Knight Frank’s European Outlook 2026: A Clear View of What’s Next for Europe’s Property Markets

Knight Frank has released its European Outlook 2026, an annual review that brings together insight from its Residential and Commercial research teams. The report explores the forces shaping Europe’s real estate landscape as confidence begins to return across the region. For anyone active in the property market—buyers, investors, or advisors—it offers a grounded view of what lies ahead.

The Outlook shows a shift in sentiment. Rate cuts are supporting housing demand, investors are reassessing risk, and capital is gravitating back toward Europe’s stability. Southern Europe, including Spain and Portugal, stands out with a stronger rebound in residential activity, while Stockholm leads the 2026 Prime Residential Forecast.

Five themes shaping Europe’s next phase

Knight Frank’s research is organised into five articles, each covering a structural trend influencing the market:

Tailwinds or tailspins?

Europe is moving into 2026 with the first signs of momentum. Rate cuts are breathing life into housing markets, and demand is rising in lifestyle-driven locations across the Mediterranean.

Read more: Tailwinds or tailspins?

What’s really driving Europe’s HNWI influx

Europe remains a top destination for high-net-worth migration. More than 100,000 HNWIs are expected to relocate in 2025, and lifestyle, stability and opportunity weigh as much as tax incentives. Millennials now make up almost half of future relocators, reshaping global wealth mobility.

Read more: Tax Exodus or Lifestyle Upgrade?

Regulation: burden or value-builder?

Policy shifts are redefining market performance.

London’s tax changes have reduced prime sales volumes, and Barcelona’s rental rules have tightened supply. At the same time, places like Chamonix are seeing the benefits of scarcity, where planning restrictions support long-term value.

Read more: Can regulation kill a market or make it more valuable?

Are risk-free rates still risk-free?

Government bonds no longer hold the same certainty as before.

Higher inflation, political pressures and widening deficits have weakened confidence. Commercial real estate, however, has produced resilient long-term returns, prompting investors to rethink where genuine stability lies.

Read more: Are the risk-free rates still risk-free?

Offices: back in business?

The European office market is seeing a bounce in activity, led by cross-border capital. Overseas investment is up sharply, and large transactions are returning, especially in core cities. The shift signals renewed appetite for quality, well-located office assets.

Read more: Are offices back in business?

Why this matters for Marbella

For markets like Marbella, the Outlook reinforces a pattern we see on the ground: steady demand from international buyers strong interest from mobile wealth rising preference for lifestyle-driven locations confidence returning as financing conditions ease Southern Europe’s position as a stable, transparent and desirable destination continues to strengthen, and this reflects in the ongoing appetite for prime homes in the Costa del Sol.

You can explore all five articles  here: https://www.knightfrank.co.uk/research/reports/european-outlook

Pia Arrieta, 28 Nov 2025 - Intelligence