Emerging Trends in Real Estate

Industry leaders across the US, Europe, and Asia are in agreement: data centres are the number one opportunity for 2026. But there is more to the asset class than simple funding needs. Morgan Stanley estimates that global spending on data centres will reach US$3 trillion between now and 2028¹.

Driving data centre demand is the emergence of artificial intelligence. The top five big tech companies will spend about US$660 billion on AI build out in 2026, up 60% from last year. With huge amounts of capital required over the coming years, even the biggest balance sheets are likely to be put to the test².

The risks of investments going very well—or very badly—are not lost on real estate leaders. “The biggest risk is that all these developments are very large—where does the take-out capital come from?” asks a real estate banker. “On the other hand, the numbers are so huge, you do two or three of these deals and you’re done for the year.” 

There are also operational risks to consider, including the potential for obsolescence associated with technology advancement, binary leasing risks, rising carbon emissions, uncertain grid impacts, and the relative immaturity of the transactions market, all of which present challenges. 

An increasingly nuanced environment is reflected in the stock market performance of AI-related companies, which have seen significant equity volatility over recent months. Bank analysts point to higher levels of investor differentiation and growing concern over disruption to existing business models. The real estate industry is not exempt from these concerns. In choppy investment waters, expert navigation will prove its worth.  

_{¹ Morgan Stanley. Who will fund AI’s $3 trillion ask?. July 2025.
² Tech AI Spending may approach $700 billion this year, but the blow to cash raises red flag. CNBC. February 2026}

Retail investments are back on investor shopping lists, as the sector benefits from significant repricing and a shortage of supply. In the UK, retail was the best-performing sector for parts of last year, generating total returns of 9.2% by the third quarter, while Asia Pacific continued to offer opportunities driven by population and income growth. In the US, active shopping centres (excluding regional malls) saw the strongest valuations in a decade. 

The upturn in retail comes after a long period of challenging market conditions, which were exacerbated during the pandemic. But that story of underperformance set the scene for a more positive narrative, supported by leaner product offerings and more attractive returns on capital. “Retail has become investible again and is probably the most interesting sector of all,” says a US-based investment banker. 

In 2025, global retail transaction volumes rose by 7% to US$125 billion, even as they were restricted by supply side constraints. Even so, investors remained selective, with the primary focus on a narrow band of “necessity-based” opportunities, including neighbourhood-level convenience stores, grocery-anchored centres, and small-footprint retail formats. In the US, open air retailers tended to outperform closed malls. 

Financing markets saw some standout deals. In December, Bain Capital, and 11North Partners raised US$1.6 billion for a joint venture targeting high quality and value-add grocery-anchored centres. In the UK, investors reported a growing trend of grocery retailers buying back stores, prompted by attractive pricing relative to rental values. Meanwhile, around the world, retail segments including fashion and household goods moved to strengthen their store portfolios, as physical shopping reasserted its credentials against online. In Europe, prime rents reached 11% above their pandemic lows. 

As retail rediscovers its spark, investors caution against exuberance. Countervailing factors include a lack of development volumes, with high construction costs and slow permitting timelines likely to weigh in 2026. That said, decision makers are confident that the flight-to-quality trend will reward those who can acquire successful locations with proven footfall and robust spending patterns.

Once seen as a vanilla asset class, real estate is set to accelerate its transformation into a multi-faceted ecosystem, characterised by converging domains, deepening investor sophistication, and overlapping dynamics across public and private markets. The transition is echoed in increasingly diversified funding resources, global (rather than local) investment flows, and the growth of complex financial structures, all creating new demands on strategy and risk management. 

Driven by pension reforms, tech concentration in listed markets, and the demands of rising longevity, institutional investors have deepened exposure to private markets, direct investments, and private equity-style platforms. Pension funds, insurers, sovereign wealth funds, and alternative asset managers now deploy capital at a breadth and scale unimaginable 20 years ago, with real estate increasingly positioned alongside infrastructure, private credit, and private equity. 

A new trend is the rising influence of private wealth. In Europe and the US, private equity, family offices, high-net-worth individuals, and private local investors are increasingly prominent sources of funding. In APAC, the trend is even more pronounced, with expanding family offices, private banks, insurers, and sovereign wealth funds driving inflows. Together, these developments point to a structural shift towards more agile equity funding in the year ahead. 

The fastest-growing segment is “household wealth”, which is retail capital in its broadest sense, directed or influenced by individuals through defined-contribution pensions, insurance wrappers, high-net-worth investment, or family offices. PwC’s latest Asset and Wealth Management Revolution report forecasts that retail assets under management will rise from US$139 trillion today to US$200 trillion by 2030. This type of capital carries its own unique needs, and its growing influence demands a dedicated industry response, including a greater focus on education, compliance, and more sophisticated reporting. 

Exactly how this will play out is unclear, but the changing nature – as much as the volume – of capital flowing into real estate is undoubtedly important to its evolution, alongside the shift towards operational assets, the increasing overlap with infrastructure, and the impact of technology and decarbonisation challenges .