In 2026, the “Living” sector—comprising multifamily housing, student accommodation, and senior living—has officially matured into a core asset class across Europe. This sector now dominates investment rankings, often outperforming traditional office and retail allocations. The driver is simple: structural demand. Across the continent, apartment rents are rising in line with, or even exceeding, income growth due to an ongoing low supply and the increasing professionalization of the rental market.
Spain and France have emerged as prime examples of this trend. In Spain, “Flex Living” and student housing are attracting record levels of capital as investors seek to capitalize on the housing shortage in cities like Madrid and Barcelona. In France, the student housing sector remains heavily undersupplied, providing a defensive hedge against economic volatility. PGIM Real Estate forecasts that the “Living” sectors will deliver some of the strongest total returns in 2026, supported by positive income growth and modest yield compression as liquidity returns to the market.
This sector’s success is deeply tied to the rise of Operational Real Estate (OpRE). Investors are no longer just landlords; they are service providers. High-quality assets that offer amenities, high-speed connectivity, and community-focused management are commanding significant rental premiums. Furthermore, the residential sector is increasingly viewed as a key beneficiary of the energy transition. Sustainable housing that minimizes utility costs for tenants is not only more liquid but also more resilient to the rising “brown discount” affecting older, inefficient buildings.
Looking ahead, the “Living” sector is also benefiting from a shift in financing. As the EBA guidelines take effect in 2026, residential projects with strong energy ratings (EPC A or B) are finding it easier to secure “green” financing with preferential margins. This synergy between social need, environmental performance, and institutional demand has made “Living” the most reliable growth story in European real estate. For the remainder of 2026, we expect to see even more capital reallocated from secondary offices into specialized housing as investors prioritize assets with high occupier “stickiness” and clear long-term utility.
Commentary from M24 SunShine Investment Division:
Europe’s “Living” sector has moved decisively into core territory in 2026, driven by structural undersupply and resilient occupier demand across multifamily, student housing, and senior living. As rental markets professionalise, returns are increasingly shaped by operational excellence—where investors act as service providers, and amenity-led, community-focused assets command a premium. The energy transition is further strengthening the sector’s appeal, with efficient housing proving more liquid and less exposed to the growing “brown discount.” With EBA-aligned risk frameworks now influencing credit decisions, high-rated residential stock is also gaining access to preferential green financing. The result is a clear reallocation trend: capital moving out of secondary offices and into specialised housing with durable income and long-term relevance.
