Limited development activity across Europe has created some of the most attractive long-term income-generating opportunities in the global real estate sector, according to Hines' Mid-Year Outlook 2026 report,published today.
Despite continued moderate economic growth across much of the region, Hines Research identifies the European residential market as one of the strongest-performing living sectors globally, with rental market fundamentals approximately twice as strong as those in the United States, as constrained supply continues to support occupancy levels and rental growth. The report also highlights that European retail rents increased by more than 5% in 2025, logistics markets have regained a better balance between supply and demand, and financing conditions continue to improve. As access to financing improves and capital returns to the market, Hines believes Europe is particularly well positioned to benefit from what it describes as the "scarcity advantage," where sustained demand is reinforced by significant barriers to new supply.
"We are seeing the same pattern emerge across the globe," said David Steinbach, Global Chief Investment Officer at Hines. "Increasingly, the question is not whether demand exists, but whether markets can deliver enough housing, retail and logistics space to meet it. Europe stands out because years of limited development have created a stronger foundation for sustainable income growth across multiple sectors."
The report is released at a time when the European commercial real estate market is stabilising after several years of valuation adjustments. Financing conditions have improved, investment activity has recovered and lending standards have become more favourable. However, Hines believes the most compelling opportunities remain concentrated in sectors where structural supply shortages continue to drive occupancy and rental growth, reinforcing the firm's view that this cycle will favour investors capable of identifying the scarcity advantage.
"Europe's investment story is not built on rapid economic growth," said Alfonso Munk, Co-Head of Investment Management at Hines. "It is built on scarcity. The persistent housing shortage, disciplined development activity and improving financing conditions have created attractive opportunities for investors seeking resilient income and long-term value creation."
Spain: Strong Fundamentals Reinforce Long-Term Investment Opportunities
In Spain, consumer fundamentals remain robust, while retailers' operating performance continues to improve. As a result, Hines sees particularly strong rental growth potential in retail parks, shopping centres and high street assets, outperforming many other European markets.
In the logistics sector, market conditions have moderated from the peaks seen in recent years but are showing clear signs of normalisation, while maintaining healthy rental growth across the country's main logistics hubs.
Prime office assets located in central business districts (CBDs) have also benefited from high levels of liquidity, which, together with sustained rental growth, has supported further valuation increases.
Meanwhile, Spain's residential market remains one of the most supply-constrained in Europe following two decades of limited residential development. The housing shortage in Madrid and Barcelona has now reached several hundred thousand homes. Against this backdrop, Hines expects residential rents to continue increasing broadly in line with nominal wage growth, at an annual rate of approximately 3% to 4% over the coming years.
"Spain continues to stand out as one of Europe's most attractive real estate markets. Structural supply shortages, strong demand and improving capital market conditions are creating highly attractive long-term investment opportunities across the residential, retail, logistics and prime office sectors. While the outlook varies by asset class, the common denominator is clear: high-quality assets in supply-constrained markets are well positioned to deliver sustained long-term performance," said Vanessa Gelado, Senior Managing Director and Head of Southern Europe at Hines.
Key Findings from the Report
The full Hines Mid-Year Outlook 2026 report is available at THIS LINK
About Hines
Hines is one of the world's leading real estate investment managers. The firm owns and manages $91.7 billion¹ of assets across a broad range of property types on behalf of a diverse group of institutional and private clients. Every day, Hines' 5,000 employees across 30 countries draw on the firm's 69-year history to help shape the future of the built environment through the investment, development and management of some of the world's highest-quality real estate assets. For more information, visit www.hines.com and follow @Hines on social media.
¹ Includes both the global Hines organisation and RIA AUM assets under management as of 31 December 2025.
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