The residential sector continues to gain ground as a property investment class, attracting €59 billion in 2025. This is the highest figure since 2023 and is expected to continue growing, with most institutional investors anticipating an increase in their exposure to the sector over the next five years.
The data comes from Cushman & Wakefield and was compiled as part of its latest survey of European institutional investors, which highlights the growing involvement of institutional capital in the residential sector.
According to this barometer, around two-thirds of respondents currently allocate 20% or more of their portfolios to residential assets, and 96% expect to increase this exposure by 2031.
For 74% of investors, the stability of returns continues to be cited as the main factor driving the sector’s appeal, supported by robust demographic trends and consistent demand across all market segments. Looking at investment targets, the private rental market (PRS) and Build-to-Rent (BTR) continue to lead the interest of these players, followed by student accommodation (PBSA). At the same time, as investment strategies become more diversified, other solutions such as affordable housing or co-living are also attracting growing interest from investors, notes the consultancy.
“What stands out most in this survey is the consistency of investor confidence. Allocations are increasing, strategies are expanding and investment in housing is becoming increasingly structurally integrated into portfolios,” notes Patrick Hogan, Head of EMEA Living Capital Markets at Cushman & Wakefield. And, “the sector’s strong performance in 2025 has clearly reinforced that conviction,” he says.
According to Cushman & Wakefield, in 2025 the UK and Germany accounted for 66% of European residential investment, which, it should be noted, reached €25 billion. Spain joins them in the group of most attractive markets, with Ireland now ahead of France in the next group of preferred countries.
Looking ahead, more than half of respondents do not anticipate any changes in interest rates over the coming year, whilst 48% expect prime residential yields to remain stable. With expectations of yield compression easing, investors believe that, going forward, rental growth and improved operational efficiency will be the main drivers of the sector’s performance.
In 2026, the PRS/BTR segment is tipped to be the best-performing segment, ahead of the PBSA. Meanwhile, a shortage of opportunities, the continuing price mismatch between buyers and sellers, and political and regulatory risks are the main challenges identified.
Stabilised assets remain the investment priority, with almost half of investors indicating that between 80% and 100% of their active portfolios consist of this type of asset.
Joint ventures and direct acquisitions of stabilised assets are expected to be the main routes into the market over the next three years. Forward funding and forward purchase models, however, are likely to remain more limited, with the exception of emerging markets such as Belgium, Italy, Poland and the Czech Republic, where institutional supply is only now beginning to gain scale.
As for Portugal, the institutional residential investment market is still virtually non-existent or of little significance, with the best opportunities currently centred on the PBSA segment. “In Portugal, student accommodation entered 2026 on a very solid footing, underpinned by limited supply, growing demand and increasingly strong institutional interest. This context makes the market particularly attractive to investors focused on stable long-term returns. Meanwhile, the build-to-rent segment remains underdeveloped, but the recent tax framework could be a key catalyst for its future growth,” says Alvaro Forero, Head of Alternatives & Living at Cushman & Wakefield.
