Consensus Indicators signal a K-shaped recovery in both Europe and the U.S.

InREV, the European Association for Investors in Non-Listed Real Estate Vehicles, recently published their Consensus Indicator for March 2026, revealing that sentiment remains positive but is moderating amid rising geopolitical and interest rate pressures. The indicator provides quarterly insights into the dynamics of current and anticipated conditions in economy, investment, leasing and operations, development, and new lending. 

This quarterly report is especially valuable as it provides key insight into how investors are positioning for the global macro landscape that we described in our 2026 Global CRE Outlook as unusually complex and disorderly. Against this backdrop, we argued that real estate investors should focus on what they can control: driving net operating income growth. Achieving this will require disciplined property, market, and fund selection, as return dispersion across real estate continues to widen.

Investor sentiment towards European real estate markets remained positive in Q1 2026 for the eighth consecutive quarter. However, optimism moderated amid concerns over the potential impacts of the conflict in the Middle East. Notably, 74% of responses were submitted after the outbreak of the conflict involving Iran.

• The headline reading softened to 54.7 in Q1 2026, down from 59.4 in Q4 2025.Notably, the reading is higher than the 2Q 2025 reading of 52.2 in the aftermath of “Liberation Day,” and is above all readings from 1Q23 to 2Q24. For reference, a figure above 50 indicates expansion and signals optimism regarding the trajectory of the market recovery, while a reading below 50 points to contraction. 
• Two sub-indicators remained firmly in positive territory: financing conditions and leasing operations. Investment liquidity declined sharply, though it remained marginally positive. By contrast, the economic outlook and new development indicators fell sharply into negative territory, to 42.4 and 43.8, respectively.

The decline in the indicator is understandable, as ECB inflation forecasts for 2026 have already been revised upward by 70bps to 2.6% in March 2026, compared to December 2025, which is pressuring rates higher. Indeed, Geopolitical risks and interest rates were two of the top 5 themes that emerged in our recent discussions with European investors. However, fundamentals remain on solid footing as longer-term lease structures continue to support income stability and, while interest rates have risen, the debt capital markets remain open and liquid. All of this reinforces our view that this is a Cycle for Selectivity, as there is a wide range of rent growth forecasts across European markets and property types provided by Property Market Analysis LLP (PMA). 

A V-shaped recovery in headline valuations remains unlikely given the lack of meaningful stimulus. Instead, returns are expected to normalize gradually. While that may suggest a U-shaped path, widening dispersion in returns across property types and markets points to something closer to a K-shaped recovery. 

• The Real Estate Roundtable released its Sentiment Index for 1Q26. It showed an overall score of 66, a decrease of 1 point from the previous quarter. The Current Index registered 66, a 2-point increase over Q4 2025. The Future Index posted a score of 67 points, a decrease of 2 points from the previous quarter, reflecting a prevailing sentiment that the market is in the early stages of a tentative, uneven recovery. Political, tariff, and interest rate uncertainty is contributing to wide spreads between buyers and sellers. Amid the uncertainty around pricing clarity and geopolitical stability, participants are cautiously optimistic for an improved 2026. 
• The CRE Finance Council (CREFC), the industry association representing the $6.3 trillion U.S. commercial and multifamily real estate finance sector, released its 4Q25 Sentiment Index Survey on January 22, 2026. It showed the index rose 2.1% to 125.4, from 122.8 in 3Q 2025, approaching the all-time survey high of 126.6 set in 4Q 2024. The survey's topical questions revealed a market preparing for significant refinancing activity amid uneven outcomes. 

Investor sentiment toward European real estate remains positive, but has moderated amid heightened geopolitical risk and rising interest rate pressures. While financing and leasing conditions remain supportive, expectations for the broader economy and new development have declined. Overall, the data in both Europe and the U.S. point to an uneven recovery characterized by widening dispersion across markets and property types, reinforcing the need for selectivity and a focus on income growth rather than a rapid, broad-based rebound. We believe the cycle ahead will be alpha-driven and real estate investors will increasingly need to take a page from equity markets, where asset and market selection drive performance.