Europe's top real estate markets remain robust in mid-2026. The latest update of the "DNA of Real Estate" study by Cushman & Wakefield documents continued solid rental price growth in the office, logistics and retail segments. At the same time, prime yields have risen slightly again, signalling an end to nationwide yield compression.
The second quarter was marked by ongoing geopolitical uncertainties and a continued elevated interest rate environment. Bond yields remained high for much of the quarter and only eased slightly towards the end – when signs still pointed to a peace agreement. With the ECB's interest rate hike in June, expectations of further yield compression faded, putting additional pressure on capital values.
Simon Jeschioro, Head of Capital Markets & Investment Advisory Germany at Cushman & Wakefield, summarizes the current trends as follows: "We do not see a phase of broad yield compression coming our way – in our view, individual location and asset selection currently determines the performance of individual, larger transactions." Jeschioro continues: "Investors should be prepared for slightly higher financing costs in the current market phase; Price reductions are possible, but not across the board. Almost fully let, high-quality core CBD assets remain attractive and face stable demand. In summary, we find that liquidity is available, but transactions are still faltering in many cases."
Nigel Almond, Senior Director, Global Property Research & Intelligence, EMEA at Cushman & Wakefield, explains: "Despite a challenging market environment, more than three-quarters of European markets recorded stable returns. At the same time, the number of markets increased with rising yields." He continues: "On the tenant side, the growth in prime rents continued both quarter-on-quarter and year-on-year, especially in the office sector. This continues to support moderate net present value growth at the European level and in most regions."
Office properties lead rent growth
The rental price trend was led by the office sector, with top CBD office rents in Europe rising 1.2% quarter-on-quarter and 4.5% year-on-year due to strong demand for space.
The strongest quarterly rent increases were:
- Benelux (+2.6%)
- Germany (+1.9%)
- UK & Ireland (+1.6%)
Rotterdam is particularly noteworthy, with an increase of 13.2% to 385 euros/m²/year. This was due to recent leases and higher asking rents for new construction projects.
At the same time, there was a trend reversal in yields. Seven European office markets reported yield expansions in the second quarter – more than at any time in two years. Only two markets still recorded yield compression. As a result, the average European prime yield for office properties rose by 3 basis points to 5.39%.
Southern Europe and Central and Eastern Europe remain particularly resilient
The most resilient regions in Europe remain Southern Europe and Central and Eastern Europe. In the second quarter, both regions combined comparatively strong rental price growth with predominantly stable or slightly declining yields. This enabled them to maintain their position as the most attractive markets for investors in the current market environment.
While rental price growth continues in Europe's top markets, the slight expansion in yields points to a new market phase. Investment decisions are increasingly determined by the quality of individual locations and properties. High-quality core properties in established prime locations remain the preferred choice of institutional investors.
