For the second year running, the living sector has claimed the top spot in European real estate investment, a shift that industry bodies now describe as structural rather than cyclical. JLL reports that living accounted for 30% of direct European real estate investment in 2025, following growth of 34% in 2024 and 22% in 2025, with a further 10 to 15% expected in 2026. CBRE puts it more plainly in its 2026 outlook: "the living sector has now cemented its position as Europe's largest investment sector". What began as a niche allocation for pension funds and specialist operators has become the default core holding for institutional capital across the continent.
The investor survey data supports this. The 2026 Investment Intentions Survey from INREV, produced with ANREV and PREA, found residential is now the most preferred sector among European investors, ahead of logistics, offices and retail. Iryna Pylypchuk, INREV's director of research and market information, noted that investors are clearly positioning for a recovery, but the approach feels different, pointing to a more disciplined, selective style of capital deployment than in previous cycles. That discipline is visible in where the money is going: established multifamily markets in Germany and the Nordics, alongside newer growth pockets in Southern Europe.
Purpose-built student accommodation has emerged as one of the strongest sub-sectors within that story. Colliers research shows PBSA accounted for over 25% of all living sector transactions in 2025, with portfolio and asset sales up 60% year on year in Italy and half of all activity in Spain. A single PBSA portfolio in Denmark closed at €400m, the country's largest deal of the year. Demand is being driven by rising international student mobility from Asia, Africa and South America, alongside a growing share of English-taught programmes across continental universities, factors that CBRE expects to keep occupancy and rental growth strong in the UK, Germany, France and Spain.
Underpinning all of this is a supply gap that shows no sign of closing. The European Commission's Joint Research Centre estimates the EU needs more than two million new homes a year through 2035 to meet demand, while housing completions across major markets are forecast to fall a further 5% in 2026, the lowest level of new supply in a decade. Between 2022 and 2025, households in key European cities grew 3.5% while housing stock expanded by only 2.1%. Governments are responding: the European Affordable Housing Plan, published at the end of 2025, sets out measures to unlock private capital into supply, while Sweden and Ireland are separately reworking rental regulation to attract new investment.
Build-to-rent is where this pressure is most visible in transaction volumes. In the UK, BTR investment has already surpassed full-year totals for 2023, 2024 and 2025, with the second quarter of 2026 alone delivering the strongest Q2 on record. Cushman & Wakefield's European Living Investor Survey finds the same appetite spreading across the continent, with build-to-rent, student housing and affordable housing rated the top three sub-sectors by cross-border investors. In Spain, rent caps have paradoxically tightened supply of private rental stock, pushing more capital towards professionally managed BTR schemes as the only route to scale.
For investors and developers, the message from the 2026 outlooks is consistent: living is no longer a diversification play; it is the core allocation. Rental growth is expected to moderate as affordability limits catch up with demand, shifting the competitive edge towards operators who can manage assets efficiently rather than simply build them. With offices and retail still working through structural repositioning, and data centres constrained by power and land, the living sector's combination of demographic demand, chronic undersupply and now genuine scale gives it a claim on institutional portfolios that few other European asset classes can currently match.
People and companies mentioned
- CBRE
- JLL
- Colliers
- Cushman & Wakefield
- INREV
- PwC
- Urban Land Institute (ULI)
- Iryna Pylypchuk, Director of Research and Market Information, INREV
Image Source: Unsplash, photo by Joachim Lesne (Kaktus Towers, Copenhagen) (feature image), photo by Ilona Klevansky (micampus, Bilbao)
Sources: CBRE, European Real Estate Market Outlook 2026 JLL, EMEA Living Market Perspectives 2026 Colliers, EMEA Living Sector Snapshot, March 2026 INREV/ANREV/PREA, Investment Intentions Survey 2026 Cushman & Wakefield, European Living Investor Survey 2026 PwC/Urban Land Institute, Emerging Trends in Real Estate Europe 2026
