While the capital market recovery has been more gradual than initially projected, recent trends suggest that momentum is levelling off, with the market increasingly moving towards stabilisation. Deal flows remain subdued amid a prevailing “wait-and-see” attitude, while market sentiment has shown only limited improvement compared to Q2.
The Office sector, in particular, has emerged as a leader. It is the best-performing CRE asset class year-to-date, recording a 7% increase in transaction volume. Flight to quality continues to dictate market dynamics, aggressively driving demand for premium assets and propelling growth in key markets, most notably in the UK (+20%) and France (+6%).
Despite the dominance of domestic players, foreign investment continues to exhibit robustness. This is notably supported by an expanding footprint of Middle Eastern investors reflecting their intensifying interest in the European landscape. The broader macroeconomic environment continues to weigh heavily on pricing. Q3 2026 represents a potential inflection point, as a generalized increase in prime yields has now materialized across all asset classes. This trend is also most visible in the Office sector.
