- Residential and modern living are the preferred real estate sectors as investors seek more resilient cashflows in the face of geopolitical and economic headwinds
- Infrastructure allocations continue to rise, led by energy transition and digital infrastructure
- Pan-European investment expertise and local market capabilities gain importance in a more fragmented geopolitical environment
Augsburg, London. 7 July 2026. A new investment cycle is underway in real assets as higher financing costs and geopolitical uncertainty encourage institutional investors to deploy capital more selectively, with the strongest conviction focussed on residential living sectors and infrastructure, according to PATRIZIA’s sixth annual global investor survey.
The benchmark survey of real assets markets, representing close to EUR 1 trillion in capital, suggests that conviction is returning in sectors supported by resilient demand, long-term structural trends and stable cashflows. Residential and modern living remain the preferred areas within real estate, while infrastructure continues to attract growing investor interest, particularly in sectors linked to energy resilience and digital infrastructure.
Residential and living sectors remain in focus
Residential and modern living segments (e.g., Affordable housing, Student housing, Senior housing, Nursing Homes, Co-living) remain the strongest areas of conviction, with 77% of respondents identifying these sectors as the areas they plan to expand most over the next five years. Traditional residential apartments ranked as the most attractive living segment overall (40%), followed closely by affordable housing (34%).
The survey also highlights continued investor focus on operational value creation. Refurbishment and brown-to-green initiatives remain key priorities as asset owners seek to modernise portfolios, improve building performance and future-proof assets against changing regulatory and occupier requirements.
This preference for resilient sectors is also reflected in continued demand for defensive investment strategies. Around two thirds of respondents plan to increase allocations to Core and Core+ approaches, reflecting a continued focus on income resilience and asset quality in a more selective market environment.
Financing conditions continue to shape investment decisions. Seven in ten investors expect financing costs to increase over the next two years, reinforcing a more disciplined and selective approach to capital deployment across real estate markets.
Mahdi Mokrane, Head of Fund Management Real Estate at PATRIZIA, commented: “There is a clear willingness among investors to move from strategy into execution again, although deployment remains selective and carefully calibrated to risk. What’s striking is that across many parts of European real estate, fundamentals have held up better than market sentiment over recent years. Investors are looking for sectors where long-term demand remains strong and cashflows are resilient. That’s why residential and modern living continue to stand out - structural undersupply, together with changing demographics and the need for modern housing, create compelling opportunities for long-term capital.”
Infrastructure conviction remains strong
The survey also points to continued long-term confidence in infrastructure as investors seek exposure to structural growth drivers and resilient income streams.
Almost half of respondents plan to increase their infrastructure allocations over the next five years, up from last year, underlining continued institutional appetite for long-duration infrastructure investments (45%).
Energy transition remains the strongest area of investor interest, with 41% planning to increase exposure to the sector. Digital infrastructure also continues to attract significant attention, while social infrastructure recorded a notable increase in investor interest compared with previous years (17% versus 2% in 2025).
Investor sentiment towards infrastructure market activity remains positive. Nearly three quarters of respondents expect transaction activity to increase over the next two years, supported by ongoing demand for assets linked to digitalisation, decarbonisation and the modernisation of essential infrastructure (73%).
While return expectations have become more measured as financing conditions tighten, infrastructure continues to be viewed as one of the most attractive long-term allocation opportunities within real assets.
Phoebe Smith, Head of Infrastructure Fund Management, Europe, at PATRIZIA, said: “The energy transition is increasingly a resilience story. Investors are looking beyond generation capacity alone and focusing on the infrastructure required to strengthen energy security and support more decentralised systems. The same is true in digital infrastructure, where localised investment is becoming increasingly important as demand for resilient and distributed networks grows across Europe. We believe this favours managers with genuine local expertise because many of the most attractive opportunities are not large-scale projects. They are embedded in local economies and require an understanding of how infrastructure is evolving at a regional level.”
Geopolitical fragmentation increases focus on Europe and local expertise
The survey also highlights how geopolitical uncertainty is increasingly shaping institutional capital allocation decisions.
Around 85% of respondents said geopolitical volatility is having a moderate or significant impact on their real asset portfolios. Against this backdrop, investors are becoming more selective not only by asset class, but also by geography and investment partner.
Europe continues to strengthen its position as an attractive destination for long-term capital deployment. Nearly one in four investors (24%) plan to increase their exposure to Europe over the next three years, while only a small minority (4%) expect to reduce allocations, reflecting demand for stability, institutional quality and long-term structural investment opportunities.
At the same time, local market expertise and operational execution are becoming more important differentiators when selecting investment managers. Dedicated local teams and strong European market expertise were identified among the most valued characteristics investors seeks from investment managers, with more than 80% of respondents highlighting both capabilities as important selection criteria.
The findings also underline continued investor focus on long-term structural drivers including digitalisation, energy transition and living-related investments, despite broader macroeconomic and geopolitical uncertainty.
Konrad Finkenzeller, Head of Client Division at PATRIZIA, said “Investors today are far more selective, by geography, sector and investment partner. Rather than broad market exposure, many allocators are increasingly looking for targeted exposure and managers with genuine local market expertise. Europe continues to strengthen its position as an attractive destination for institutional capital, supported by long-term structural demand, deep urbanisation trends and a highly institutional investment environment.”
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PATRIZIA
PATRIZIA has been providing investment opportunities in smart real assets for institutional, semi-professional, and private investors for more than 40 years, focusing on real estate and infrastructure. PATRIZIA’s investment solutions are driven by the “DUEL” megatrends - Digital, Urban, Energy and Living transitions - and capitalise on the opportunities arising from these transformative global shifts. PATRIZIA currently has approximately EUR 56bn in assets under management (AUM) and employs around 800 professionals across 26 locations worldwide.
PATRIZIA has been committed to making a positive impact since its founding. In 1992, the company began collaborating closely with Bunter Kreis (“Colourful Circle”) in Germany to provide aftercare for children with severe diseases. Since 1999, the PATRIZIA Foundation has provided 800,000 children and young people worldwide with access to education, healthcare and a safe home, enabling them to live better, self-determined lives.
For more information, visit www.patrizia.ag and www.patrizia.foundation.