Investors target Single Family, Co-living, Senior Living and Care Homes across Europe.
Introduction
Our 2026 European Operational Real Estate (OpRE) Investor Sentiment Survey demonstrated clearly that the trend of investors diversifying their portfolios and increasing their exposure to the OpRE sectors is continuing to accelerate.
A growing number of investors are targeting OpRE, attracted by their ability to deliver long-term stable returns while providing diversification from other real estate asset classes.
PBSA remains the most sought-after sector for the second year in a row. However, there has been a notable rise in the proportion of investors looking to target Co-Living, Senior Living, and Care Homes.
Investors plan to deploy €45 billion over the next three years alone, with the majority of respondents expecting 2027 to be their most active year.
Following a challenging period for fundraising, investors are more optimistic about the next 12 months. Value-add and Core-plus strategies are expected to be the easiest to raise capital for.
Interest in accessing OpRE sectors through funds, whether generalist or sector-specific, has also increased, following a decline in 2025.
Operational real estate (OpRE) for the purposes of this survey encompasses investible residential sectors (Multifamily, Single family, PBSA, Senior Living, Co-living, Care Homes, Affordable Housing and Social Housing), Hotel sectors (Serviced apartments, Mid-market, Budget, Luxury, Lifestyle, Hostels, Branded Residences) and Self Storage.
Our survey gathered responses from 56 investors, who collectively have €540 billion in real estate assets under management (AuM). Around 75% of respondents are based in the UK, with 20% based in continental Europe and 5% in the rest of the world.
Increasing allocation to OpRE sectors
Investment into OpRE across Europe has accounted for a growing share of total investment since 2022, rising from 30% to 38%. This increase aligns with investors’ stated ambitions to expand their allocations to OpRE. In 2026, almost two-fifths of respondents intend to increase their allocations over the next three years, while only 7% expect to reduce exposure.
This suggests that the share of total investment directed towards OpRE sectors will continue to rise over the next three years, as investors target opportunities to allocate capital to fulfil these ambitions.
The primary motivation for increasing exposure to OpRE is the long-term stable income these sectors offer. Returns are supported by the favourable demand and supply dynamics, with many markets across Europe facing housing supply shortages and having rising elderly populations, drivers that are not going to change in the near future.
Which specific sectors are investors targeting?
The range of OpRE sectors that investors are looking to target has broadened in 2026, with all but two sectors seeing an increase in interest. This reflects a growing preference for diversified OpRE strategies, rather than a focus on specific subsectors.
PBSA remains the most sought-after sector for the second year in a row, with 58% of respondents intending to allocate capital over the next three years. However, there has been strong growth in investor interest in Single Family (52%) and Co-Living (50%).
Rising interest in Single Family has already materialised in the UK, where it accounted for 59% of total Build to Rent investment in 2025. We are also seeing increased appetite for the sector across other European markets, evidenced by DFI and Everlast launching a €500m Single Family platform in Denmark at the end of last year, and Goldman Sachs and PSP Investments forming a €1.2 billion JV to invest in Single Family housing across Germany.
The resurgence of interest in Co-Living, which only 35% of investors listed as a target sector in 2025, is likely to be linked to the recent increase in delivery of schemes across Europe that are proving the concept, coupled with significant investments from Greystar and Stoneshield in the last 12 months.
Investor appetite for Care Homes and Senior Living continued to strengthen in 2026, building on momentum seen last year. The sectors have some of the strongest structural tailwinds across Europe and present a significant opportunity for investors who are able to successfully navigate the operational environment.
Investor interest increased across all Hotel subsectors, with Serviced Apartments remaining the most sought‑after for the third consecutive year.
Expanding Geographical Appetite
When investors were asked where in Europe they plan to target, they identified the UK and Ireland as their top priority for the next three years, continuing a trend we have observed since 2023.
Pan‑European strategies have become a higher priority in 2026, ranking as the second most targeted regional approach. This reflects a broader shift over the past year, with investors seeking exposure to OpRE sectors across multiple geographies.
Notably, there has been growth in investor appetite for the DACH region (Germany, Austria, Switzerland), which has become the third most sought-after region, having slipped to fifth last year. This trend is most evident in the Senior Living and Affordable Housing subsectors.
Ambitions to deploy significant capital
Our survey reveals that respondents are looking to invest c.€45 billion over the next three years across the OpRE sectors. Three-quarters of this capital is targeting the Living sectors, with PBSA expected to see the greatest inflow of capital. Care Homes are anticipated to see the second largest inflow, rising from fourth last year, and signalling continued recovery after a challenging period in the early 2020s.
This is the first time Multifamily hasn’t been at the top of the list in terms of expected capital allocation, instead falling to joint third place alongside Single Family. The Multifamily market is one of the most mature of the OpRE sectors across Europe and is the sector in which the highest proportion of respondents already have exposure. This, combined with challenges facing urban development, is likely leading investors to explore alternative OpRE sectors.
Co-Living is also poised for strong growth, with investors looking to deploy c.€4.5 billion over the next three years, almost double the amount expected from respondents last year. This is a welcome trend for the sector and will support a growing number of opportunities we expect to come to market through 2026, to both fund new developments and purchase operational platforms.
