European real estate investment reached about €46 billion in the third quarter of 2026, around 6% below the same period last year, according to Savills’ preliminary estimate. Savills puts the first nine months at €156 billion, up 4% year on year, so cumulative activity remains above last year’s level. It adds that its early figures may partly reflect caution after the recent interest rate announcements. The result follows a firmer second quarter, when Savills put volumes at about €53 billion, a rise of 6%.

The slowdown did not reflect weak fundamentals. Euro area GDP grew 1.2% year on year in the second quarter, revised up from 1.0%, and Savills reports that investor confidence improved. Higher financing costs and uncertainty over pricing nonetheless kept investment decisions measured and lengthened due diligence. The evidence points to a rate shock rather than a demand shock, and it shows most clearly when the data is taken region by region.

The economy: borrowing costs turn higher

The year began with rate cuts expected rather than rises, according to CBRE’s mid-year review. Energy prices changed that. With oil above US$105 a barrel, eurozone inflation reached 3.2% in August, and on 10 September the ECB raised its deposit rate by 0.25 percentage points to 2.50%, effective from 16 September, and lifted its 2027 inflation forecast to 2.5% from 2.3%. Eurostat’s flash estimate then showed inflation accelerating to 3.8% in September. Germany’s 10-year bond yield reached its highest level since 2011. It was the ECB’s second rate increase of 2026, following one in June. The Bank of England held Bank Rate at 3.75% in September, although three members of its committee voted for an increase.

Property felt this through financing. CBRE’s mid-year review reports that the cost of debt rose in the first half of the year, and Savills notes that long-term sovereign yields climbed by roughly 25 basis points in several European markets from the start of the second quarter, which delayed the compression of prime yields that investors had expected early in the year. Debt remains available, according to Savills, but access is uneven, with lenders favouring core assets with secure income and showing more caution towards development and value-add strategies. The ECB’s bank lending survey recorded a net 6% of banks tightening commercial real estate credit standards in the first half, the lowest reading since 2021, which Savills reads as a slower pace of tightening rather than an easing.

Income did not disappear. CBRE says rental growth has still produced capital value gains for prime assets, even where yields moved outward. Weaker volumes therefore point to hesitation over pricing rather than a collapse in occupier demand.

The regional picture

Savills’ nine-month figures show how uneven the recovery has become. Its research notes that the three largest and most liquid markets are absent from the growth story, which holds back the overall total.

Detailed country data mostly runs to the end of the second quarter, with third-quarter country reports due from late October. France is the exception, with third-quarter figures already published.

Central and Eastern Europe: up 34%

Poland sets the pace. CBRE records Polish investment up 72% in the first half and up 91% in the second quarter alone to €2 billion. Knight Frank counted €5.5 billion across five CEE markets in the first half, up 6% year on year, and forecasts that Poland could reach €6 billion for the full year, its highest since the pandemic.

The Czech Republic shows a different pattern. Czech investors put almost €2 billion into commercial property across the region in the first half, according to Knight Frank, equal to 36% of capital deployed in CEE. Savills says Poland benefits from regional capital flows, particularly from Czech investors, while defence and manufacturing activity increasingly supports industrial demand. Cushman & Wakefield, which tracks seven markets, puts first-half volume at about €5.4 billion, flat on last year, and says Czech-origin capital fell to 33.3% of the total from 44.5%. It also finds that the supply of suitable assets, rather than investor appetite, is limiting activity. Residential is gaining ground, with the €575 million Resi4Rent portfolio in Poland among the largest deals.

Why the gap with Savills? Advisers tracking narrower sets of markets report flat to modest growth for the first half, against Savills’ 34% for nine months. The difference may reflect wider coverage, a stronger third quarter or both, and CEE third-quarter reports are not yet published.

The Nordics: up 25%

Sweden is the engine. Cushman & Wakefield reports first-half transaction volume of 120.5 billion Swedish kronor (SEK), up 60% and the strongest first half since 2021. CBRE puts the second quarter at about SEK 80 billion, up 150%, making Sweden the third-largest European market that quarter behind the UK and Germany. Domestic buyers drove it, with listed property companies increasingly active. Foreign investors accounted for just 7% of second-quarter volume against a five-year average of around 20%. Savills describes Sweden’s third-quarter estimate as softer after the strong first half, with domestic and Norwegian buyers still active and scope for improvement in the fourth quarter.

