INTRODUCTION Contributed by: John Sullivan and Michael Haworth, DLA Piper LLP
In our Introduction to last year’s Global Guide, we noted that the commercial real estate (CRE) markets appeared to be turning a corner, after a period of uncertainty caused by inflation, interest rate increases and value impairment across many asset classes, only to have that nascent sense of optimism dampened at the start of 2025 by concerns that newly announced tariffs could result in trade wars, increased inflation and slower economic growth. Indeed, the global economy faced many challenges in 2025, including the highest tariffs seen in the last century, increased labour shortages caused, in part, by more restric - tive immigration policies, and geopolitical tensions in many parts of the world. But despite these challenges, the CRE market showed remarkable resilience. Last year, global direct CRE investment activity increased by 19% over 2024. In the US, commercial real estate investment volume increased 29% year- over-year in Q4 to USD171.6 billion, pushing full year 2025 volume to USD499.1 billion – 22% above 2024 levels. Fourth quarter CRE investment volume in EMEA rose by 16% over 2024, led by the UK and Germany. Asia Pacific saw 15% year-over-year CRE investment growth in Q4 of 2025. Cross-border investment con - tinued to recover in spite of geopolitical pressures, finishing 2025 with 25% year-over-year growth. Debt markets improved in 2025, with the US CBRE Lending Momentum Index (which tracks the pace of CBRE-originated commercial loan closings in the US) increasing 67% year-over-year. In most major mar - kets, the overall cost of debt decreased significantly from recent peaks. Overview Whether it was the Danish theoretical physicist Niels Bohr or the American baseball player Yogi Berra who said it first, “prediction is difficult, especially about the future”. That said, despite continuing tariff/trade uncertainty and ongoing geopolitical conflicts, at the start of 2026 there was a general sense of optimism for the CRE market, albeit with the acknowledgment that much of the data supporting such optimism was gathered before the conflict with Iran began. According to Knight Frank’s Active Capital survey, which measures the views and investment sentiments
of 119 of the world’s largest CRE investors represent - ing more than USD1.4 trillion of assets under man - agement (AUM), global institutions are set to invest USD144 billion in CRE this year, with approximately 87% of investors (by AUM) reporting that they intend to increase their direct investments in CRE in 2026. In Deloitte’s 2026 Commercial Real Estate Outlook, top markets for CRE investment (excluding each respond - ent’s home market) include the United States, India and Germany, and 75% of European and Asia-Pacific respondents reported that they expect to increase their CRE investment over the next 18 months, especially into India (86%), Canada (80%) and France (78%). In its 2026 Global Investment Outlook, Hines states that “we believe that 2025 may prove to be the year that real estate quietly bottomed – and 2026 could be the year that capital wakes up to it”, and they forecast opportunities concentrated in living, industrial, retail and certain alternative asset classes, particularly data centres. JLL sounded a similarly optimistic sentiment at the end of last year, stating that the “outlook for 2026 is positive with most major markets expected to see steady growth, supported by low or falling policy inter - est rates, low and contained inflation, and increas - ing fiscal spending”. In the 2026 edition of ULI/PwC’s Emerging Trends in Real Estate (United States and Canada), the 2026 “buy rating” of 3.74 is the highest it has been in the last 20 years. The 2026 edition of Emerging Trends for Europe expresses a more cau - tionary tone, stating that the “overriding sentiment for European real estate in 2026 is shifting from last year’s cautious optimism to something more pragmat - ic, with the likelihood of renewed investment activity once again tempered by geopolitical and economic uncertainty”. The 2026 Emerging Trends Report for Asia Pacific suggests that there is a mood of “cautious optimism” amongst Asia Pacific real estate leaders about the prospects for 2026. However, this optimism is fragile and subject to concerns about geopolitics and cost inflation. Furthermore, sentiment varies widely across the region: positive in Japan and Singapore, but less so in China and Hong Kong. Finally, CBRE predicts that the Asia Pacific CRE market is poised for growth in both investment and leasing activity in 2026.
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