AEW Research's Q2 2026 outlook makes the case that in a higher-for-longer rate environment, property returns will be driven by income growth, capital discipline and market selection rather than yield compression.
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Investment Strategies
Research
Our research based approach is integrated at every level of the investment decision-making process.
Growth is Fundamental
August 2026
Looking Through the Noise: Conviction Returning?
August 2026
As geopolitical uncertainty and higher-for-longer interest rates persist, investors across Asia Pacific are increasingly focusing on fundamentals to identify resilient income and selective opportunities.
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Positive Outlook for Prime Offices Despite Elevated Lease Incentives
July 2026
Over the next five years, office-based employment growth in Europe is expected to slow as the working-age population declines, partly offset by continued urbanisation. AI’s impact remains uncertain: US data is inconclusive, while initial European data points to weaker hiring by tech companies. In the short term, adoption will be constrained by high costs, limited data-centre capacity and sovereignty concerns. Office vacancy rates are expected to fall from a peak of 9% in mid-2026 to 7% by 2030, supported by limited new supply and office conversions. Prime rents are forecast to grow by 3.9% p.a. between 2026 and 2030, although incentives remain high, particularly in peripheral Paris and London markets. Transaction activity has slowed due to higher financing costs and wider bid-ask spreads, but liquidity could recover in H2 2026 if the peace process progresses. Valuations remain bifurcated, with high-quality offices outperforming structurally challenged assets. Overall, total returns are expected to reach 10% p.a. across the 63 covered European markets.
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