Large corporate deals shaped the figures. Wihlborgs bought a SEK 13.3 billion portfolio of 95 assets from Castellum in Malmö, Lund and Helsingborg, and Sveafastigheter merged with KlaraBo to create a business with property valued at about SEK 47 billion. Cushman & Wakefield says prime yields compressed year on year across most sectors in the second quarter and expects 2026 volume to exceed SEK 200 billion, the strongest year in five years.

Elsewhere in the region, the story is more mixed. Colliers’ first-half review puts Sweden at €9.7 billion, Finland at €3.4 billion, Norway at €3.0 billion and Denmark at €2.1 billion, with the Danish figure covering January to May only. Finland delivered the strongest growth, up 87%, and foreign buyers made up 56% of Finnish volume across the first half, against 18% in Sweden over the same period (the 7% quoted above is Sweden’s second quarter alone). Denmark stayed below last year’s elevated level, and CBRE notes that shifting interest rate expectations weighed on Danish activity.

The Nordic recovery is therefore largely domestic and led by listed companies, which may make it less sensitive to swings in cross-border sentiment than markets that depend on international buyers. This is an interpretation rather than a finding reported by the advisers.

Southern Europe: up 20%

Spain is the standout. CBRE records first-half investment of €12.0 billion, up 59% and the best half-year on record. Living, which covers residential rental, student housing and senior housing, led with more than €4.5 billion, or 38% of the total, followed by hotels with more than €2.0 billion, up 18%. Madrid and Barcelona took 70% of allocated investment. Savills links Spain’s pull to resilient economic performance and an attractive sovereign risk premium.

Cushman & Wakefield counts differently but reaches a similar conclusion. It puts Spain at €9.1 billion for the first half, up 39%. Portugal reached €1.37 billion, up 13%, while the three markets of Italy, Spain and Portugal together totalled €18.2 billion, up 39%. In Italy, Savills reports that large transactions are supporting activity, with out-of-town retail, hospitality and logistics attracting interest. CBRE shows Italian volume 7% lower in the second quarter than a year earlier, but that fall was confined to the quarter. For the half as a whole, Dils reports Italian investment of €7 billion, the strongest first half since its records began.

Rest of Western Europe: down 5%

This group is the hardest to read, because first-half data points up while Savills’ nine-month figure points down. The Netherlands recorded €7.1 billion in the first half, up 23.9%, with logistics and offices as the main drivers, according to Savills. Savills adds that the Dutch market largely absorbed the ECB’s June increase and that prime yields held steady in the second quarter. It describes investor interest in the Netherlands as improving, particularly in logistics, including demand from US buyers, while residential activity remains predominantly domestic.

Ireland also had a strong half. CBRE reports about €1.5 billion of investment, almost 70% above last year, and a second quarter above €1 billion that was the strongest since 2022. The €500 million Horizon Logistics Park sale accounted for roughly half of that quarter, although CBRE says activity was broad across sectors. Savills says Ireland’s domestic economy remains resilient, supporting expectations of higher annual investment. By contrast, CBRE shows Belgian volumes 14% lower in the second quarter than a year earlier.

CBRE’s Dutch outlook adds a warning. It says a 10.4% transfer tax on non-residential property, the 2025 end of the fiscal investment institution regime for direct property and repeated rent regulation proposals have eroded confidence in the Netherlands. The published half-year gains cannot be fully reconciled with Savills’ decline for the group. The likely explanation is weakness in other markets within the group or in the third quarter, which country-level Q3 data should clarify.

The core markets: down 8%

The United Kingdom remains Europe’s largest destination for capital, but volumes are slipping. CBRE puts first-half transactions at £23 billion, down 8% year on year, with the second quarter at £10.2 billion, 20% below the first. Living held up. CBRE’s second-quarter figures show £2.4 billion going into UK living in the quarter, with multifamily build-to-rent taking £1.8 billion, the highest quarterly total for that asset class, and half-year living volumes 7% above last year. Student housing, which dominated the first quarter, added just £108 million in the second. Hotel investment rose 119% to more than £2.9 billion. Capital was split evenly between domestic and foreign buyers, with North American investors leading the foreign side. Savills points to weaker public finances, uncertainty ahead of the 28 October Budget and London’s reliance on overseas buyers, whose reduced flows have weighed on UK volumes.

