Market Radar Europe: Logistics leads as institutional giants bet big on European real estate

Bets are on for interest rates and inflation in 2026

As ever, the future of interest rates remains a hotly debated topic among real estate professionals, for whom the cost of borrowing is the crucial linchpin of investment strategy. As the new year approaches, where are rates expected to go in 2026?

Policy from the European Central Bank (ECB) is expected to be one of steadfast inertia throughout 2026, with analysts suggesting the Bank’s work is largely done and it will remain firmly planted on the sidelines.

This case is solidified by the eurozone’s inflation levels which unexpectedly rose from 2.1% to 2.2% in November. Only a dramatic and unexpected undershoot of price pressures in the first half of the year might compel the committee to sanction an additional rate cut or two.

By contrast, the Bank of England (BoE) is predicted to continue easing monetary policy as the UK's lingering inflation woes finally subside, with forecasts pointing towards a consensus of two further cuts in the first half of 2026 due to upside risks dissipating and the country shedding its 'outlier' status on prices.

Institutional optimism for European real estate

Europe’s real estate investment market sentiment is currently characterised by a powerful, yet highly selective, conviction from global financial heavyweights, who are aggressively pursuing high-demand sectors despite wider economic uncertainties.

Signalling profound confidence in the British market’s resilience and future prospects, the investment management giant Blackstone has reportedly pledged a monumental GBP 100 billion investment into the UK over the next decade, strategically focusing capital deployment on defensive niches like logistics, affordable housing, and PBSA.

This aggressive, targeted strategy finds an echo in the broader continental view held by Deutsche Bank, which has reiterated its preference for commercial European real estate over residential assets.

Driven by analysts' expectations of a macro economic recovery and fading recession risks across the region, the bank specifically highlights the logistics sector as the strongest performer, demonstrating that institutional capital is now prioritising assets underpinned by robust operational demand and long-term structural trends.

Logistics deals take the lead

Major transactions dominated the logistics real estate sector this week, highlighting strong activity across global platforms and key European markets. Ares Management announced a major restructuring, consolidating its extensive 600-million-square-foot global logistics portfolio, including recently acquired assets from GLP Capital Partners, under the new unified brand, Marq Logistics.

In the UK market, KKR provided a GBP 350 million refinancing facility for Cain's 3.2 million square foot prime UK industrial and logistics portfolio, and Tritax successfully secured GBP 204 million for its London logistics fund.

Further investment in the Greater London area saw Prologis boost its development strategy by acquiring a 24-acre development site in North London near Waltham Abbey.

Meanwhile, continental Europe recorded major investment and recapitalisation deals: CTP launched its expansion into Italy with a commitment to a EUR 1 billion investment plan over five years, and Brookfield recapitalised a USD 220 million portfolio, comprising 33 light industrial assets in the Greater Stockholm and Mälardalen regions, from EQT.

Look out for a new edition of the GRI Institute's Market Radar Europe next week!