Real Asset Media Thought Leaders

Europe’s data centre market is rapidly evolving into one of the most dynamic areas of real estate investment, shaped by digital transformation, geopolitical pressures and shifting stakeholder expectations, according to Thomas Veith, global real estate leader at PwC. Speaking at Mipim 2026 in Cannes in an interview with Richard Betts, group publisher of Real Asset Media, Veith said the sector has emerged as a clear focal point for investors seeking long-term structural growth. “People are looking for what the opportunities are. And as we have seen from our roundtable, data centres are of course the hottest thing, it seems,” he said. He linked the surge in interest to a broader transformation of the digital economy, with demand for infrastructure accelerating across Europe. Alongside this, geopolitical tensions are increasingly shaping investment decisions, particularly around data sovereignty. “One important topic that’s coming on top, driven by the geopolitics, that’s about sovereignty in Europe… we [will] need more local infrastructure here in Europe,” Veith said, adding that this is reinforcing demand beyond pure digitisation trends. While data centres have become a top investment class over the past three to four years, Veith stressed that the European market differs structurally from the US. Rather than being dominated by hyperscale developments, Europe is seeing a more diverse and fragmented landscape. “The range of data centre that we are seeing is really multiplying. It’s not just a hyperscaler… Europe is not such a hyperscaler market,” he said. Instead, growth is being driven by a mix of cloud providers entering the market, as well as facilities designed specifically for AI-led workloads. Co-location assets remain central, but the range of developments is broadening as demand diversifies. Sustainability considerations are also reshaping how and where data centres are built. Veith noted a clear shift away from large greenfield developments towards repurposing existing assets. “It’s less building the big 100 megawatt sites on green areas. It’s more the alternative use of current existing brownfield assets… like old office buildings,” he said. This approach reflects both environmental pressures and constraints around energy availability, which remain critical to development decisions. At the same time, the stakeholder landscape is becoming more complex. Governments, municipalities and local communities are taking a more active role in shaping data centre deployment, often weighing economic benefits against competing land uses. “It’s more, also, the society and the governments that are looking at this… every city is thinking about… what do I get out of the tax? How many jobs does this create?” Veith said. He warned that in some markets, this is leading to increasing resistance, with certain cities pushing back against further data centre expansion. “We see in some parts of Europe that this is a high competition where a lot of cities say, ‘no, we don’t want more data centres currently’. And that’s a bad trend,” he added. As a result, Veith emphasised that successful development will depend not only on securing power and connectivity, but also on managing a broader set of stakeholders. “The stakeholder management has to be widened… we have to also take care of the public, the governments, the local cities that want to have their stake out of the data centre transformation,” he said. The sector’s rapid evolution since Mipim 2025 highlights how quickly data centres have moved to the centre of Europe’s real estate investment narrative, with growth prospects remaining strong but increasingly complex to navigate.

