Global Real Estate Perspective, February 2026

• Steady economic growth expected in 2026. Economic conditions continued to stabilize through the end of 2025. Steady growth is anticipated across major economies this year, supported by lower interest rates, contained inflation and increasing fiscal spending.
• Global real estate activity strengthening. Global office leasing rose to its highest level since the pandemic in 2025. Industrial demand is rebounding in many major markets, while retailers continue to expand in core locations.
• Capital markets momentum built substantially through the fourth quarter of 2025. Strong debt market liquidity globally and declining Treasury volatility in the U.S. combined to create increasingly favorable conditions, reinforcing investor conviction and accelerating deployment activity.

Economic conditions continued to stabilize during the final quarter of 2025 despite ongoing geopolitical uncertainty. The outlook for 2026 is positive with most major markets expected to see steady growth, supported by low or falling policy interest rates, low and contained inflation, and increasing fiscal spending.

Occupier activity was varied across markets and property types but broadly strengthened during the quarter. Despite longer deal timelines, requirements are rising in many industrial markets as demand rebounds. Global office leasing rose further to its highest annual level since the pandemic, while retailers are still expanding in core locations.

Global capital markets continued to build momentum in the fourth quarter as economic growth improved, inflation pressures eased, and interest rates neared neutral levels. Highly liquid debt markets and steady property fundamentals fueled greater transaction activity and reinforced investor confidence, with fundraising marking a notable rebound after several challenging years. Investor sentiment firmly shifted toward risk-on behavior, supported by competitive lending conditions and persistent relative value in commercial real estate.

Direct investment activity sustained its momentum through the fourth quarter of 2025, with global volumes over the full year increasing by 19% from 2024. Fourth-quarter transaction volumes were 15% higher year-over-year, indicative of increased investor confidence. EMEA investment volumes in the final quarter rose by 16% from the previous year, led by the UK and Germany. Asia Pacific achieved 15% year-over-year growth in the quarter, with the Americas up by 14%.

Global cross-border investment finished the year up 25% year-over-year. Though the share of inter-regional (long-haul) capital flows are rising, they are still well below previous peak levels. Cross-border commercial real estate investment is positioned for additional acceleration through 2026 and beyond, as large pension systems worldwide undergo structural reforms that encourage increased real estate exposure.

Global office leasing activity rose again in Q4, with volumes over the full year increasing by 5% to the highest level since 2019. Gateway markets and larger deals drove leasing in North America and activity also rose in Asia Pacific, whereas longer deal timelines in Europe contributed to a marginal slowing.

The global vacancy rate continued to decline after peaking in mid-2025. Groundbreakings are at record lows in the U.S. with three quarters of the remaining pipeline already pre-leased, while new construction starts are at the lowest level in over a decade in Europe. The dwindling availability of high-quality, central space is driving supply shortages and elevated rental growth for high-end space in both regions. In Asia Pacific, a tenant focus on quality and consolidating portfolios into central locations is helping to balance an elevated supply pipeline in some markets.

Future trends: Workplace strategies evolving from mandates to experience-driven environments
 

Short-term: With over 50% of organizations globally requiring 3-4 days in-office, workplace experience and creating ‘commute-worthy’ spaces are increasingly important for driving utilisation and talent strategies. The ongoing increase in office attendance has pushed many large organizations into expansion mode, which is expected to support a continued gradual recovery in leasing through 2026.

Long-term: Affordability and availability will be increasingly in focus for occupiers, with limited new space in prime central submarkets. Companies will need to start searches earlier and maintain flexibility. Renewals and extensions will account for a larger share of activity, while leasing in refurbished projects and core-adjacent submarkets is likely to increase. For property owners, this supply-demand imbalance presents an opportunity to retrofit and reposition existing assets.

Logistics leasing demand continues to rebound from tariff uncertainty in the first half of 2025. Despite long deal timelines, leasing increased during 2025 in both North America and Europe. Results in Asia Pacific were mixed, with a moderate decline in regional absorption over the year. New supply has decreased significantly from peak levels in each region which will contribute to plateauing or falling vacancy over the next 12 months.

