European real estate is entering a new phase in which location is becoming as important as sector selection in determining investment returns. Catella’s “House view Autumn 2026” identifies a widening divergence between European cities and groups them into six distinct clusters based on their economic strength and urban attractiveness.
For much of the past decade, successful real estate investment strategies have largely been built around making the right sector calls — particularly “beds and sheds.” Residential has benefited from structural housing shortages and affordability constraints, while logistics has been supported by ecommerce and redefined supply chains. As sector trends become increasingly well understood, the key investment question is shifting from what to invest in to where to invest, making city selection a critical driver of long-term returns.
“European real estate can no longer be viewed as one market moving through a single cycle. Econom
