Market Radar Europe: Knight Frank reveals how wealth mobility is reshaping global property markets

Wealth mobility reshapes global property markets

The 2026 edition of the Knight Frank Wealth Report marks the publication's 20th anniversary, providing a detailed analysis of how private capital adapts to a fractured geopolitical landscape through agility and value-add strategies. 

Revisiting its historical predictions, the report scrutinises two decades of investment trends across the US, Europe, and other major markets.

The Prime International Residential Index (PIRI 100) highlights a 3.2% rise in global luxury residential prices. While North America experienced a decline due to weakness in Canada, Europe emerged as a top performer with an average price increase of 3.3% - bolstered by a softer euro and successive interest rate cuts from the European Central Bank. 

Capital remains highly mobile, a trend intensified by the abolition of the UK's non-dom regime, which has redirected wealth towards stable tax environments. 

Italy has become a tax-led magnet, drawing wealth to Milan and Lake Como, while London sees a shift toward a "dip-in, dip-out" lifestyle, where affluent individuals prioritise turnkey urban retreats over traditional trophy estates.

Mobile capital is also gravitating toward tax-efficient challenger cities such as Madrid and Malta. Spain and Portugal delivered strong growth, with Porto and Marbella attracting buyers from Northern Europe, Latin America, and the US for family investments. 

Extreme premiums for new-builds in Monaco, averaging USD 47.9 million, have pushed demand into the French Riviera, while Swiss alpine resorts including Meribel remain stable safe havens amidst geopolitical uncertainty.

The European commercial real estate sector saw a robust recovery in 2025, with private investors spending USD 18.9 billion. High-value transactions have returned, exemplified by Blackstone's USD 820 million acquisition of the Trocadero building in Paris, with capital focusing on prime, ESG-compliant assets. 

Reflecting on technological forecasts, the report revisits 2008 predictions regarding blockchain's potential to revolutionise property transactions. 

These shifts have not yet mainstreamed, as physical real estate requires external verification, and stakeholders in the US and elsewhere remain reluctant to share private data. However, artificial intelligence could be the catalyst needed to unlock blockchain's utility, evidenced by new UK initiatives pairing the technologies.

Finally, the report highlights a strategic shift from broad ESG metrics towards specific energy targets. With global energy consumption projected to rise 15.5% by 2035, and a 127% surge in data centre electricity demand expected by 2030, access to dependable power is critical. 

Since buildings account for nearly 30% of global energy use, investments in renewable procurement and efficiency retrofits are essential for delivering measurable returns, mitigating risks, and ensuring portfolio resilience.

European economy balances defence, sustainability, and AI

A recent analysis from Chatham House warns that while the disruption caused by the conflict in the Middle East has cost the European Union an additional EUR 24 billion in energy imports, a crisis in Taiwan would inflict far greater economic damage. 

A blockade could shrink global GDP by 5%, exposing Europe's critical reliance on Taiwanese semiconductors. To address this vulnerability, experts recommend supporting strategic investments, such as a new EUR 10 billion semiconductor facility in Dresden. 

Simultaneously, Europe is rapidly shifting towards a war economy. EU defence spending has surged by over 60% in five years to EUR 380 billion, driven by Poland's significant military investments and industrial consolidation by firms such as Rheinmetall. 

Financial institutions are backing this transition, with JPMorgan Chase expanding its USD 1.5 trillion Security and Resiliency Initiative into Europe to bolster defence, energy, and AI capabilities.

The ongoing crisis has exposed severe energy vulnerabilities, prompting robust emergency measures. 

To combat fuel shortages and industrial shutdowns, the European Commission introduced the AccelerateEU framework, designed to reduce reliance on imported fossil fuels through rapid electrification, streamlined wind farm permitting, and the expansion of domestic renewables. 

This aligns with broader global trends, where solar PV recently became the primary driver of energy supply growth. However, this energy transition must be coupled with material efficiency. 