Andreas Walter, partner and attorney at law at German boutique firm Yester & Morrow, says Europe’s real estate market is approaching a decisive turning point as refinancing pressure builds and regulatory reforms unlock new sources of long-term capital. Speaking to Real Asset Media, Walter said prolonged market inertia since 2024 is nearing its end. “In 2026, we are going to see a market movement. We've seen a standstill in the market for 2024–2025 because the refinancing. We had a record high refinancing rate which has not taken place. The can was kicked down the road. The banks didn't refinance. There was no pressure from the banking side on the lenders. We think this is going to shift, because as the first one within the line is going to fall, then it's going to have a huge impact on the overall market,” he said. He explained that lenders have so far been able to defer difficult decisions by relying on existing credit assessments, provided borrowers maintained sufficient cash flow. “There even is a legal reasoning for that, because the banks can prolong on their old assessments, even if it's a soft breach, as long as the capital flow is there,” he said. He warned that this flexibility is now fading. “Now, once that changes, they need to go into a new assessment. We think 2026 is going to be the year when, for the first time, there's going to be pressure from the banking side on the real estate sector to refinance,” he said. Walter also highlighted major changes in Germany’s regulatory treatment of fund structures, which he believes will reshape institutional investment. “Well, from the positive side, on the other hand, what we are currently seeing is a paradigm shift in the way the legislature actually treats the regulation on the fund sector,” he said. He said the reforms will enable pension funds to invest more directly in real estate and infrastructure through joint ventures. “Now, what does that enable? It gives us the chance to actually pool pension money, not only international but also German pension money, with a very direct investment ability from a fund into a JV, into the real estate and the infrastructure sector,” he said. A central element is the removal of long-standing tax risks that previously discouraged integrated investment structures. “Because they are taking away this huge risk of trade tax which was always there, banning people going into sensible economic structures, they had to legally separate them and therefore destroy value within the chain,” he said. He added that legislative reform will support more efficient deployment of capital. “Now, shifting this from the legislative side is going to give us the ability to have a direct investment into infrastructure and commercial activities, which is going to have a huge impact from our perspective,” he said. Walter sees infrastructure-led strategies as central to building more resilient portfolios. “And what is the core type, or the core essence, of infrastructure? It is way less volatile than real estate. So, you've got a steady income stream from the infrastructure,” he said. He argued that combining infrastructure and property investment could help address wider social challenges. “We can combine it with real estate and therefore have a real impact on big questions of the society. Like, how do we live? How do we combine living of the younger and the older generation? And how do we get back to vibrant inner cities?” he said. Environmental performance, he added, will be central to future development models. “Well, if we make them climate neutral, due to the fact that we have got renewable energies, and we can have a direct investment, we combine it with the real estate on which we are building it. It's going to be a win-win for everybody,” he said. Taken together, Walter believes 2026 will mark a transition away from financial forbearance and regulatory constraint towards tighter credit discipline and more flexible capital structures. Whi

Germany’s acute housing shortage, particularly in major cities such as Berlin, is driving growing demand for smaller, more affordable rental homes and reshaping development strategies across the market, according to Matthias Euler, managing director, Germany and Austria, at Greystar. Speaking to Real Asset Media at EXPO Real 2025, Euler said: “I think the German residential market is one of the hottest at the moment in the world. In Germany, we have a huge lack of residential apartments. People are not finding apartments, especially in the metropolitan regions of the top seven, like Berlin.” He added: “Finding an apartment in Berlin is almost impossible.” Explaining Greystar’s response, Euler said: “So, what we do — we have two routes. On the one hand, we construct small micro-living apartments with a big part of amenities that people feel like at home. [They] have a first entrance into a residential market, like in Berlin, before they start to search for a long-term apartment.” He added: “So we are sort of a buffer.” Alongside this, the group is developing more basic housing for long-term residents. “On the other hand, we try to invest into projects which do not have any amenities — no furniture — to allow local people to find an apartment in the long term for lower rents,” he said. “Because we need to ask for rents of €20 to €25 per sq m to cover the construction costs.” Euler said that while these rent levels remain high, they are stabilising. “They are still high, but they’re stabilised,” he said. “We need a bigger lot size for a project to have a sort of a scaling effect that helps us to cover the costs and to use modular construction and prefab construction. And this is how we try to solve the situation.” He also pointed to financing constraints across Europe. “The main driver in Europe is the capital, the missing capital,” Euler said. “So, we see lots of developers who have very good ideas, very nice plots, but not the capital to get the construction done.” He added that this is where Greystar steps in “by capital injections with the global presence of Greystar”. Highlighting the group’s global platform, he said: “We are managing one million apartments worldwide, so we know how to collect equity and to place investors and help them to get invested into Germany. We know how to produce the reporting they are expecting as an institutional investor. So, we are sort of a filter from institutional capital to local presence and local projects.” Greystar’s operational background also shapes its development model. “Greystar is originally a property manager for residential apartments. We know exactly what they need,” Euler said. “So, we always have at least two full-time employees in the asset: the technical asset manager and a community manager.” He added that many schemes require redesign. “If we take a look at a plot, we first check the layouts, because normally they are too big, the apartments. They were planned for build to sell and not for build to rent,” he said. “So, we optimise them, we reduce the square metres, we make more units in one asset than originally planned.” This approach extends to student housing and short-term accommodation. “We also think about PBSA for students, really made for students,” Euler said. “The student has another need. They don’t need 30, 40 sq m in their apartment.” As a result, “for students, we think about 20 sq m for an apartment”, while larger units of 30 to 40 sq m are aimed at business travellers and project-based workers. Euler said this combination of targeted design, capital support, and operational expertise is central to addressing Germany’s housing shortage as development costs and funding constraints continue to weigh on new supply. www.realassetinsight.com www.realassetmedia.com

