UK commercial real estate investment volumes reached €12.7bn in Q1 2026 – a 7% fall on the same period last year, according to MSCI’s latest quarterly Europe Capital Trends report.
London remained the top investment destination in Europe with transaction volumes 3% higher than in Q1 2025
European commercial real estate investment activity slowed across the region in Q1 with €47.3bn of transactions completing – down 10% on Q1 2025 and significantly lower than €90bn of deals recorded in the preceding quarter.
The first quarter was the weakest quarter for acquisitions by global institutions since 2010, while major institutional investors in Europe were net sellers of real estate, according to MSCI’s data.
Tom Leahy, head of EMEA real assets research at MSCI, said: “Europe’s real estate market has become highly sensitive to changes in interest rates. The Iran conflict has altered expectations for lower interest rates in the UK and put higher borrowing costs on the agenda in the eurozone. It’s a notable shift from the fourth quarter last year, when there appeared to be strong momentum for a sustained recovery in real estate investment volumes.
“Many of the ingredients that contributed to the strong end to 2025 for European real estate are still present. Capital values have stabilised, returns are back in positive territory and occupier markets have held up relatively well. However, property remains vulnerable to the potential impact from external shocks, especially those which muddy the trajectory for interest rates. The key for investors will be how they navigate this new cycle, assessing where performance could depend on asset selection and operational performance rather than sector allocation.”