Leading brands, including H&M and IKEA, are urging the EU to implement stronger regulations under the Circular Economy Act. They argue that standardising recyclability and promoting circular business models are essential for long-term supply chain resilience and competitiveness across Europe, the US, and other international markets.

This push for electrification is being severely tested by the infrastructure demands of the artificial intelligence boom. Nokia's CEO has warned that Europe risks falling behind the US and China due to a critical shortage of data centre capacity and power grid connections. 

OpenAI's recent moves highlight this dichotomy; while the firm will open its largest international research hub in London in 2027, it recently paused a primary UK data centre project due to high energy costs and regulatory hurdles. 

To overcome grid congestion, the European data centre industry is shifting from demand-led to constraint-led planning, increasingly prioritising Tier II locations that offer reliable power governance.

Despite these structural challenges, the sector is booming. MSCI reports that data centres have delivered impressive 23.8% annualised returns, while Savills predicts global power capacity will jump to 222 GW by 2030, creating a massive ripple effect for logistics and industrial real estate.

► Join us online on 9th June for Data Centres GRI 2026 for the latest developments

Germany faces war shocks and shifting property dynamics

The German government has downgraded its economic growth forecasts for 2026 and 2027, citing the ongoing war in Iran, high energy prices, and persistent supply-chain disruptions. The economy ministry now expects growth of just 0.5% this year and 0.9% in 2027. 

While the administration attributes this sluggishness to external geopolitical shocks, independent economists argue that officials share the blame for failing to address high domestic costs, excessive bureaucracy, and stagnant private-sector investment. 

Although BNP Paribas reported a modest Q1 2026 growth rate of 0.3%, driven by robust public investment and inventory accumulation, accelerating inflation and a significant slowdown in lending raise concerns of a potential pull-back. 

Furthermore, S&P Global Ratings lowered its 2026 GDP growth forecast to 0.8%, as 10-year bund yields exceeded 3%, reaching their highest levels since the 2011 sovereign debt crisis.

This volatile economic environment is placing immense pressure on the German real estate market. S&P notes that higher capitalisation rates, rising material costs, and passed-through energy expenses are straining housing companies and reducing the viability of modernisation projects. 

Consequently, the broader investment market remained subdued, with Q1 transaction volumes declining by 5% year-on-year to approximately EUR 7.8 billion. 

According to Savills, a weaker economic outlook and renewed interest rate increases are creating an urgency for owners to sell. However, the current buyer profile is largely restricted to the public sector, owner-occupiers, and private investors. 

Despite these headwinds, Savills maintains a stable full-year outlook, anticipating a total transaction volume of roughly EUR 35 billion, aligning with recent historical averages across Europe and the US.

Regional commercial sectors reflect this adjustment, revealing a divergence in market dynamics. 

In Frankfurt, the office leasing market experienced a cautious start to 2026, with Q1 take-up totalling 69,400 square metres, marking its lowest level since mid-2020, according to CBRE. The vacancy rate rose to 11.5%, though prime rents held steady, and the investment market demonstrated resilience with EUR 251 million in total volume. 

Conversely, Dusseldorf saw a massive singular spike in investment, quadrupling to EUR 417 million, driven almost entirely by the major Deiker Höfe transaction. While Dusseldorf's office take-up held steady, a distinct flight to quality pushed the weighted average rent up by 17% as companies aggressively competed for top-tier talent.

Meanwhile, Germany's industrial and logistics real estate sector has proven highly resilient. CBRE reported a stable Q1 take-up of 1.3 million square metres. A reduction in speculative construction pushed the Big Box vacancy rate down to 4.7%, driving average prime rents in top markets to EUR 9.21 per square metre. 

Transport, logistics, and trading firms remain active, while Chinese e-tailers expanded to secure a 13% market share. Investor appetite remains strong, evidenced by Nuveen acquiring the Munich-LEN business park for EUR 40 million, marking its first directly owned industrial property in Europe.

► Don’t miss out on insights from top German industry leaders at Deutsche GRI 2026
 

---

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