Germany is steadier on paper. CBRE records €16.2 billion in the first half, up 13%, with commercial property up around a fifth, though momentum weakened in the second quarter as deals took longer to complete. BNP Paribas Real Estate reports that net prime yields rose across all asset classes in the second quarter for the first time. Office investment recorded the strongest recovery among the large asset classes, up 66% to €3.45 billion according to CBRE, while residential stayed the largest asset class and domestic capital still dominates. Savills expects fund redemptions, with about €17.3 billion withdrawn from German open-ended property funds since early 2024, to bring more motivated sellers to market.

France is the most uneven. Immostat data cited by Cushman & Wakefield shows €3.4 billion of commercial investment in the third quarter, after €2.01 billion in the first quarter and €4.82 billion in the second, which was lifted by an exceptional €2.3 billion portfolio sale. The nine-month total of €10.3 billion compares with €8.8 billion a year earlier, but that single transaction flatters the headline. Excluding it, nine-month volume works out at about €8.0 billion, below last year, and logistics investment fell 47% over the period. Savills identifies France as the main drag on the core markets. It points to a spread over German ten-year bonds above 100 basis points in September for the first time since 2012, a French ten-year borrowing cost of roughly 4.7% and an MSCI investor barometer in which 46% of respondents plan to cut property allocations and 58% plan to increase disposals.

The half-year picture for the core is therefore mixed, with Germany up, France flattered by one portfolio and the UK down. Savills’ decline of 8% over nine months fits a weak third quarter, and the UK’s second-quarter drop, slower German momentum and French fiscal strain all point the same way, though national Q3 data for the UK and Germany is needed to confirm it.

What capital bought

Living is the largest sector. CBRE records €29.9 billion in the first half, ahead of offices at €22.6 billion (up 13%), industrial and logistics at €19.2 billion, retail at €18.1 billion and hotels at €11.8 billion. Savills expects multifamily, student housing, care homes and senior living together to account for more than 30% of volumes across the first three quarters, and says income security remains central to allocation decisions. It also reports stronger demand for prime offices, concentrated at the super-prime end where pricing is more sensitive to bond yields, and a gathering revival in retail warehouses and shopping centres.

Logistics lost share. Savills estimates its weighting at about 16% in the first half, down three percentage points, even though one of the year’s largest deals was a €2.3 billion French portfolio from Proudreed. In its third-quarter report, Savills says logistics lost some momentum, potentially a natural moderation after a long period of strong activity, with geopolitical tensions and higher energy and transport costs adding to caution.

Who was buying

International buyers accounted for slightly less than 45% of volumes across the first nine months, which Savills describes as below historical norms. It attributes this to caution and to a narrower pool of large-ticket assets, because subdued activity in the UK, Germany and France has restricted the supply of assets with the scale international investors need. Intra-European flows remain strong from UK, French, Swedish and German investors, and North America remains the largest source of international capital. The mix varies by market: foreign investors took 18% of Swedish volume across the first half against 56% in Finland, while UK capital was split evenly.

Why the headline numbers differ

Advisers report different totals for the same period. CBRE puts first-half European investment at €116 billion, while Savills’ latest figures imply about €110 billion, up from the roughly €103 billion in its second-quarter estimate, which shows how preliminary nowcasts are revised. BNP Paribas Real Estate’s second-quarter review shows €82.5 billion, around 7% below its five-year average, which appears to be a year-to-date figure, and its 12-month total to June stands at just over €187 billion, up 10% year on year.

Scope explains much of the spread. Colliers counts only Nordic deals above €5 million, and its Danish figure covers January to May. Immostat shows French nine-month volume 17% above last year, while Savills lists France as the main drag on the core markets. The €2.3 billion portfolio sale accounts for much of that gap, although Savills’ treatment of it is not stated. Most of the differences come from scope, benchmarks and revisions.

Outlook

Savills keeps a cautiously positive view for the rest of the year, noting that the fourth quarter is traditionally strong and that significant transactions are in the pipeline. It has lowered its forecasts because of the drag from the core markets, particularly France, and now expects €248 billion of European investment in 2026, up around 7%, and €266 billion in 2027. CBRE’s mid-year outlook, published before the September rate rise, expected full-year volumes 0% to 5% above 2025 and a second-half rebound as debt costs eased.

The ECB has not committed to a rate path and markets price further increases by April 2027, so the recovery depends on the largest markets regaining traction. If yields settle, deal-making in the core markets could recover. If they do not, the divergence seen in the third quarter, with smaller regions growing while the largest markets lag, is likely to continue.