Commercial real estate lending conditions in the US are beginning to improve, with early interest rate cuts and a gradual recovery in office demand expected to support increased acquisition and refinancing activity through 2026, according to Helga Blum, managing director and head of US real estate finance at BayernLB. Speaking to Real Asset Media at EXPO REAL in October 2025, Blum said the US lending market had endured a prolonged period of disruption following the pandemic but was now showing early signs of renewed momentum. “The commercial real estate lending market has been challenged in the United States as a result of the global pandemic, as we all know too well,” she said. “We’re finally starting to come out of that and are hopeful that the rate cuts that the Federal Reserve has started will actually spur additional activity in the US commercial real estate market, both in terms of acquisitions [and] refinancings.” Blum said the improving monetary environment was underpinning a more constructive outlook for the year ahead. “So overall, I’m quite hopeful for 2026 to be a good year,” she said. Office market performance, however, remains highly dependent on location, with sharp differences emerging between US coastal markets. “The office market is really very dependent on the geographic market that we’re talking about,” Blum said. She noted that several West Coast cities continue to face structural headwinds, with weaker leasing demand and higher vacancy rates persisting in major urban cores. “I think the West Coast markets, for the most part, remain somewhat challenged,” she said, pointing to Seattle, downtown Los Angeles and San Francisco. By contrast, Blum said conditions on the East Coast are improving, led by a recovery in New York City and strong demand for high-quality office assets. “On the East Coast, things are starting to look up, particularly in New York City,” she said. “We see some of the trophy quality office properties doing very well.” She highlighted strong occupancy levels in prime Midtown locations as a sign of renewed confidence in the office sector. “There’s hardly any vacancy in the Park Avenue corridor,” Blum said. “New York City is back, and most firms are mandating their employees to be back in the office four or five days a week, so that has definitely helped the office market.” www.realassetinsight.com www.realassetmedia.com

