AEW has released its 2026 Mid-Year European Outlook. The report highlights that the long-term recovery in prime European real estate is expected to withstand the impact of the conflict in the Middle East, remaining on track as solid income yields and forecast rental growth provide resilience over a five-year investment horizon.
The latest European gross domestic product (GDP) growth forecasts anticipate an impact from the Middle East conflict of just 10 basis points per year for 2026-2030, with a limited effect on long-term inflation and bond yields by year-end 2030. AEW’s base-case scenario assumes 1.5 percent GDP growth per year in 2026-30, while the downside scenario, which can be assumed to reflect a potential prolonged conflict in the Middle East, results in significantly lower, but not recessionary GDP growth of an estimated 0.7 percent in 2026-30, along with higher inflation and bond yields.
“The European real estate sector continues to demonstrate