Future trends: Strategic supply chain restructuring contributing to rising demand
 

Short-term: Leasing demand is expected to continue rising in most major markets through 2026, supported by strategic portfolio restructuring and drivers including the regionalization of higher-value manufacturing and distribution networks, growing defense spending and rising e-commerce. Lower levels of speculative construction will constrain availability of modern supply in core locations, contributing to rental growth for high-quality buildings.

Long-term: The longer-term shape of trade policies and supply chain reconfiguration is still evolving, with a focus on sourcing diversification, resilience and regionalization. In mature markets, demand is concentrated on highly specified, modern assets in strategic locations. This will lead to further growth in owner-user and build-to-suit development to enable greater customization and automation while access to reliable power will become increasingly critical in site selection.

Retail spending is expected to remain positive in most major markets through 2026, supported by rising real wages, steady labor markets and increasing tourism. Retail fundamentals are resilient across regions; U.S. absorption rose again in Q4, signaling an ongoing recovery as store opening announcements outpace closures. In Europe and higher-growth or tourism-oriented economies in Asia Pacific, retailer demand continues to be healthy for premium central space.

Future trends: Stable fundamentals as expansionary activity is tempered by limited supply

Short-term: Retailers will continue to implement strategic expansions and portfolio rebalancing, with a focus on prime destinations and smaller formats. Limited availability and new supply are likely to temper leasing activity but will support occupancy levels and rents for quality space.

Long-term: Demand from services-led tenants and for flexible ‘experiential retail’ formats is growing, with stores acting as engagement hubs for brand connection, events and services that cannot be replicated online. An increasing bifurcation in spending patterns will contribute to pressure on mid-market retailers and lead to outperformance for premium and experiential segments as well as essentials.

Global transaction volumes for the living sector finished 2025 up 24% over the year. The U.S. continues to be the dominant market accounting for two-thirds of investment, with 31% in EMEA and the remaining 3% in Asia Pacific. Further growth is expected this year on the back of improving debt availability in major markets including the U.S. and UK. Fundraising activity targeting living growth markets in Europe and Asia Pacific has also been robust, leading to a rising tide of capital targeting the sector globally.

Future trends: 2026 set to be another strong year for global living investment
 

Short-term: Global living investment is forecast to pass the US$250 billion mark in 2026, with the U.S. expected to return to average pre-pandemic investment levels and continued steady growth anticipated in Europe and Asia Pacific. However, new apartment construction challenges will act as a drag on the sector’s overall growth trajectory.

Long-term: A growing number of mature living markets will see more sophisticated housing strategies introduced, which will put an emphasis on delivering housing types optimized for different uses. This will mean an increasing supply of student accommodation, coliving and micro living urban homes as well as dedicated affordable housing across many countries, but notably in the likes of Canada, U.S. and European markets.

Following the elevated growth seen in 2022 and 2023, global revenue per available room (RevPAR) trends are normalizing further. In U.S. dollar terms, markets across EMEA generally led RevPAR growth in 2025, followed by Asia Pacific. Hotel transaction volumes are on a solid rebound with direct investment in 2025 up 22% from the low point in 2023.

Future trends: Global hotel brands prioritize unit growth over management contracts

Short-term: With slowing new supply, hotel brands are using their balance sheets to boost unit growth via M&A, strategic partnerships and conversions. The global portion of franchised hotels (i.e., those managed by third parties) is expected to increase further, creating opportunities in the highly fragmented third-party management space, with new players, increased partnerships and M&A likely to emerge.

Long-term: The global travel landscape is undergoing a significant transformation. Markets like India and Saudi Arabia are poised to play increasingly significant roles in shaping future travel patterns, driven by shifts in demographics, economic power and consumer preferences. As consumers increasingly focus on experiences, traditional hospitality brands are expanding their offerings to new verticals, boosting the growth of lifestyle hotels.