Indoor air quality is emerging as a commercial and regulatory priority for real estate owners, with growing evidence that combining air quality monitoring with energy management can improve tenant retention, asset performance, and financial outcomes, according to Jan-Kristian Westerlund, chief commercial officer at freesi. Speaking to Real Asset Media at EXPO Real 2025, Westerlund said indoor air quality has historically been under-appreciated in property investment, but is now gaining prominence following the Covid-19 pandemic and Europe’s energy crisis. “It’s a topic that is relatively new, so it needs more awareness,” he said. “However, after Covid and the energy crisis, it has increased in need through regulation.” Westerlund pointed to the revised Energy Performance of Buildings Directive, which will require indoor air quality monitoring and control in non-residential buildings across the EU. He said this regulatory shift has significantly accelerated adoption among property owners and managers. “The new Energy Performance of Buildings Directive is now requiring implementation of indoor air quality monitoring and control in all non-residential assets,” he said. “This has increased the awareness tremendously.” Freesi works with a broad range of real estate stakeholders, from commercial portfolio owners to cities and municipalities, with its technology now used by more than 100 cities. Westerlund said the company’s focus extends beyond data collection to ensuring that insights are understood and acted on across organisations. “It’s about the people adopting, learning how to use the technology, and using it to make improvements for air quality in buildings,” he said. This requires engagement across the entire ownership and management chain, from facilities teams and tenants to asset managers and portfolio owners responsible for financial performance. “We work a lot with the stakeholders, from properties to facilities managers, to the actual tenants, to the asset managers who are commercially responsible for the buildings, and to portfolio owners who make them as financial products,” he said. While indoor air quality monitoring is increasingly driven by regulation, Westerlund said clients remain focused on commercial outcomes. Many landlords are integrating indoor climate management alongside heating, ventilation, and cooling optimisation to ensure that energy savings do not come at the expense of occupant health. “Whenever they’re doing energy management on heating, ventilation, and cooling, they will always implement indoor climate management to bring the safeguard that they never do it [while] compromising the health, well-being, and comfort of the people inside the buildings,” he said. Improved air quality also supports tenant engagement and retention, which Westerlund described as a critical driver of asset-level financial performance. “Through better tenant engagement and satisfaction, the landlords are able to retain their tenants for a longer time,” he said. “This, of course, is critical for the finances of the assets.” On the investment side, Westerlund said decision-making is increasingly data-driven, with financial metrics central to adoption. “Our decision makers are financial decision makers, so they need to see the numbers,” he said. “They need to see the net operating income, how it changes from this. They need to see how long is the payback time for implementing this.” At the same time, freesi also works closely with sustainability teams, particularly where indoor air quality data supports reporting on social and health-related ESG metrics. “This is a perfect way of making it tangible in an area that is otherwise a little bit difficult for real estate managers,” Westerlund said. www.realassetimpact.com www.realassetmedia.com

Falling interest rates should help revive activity across the US commercial real estate market, supporting higher transaction and lending volumes, according to Vikram Killampali, senior director and manager of US commercial real estate finance syndications at Helaba. Speaking to Real Asset Media at EXPO Real 2025, Killampali was taking part in what he said was the first panel hosted in Germany by a US real estate lending organisation, aimed at giving European investors greater visibility on conditions and opportunities in the US commercial real estate market. He said the outlook for interest rates was turning more supportive for deal activity. “Right now, because there's a story about declining interest rates, that should be positive for the commercial real estate market, and that should spur activity, acquisition volume and more loan volume for banks like Helaba,” he said. He said the office sector continues to represent the main area of stress across US commercial real estate lending. “The challenge that I can see is consistent with what we've been experiencing for the past 18 months, which is in the office subsector, where there has been the most distress,” Killampali said. He added that the impact of the pandemic continues to weigh on office markets in many US cities. “After COVID, the office subsector and a lot of markets got hit very, very badly, and that's what caused a lot of loan losses for banks like Helaba and others with an office portfolio,” he said. Despite these pressures, Killampali said he remains positive on the medium-term outlook. “With that said, [I'm] excited about the prospects of commercial real estate industry in the US in the next couple of years.” www.realassetinsight.com www.realassetmedia.com

Heribert Gangl, head of hotels and tourism at Erste Group Bank, said Central and Eastern Europe is entering a new phase of maturity in student housing and serviced living as demand spreads from more established Western European markets. Speaking to Real Asset Media at EXPO Real 2025, he said: "There seems to be good, positive dynamics in student housing and serviced living in CEE now, spreading over from the more established, mature western markets, and these are also the CEE markets where we focus on and are very keen to find new assets in this asset class." Gangl highlighted that institutional activity is reshaping the market as major operators extend their reach across the region. "What we have seen is now that there are a few dominant players building really large, sustainable platforms who are also now expanding in these parts, and this is going to continue, I believe, with a few major brands and owners, as investors are developing this space currently, especially due to student housing." He added that although inflation-led rent growth may begin to ease, demand drivers remain strong. "I think in the last two years this growth has obviously been driven by the overall inflation, the underlying inflation, and with that, the rent increases in the residential market, so I would expect this to slow down with the slowing inflation rates as well." He said: "But overall there's still a good growth perspective in terms of demand and on the rent side for student housing and serviced living products and co-living products, which is very much linked to the local residential market."