Q2 2026 Real Estate Outlook: Adjusting to a more uncertain market

Earlier in the year, falling rate expectations and improving liquidity were creating a more constructive backdrop. Since then, geopolitical risk, renewed inflationary pressure and uncertainty over the path of interest rates have reminded investors that the recovery will not be linear.

Our Economics team expects the global economy to remain resilient, but with risks still skewed to the downside. In the UK, inflation is expected to remain sticky, which could push the timing of Bank of England rate cuts further out. For real estate, that matters: confidence is improving in pockets, but the cost of capital remains a live constraint.

That means discipline remains critical. Transaction volumes are still subdued, refinancing continues to account for much of the activity, and buyers and sellers are still testing where pricing should settle. We are seeing pockets of movement, but not yet enough to unlock the market more broadly.

That said, this is not a market without opportunity. The best prospects remain in sectors supported by structural demand, constrained supply and resilient income, including living, student accommodation, logistics and well-located operational assets. For investors and developers with conviction, patience and access to capital, current conditions can still create attractive entry points.

Our view is realistic rather than bearish. The market is adjusting, but confidence will take time to rebuild. Those able to underwrite through volatility and remain disciplined on risk, structure and pricing will be best placed for the next phase of the cycle.