The latest Emerging Trends in Real Estate®: Europe 2026 report, published by PwC and the Urban Land Institute, offers a comprehensive view of the macroeconomic environment, investment priorities and the structural forces shaping real estate markets.
For 2026, the outlook shifts from broad based optimism to more selective deployment of capital, driven by realism, with investors continuing to favour targeted, sector led strategies. The report identifies ten “Sectors to Watch” where activity, capital and opportunity are expected to concentrate over the coming year. These fall broadly into four key sectors: infrastructure, living, education and healthcare.
In this article, Danielle Hudson explores what the year ahead may hold for each of these sectors in the UK real estate market, drawing on insights from our built environment specialists.
Infrastructure with Mark Grossman
Infrastructure and data centres continue to lead the “Sectors to Watch” rankings, driven by accelerating demand for digital capacity, AI enabled services and secure data storage. This momentum shows no sign of slowing as organisations across every industry race to modernise their digital infrastructure and strengthen resilience.
Power availability remains the sector’s biggest constraint, prompting deeper exploration of on site generation, grid enhancing technologies and innovative heat reuse partnerships that can unlock additional capacity. London will remain the dominant focus, but rising costs and mounting pressure on land and energy supply are pushing investors and operators to look more seriously at regional hubs such as Manchester, Slough and the Thames Valley, where development conditions are increasingly attractive.
Investor appetite remains strong and overall, the infrastructure sector seems poised for sustained growth, continued capital inflows and continued strategic importance across the built environment.
Living with Emma Purton and Namita Matkar
The “Sectors to Watch” rankings are dominated by living sector real estate, led by later living, co living, affordable housing, student housing and serviced apartments.
The later living sector is set for continued consolidation, following major moves such as the Audley–Elysian merger, signalling confidence in scaled operational models. Mid market rental products, including schemes similar to Audley’s Mayfield brand, will keep gaining traction, though operators may pause to assess the implications of the Renters’ Rights Act on viability and consumer protections. Strengthening consumer confidence will be critical to driving sales and unlocking growth across the market.
The affordable housing sector is expected to see increased reliance on strategic partnerships between councils, registered providers, housebuilders and institutional investors as funding and regulatory pressures persist. Compliance and safety obligations are likely to be the focus of asset management strategies. Regeneration is expected to move higher up the agenda in 2026, supported by greater flexibility under the new Social and Affordable Homes Programme and increasing devolution, with mayoral influence on placemaking likely to help overcome historic complexity and political sensitivity.
Education with Robbie Turner
Last year was a year of transformation, challenge and opportunity for UK universities. Institutions faced rising estate costs, ageing infrastructure, and evolving income streams, while energy and property expenses climbed sharply. At the same time, shifts in student enrolment both domestic and international added financial pressure.
Yet these challenges are sparking innovation. Over the next 12 months, many universities will seek to reimagine and right-size their campuses, by creating multi-functional spaces for hybrid learning and social engagement, disposing of underused areas, and seeking to retrofit historic buildings to meet ambitious sustainability goals.
Collaboration will be key. Public-private partnerships are set to play a major role in funding and delivering capital projects, while anticipated further mergers and partnerships in the sector will accelerate the disposal of surplus land and a greater shared delivery and occupation of projects.
Investment in purpose-built student accommodation remains strong, driven by demand in many regions. However, with overseas student numbers softening, investors will adopt a sharper focus on institutional strength and growth potential ensuring a more strategic, targeted approach to future development.
Healthcare with Michael Whatley
Healthcare real estate remains a priority sector in 2026, supported by Europe’s ageing population, sustained demand for care provision and the defensive, long income characteristics of healthcare assets.
In 2026, the UK healthcare real estate market will continue to be shaped by demographic changes, pressure on public funding and caution from private sector investment. Demand for quality community-based assets such as GP surgeries, diagnostic hubs and outpatient centres remains strong, driven by NHS estate rationalisation and an ageing population.
For the right product investors remain for leases backed by an NHS covenant. Sustainability and energy efficiency have become critical to asset value, and upgrading of existing stock will continue to increase. NHS trusts will continue to explore alternative ways of delivering hospital modernisation and redevelopment given the ongoing frustrations with the New Hospital Programme and may consider alternative procurement routes to engage with private developers to accelerate delivery of modern, flexible healthcare facilities.
Conclusion
The “Sectors to Watch” rankings reinforce a clear shift towards targeted, needs based and operational real estate with infrastructure, living, education and healthcare firmly at the forefront of predicted market activity. In the UK, while each sector presents its own opportunities, they are united by increasing regulatory complexity, funding challenges and the need for substantial operational expertise. As 2026 unfolds, it will be instructive to see how closely these predictions translate into market activity and investment outcomes.
If you would like to discuss any of the themes highlighted above or explore how these trends may impact your assets or business, please do get in touch with Danielle Hudson or the relevant sector specialists mentioned in this article.
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