Investor sentiment in real estate has fallen sharply, according to the latest research from the European Association for Investors in Non-listed Real Estate Vehicles (INREV).
The March INREV Consensus Indicator fell to 54.7, down from an all-time high of 59.4 in December 2025, as recent geopolitical developments “prompted a sharp reassessment of near-term expectations”.
The results, gathered from 35 organisations, comprising 11 investors and 24 fund managers, suggest that a return of trade tariffs, shifting US foreign policy, and escalating geopolitical tensions have forced investors to reprice risk across asset classes, the research found.
The economic sub-indicator dropped to a record low of 42.4, with respondents expecting rising inflation to weigh on performance. Perceived investment risk swung from a net -7% in December to a net 26% in March.This recalibration comes despite INREV’s Q4 2025 Quarterly Fund Index posting its strongest return of the year at 1.24%, and European ODCE funds outperforming both US and Asia Pacific peers for seven consecutive quarters.
Retail makes a comeback
Surprisingly, retail ranked as the most preferred sector at 23% net sentiment, with student housing in second place with net 12%. Senior living, residential and offices followed, at 9% each. Residential’s reading is its weakest since December 2022 and well below its long-term average of 26%. Industrial and logistics turned negative at -3%, while office sentiment improved from -4% in December to 9%, the survey found.
Spain rises; France falls back
Spain emerged as a favoured location, with net sentiment toward Spain reaching 39%, matching the record high of March 2025 and well above the long-term average of 10%. Spain posted the highest total return of any market in Q4 at 2.69%, driven by retail returns of 4.73%. Italy and Portugal retained positive sentiment at 9% and 3%, respectively.
France recorded the weakest net sentiment at -15%, the lowest since the survey began. Germany and the Nordics held ground, both with net sentiment of 15% this March.
Financing improves
INREV said financing was the only subindicator to improve, albeit slightly, edging up to 70.4 and the only reading above 70. The share of respondents reporting improved availability from traditional bank lenders rose to 43%, the highest since tracking began, with alternative lender sentiment still strong at 39%. Almost a third of participants continued to report higher loan-to-value ratios and looser covenant structures on a quarter-on-quarter basis, INREV said.
Iryna Pylypchuk, director of research and market information at INREV, said: “Underlying market conditions haven’t changed – Q4 delivered the strongest returns of the year, and letting and operations, and financing conditions remain the most resilient of all the subindicators.
“What has changed is the external context, and the speed with which that has fed through into sentiment is striking. A record low on the economic subindicator within a single quarter indicates just how quickly confidence can shift when geopolitical uncertainty enters the equation.
“To what extent this will dampen economic growth, disrupt interest rate path and trigger inflation will hold the clue if this is a temporary recalibration or whether it becomes the trigger for a more substantive and sustained reassessment of the European real estate investment landscape.”
The INREV Consensus Indicator is a diffusion index, designed to measure the direction of trends in the European non-listed real estate market. The purpose of the indicator is to provide both backward- and forward-looking insights to decision makers, investors, market analysts and asset allocators, and to become the leading indicator for the sector.
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