Across the Hotel sectors, lifestyle and luxury have the highest forecasted allocations over the next three years, with over €4 billion of planned investment by respondents.
The €45 billion of planned investment over the next three years will support continued recovery in overall investment volumes. Around two-fifths of respondents expect to be most active in 2026, while more than half anticipate peak activity in 2027. This suggests that 2026 will continue the steady rebound from the 2023 low point, with 2027 then likely to deliver a more pronounced uplift in investment activity.
Fundraising
The fundraising environment has been challenging across all real estate sectors, including OpRE, in recent years. However, the outlook is expected to improve in 2026, with over three-fifths of respondents to our 2026 survey believing we will see improved fundraising conditions. This more positive environment will support investor ambitions to increase exposure to OpRE assets and sustain the recovery in investment activity.
When asked which strategies would be easiest to raise capital for, the most common response was "Value-Add" (42%), followed by "Core+" (31%). A rise in Value-Add capital suggests more equity to target development or repositioning opportunities. These strategies will be supported by the improving backdrop for development, namely through the slowdown in the rate of build cost inflation across many parts of Europe.
A minority of respondents (16%) expect to be able to raise Core capital, which has been largely absent from fundraising markets in recent years. If this comes through, there will be a growing pool of capital targeting stabilised operational assets, providing an end buyer for existing investors who have been developing platforms and portfolios in recent years.
The expectation that Core+ and Value-Add strategies will be the easiest to raise capital for aligns with the spread of expected returns for stabilised Multifamily assets over the next three to five years. Over half (56%) of respondents expect to see unlevered total returns of over 8% per annum, which is slightly up on 2025 and remains well above expectations in 2023. However, there has been a rise in the proportion of investors who expect returns of less than 6% per annum (20%), the highest level since 2022. This could reflect the investors who told us they expect to be able to raise and deploy Core capital over the period.
Routes to Market
When asked about their preferred routes to market, over half of the respondents (58%) indicated a preference for direct private market investment or joint ventures.
However, 2026 has seen a notable resurgence in investor appetite for accessing OpRE sectors through Funds, with 23% listing funds as their preferred route, up from just 8% in 2025. This increase will further support fundraising activity in 2026 and allow investors to gain exposure to OpRE sectors without building the infrastructure required to manage and operate direct investments.
There was also a large minority of respondents who are looking specifically at Debt strategies to gain exposure, with 19% of all respondents listing debt (direct private, direct listed or direct public debt) as their preferred route. This is up from 11% in 2025 and has been driven by a rise in those looking to use listed market and public debt to gain exposure.
Barriers to investment
It is clear that there is significant ambition among investors to increase their exposure to OpRE sectors. However, there are a number of challenges that investors will need to navigate in order to realise this expansion.
Rent regulation has been the most pressing concern for investors for the past few years, and this remains the case in our 2026 survey. However, the challenge of rent regulation varies across markets. Notably, investor interest and activity have increased in regions where there have been clarifications on rent regulation.
Uncertainty around potential changes to rent regulation tends to be more detrimental to investor sentiment than the regulation itself, as investors can price in an appropriate level of risk once regulation has been finalised. The passing of the Renters’ Rights Act in England, along with clarifications on BtR exemptions in Scotland and revisions to rent controls in Ireland, has provided greater certainty. As a result, investors can now make an informed decision about whether they are comfortable investing in these sectors, which may lead to increased attention on the Scottish and Irish markets.
Access to stock and the ability to scale platforms has risen to the second‑most cited concern in 2026. This can be especially challenging in some of the more nascent OpRE sectors, which are reliant upon development to create investable stock. However, easing concerns around the cost of development debt suggests that conditions are improving.
As cost inflation has eased over the past year, there has been a fall in investors’ concerns around operating costs: in 2025, they were the fourth highest concern for investors, but now rank as the lowest concern.
Conclusions
Investment into European OpRE sectors continues to rise, accounting for close to two-fifths of total real estate investment in 2025.
Our 2026 European Investor survey indicates that this trend is set to continue, with our respondents looking to deploy more than €45 billion of capital over the next three years.
- Investors are continuing to diversify across the OpRE spectrum. PBSA remains the most sought-after sector for the second year in a row, but there has been strong growth in interest in Co-Living, Single Family, Senior Living, Care Homes and Serviced Apartments.
- The fundraising environment has been challenging in recent years. But the outlook is set to improve in 2026. Investors expect that Value-Add and Core+ strategies will be the easiest to raise capital for. This more positive environment will support investor ambitions to increase exposure to OpRE assets and sustain the recovery in investment activity.
- 2026 has seen a notable resurgence in investor appetite for accessing OpRE sectors through Funds. This increase will further support fundraising activity in 2026 and allow investors to gain exposure to OpRE sectors without building the infrastructure required to manage and operate direct investments.
- Access to stock and the ability to scale platforms have become more pressing concerns for investors in 2026. This has been heightened by the challenging environment for development across Europe; however, there are signs of improvement with the rate of build cost inflation easing.