European Real Estate: The June and H1'26 REIT Sheet

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European Real Estate: The June and H1'26 REIT Sheet

Barclays | European Real Estate

refinancing headwinds and political risks. As we move into H2, we continue to believe earnings

delivery, capital allocation and stock selection will remain more important than broad sector

exposure.

Research highlights:

Our 2026 Outlook - Accelerated déjà vu, 18 Dec 2025 reiterated our view that 2026 would

resemble 2025 but at a faster pace: more transaction activity, wider dispersion of TSRs and a

continued shift towards earnings-based valuations. A key message from our European Real

Estate Conference was that investors are increasingly focused on cash flow growth, capital

allocation and management execution rather than hoping for a broad-based valuation recovery

driven by lower rates (see Conference feedback: Optimistic Outlook, 12 Jan 2026). While

sentiment was constructive, investors remained highly selective and largely bottom-up in their

approach.

The first two months of the year validated this view. Listed real estate performed strongly in

January and February as investors increasingly viewed real assets as a hedge against AI

disruption. Property's combination of tangible assets, recurring cash flows and limited direct

exposure to labour displacement compared favourably with other sectors facing questions

around AI's impact on long-term earnings. However, this outperformance faded as geopolitical

concerns, energy market volatility and higher rates re-emerged as dominant market themes

from March onwards. Despite weaker share price performance through much of Q2, our

conference discussions and investor meetings suggest underlying interest in the sector remains

healthy, with many investors choosing to wait for greater macro clarity before increasing

exposure.