InRento CEO Gustas Germanavicius believes the European real estate sector is facing a period of alter as 2026 approaches. With many cities already densely developed and land for new projects scarce, both developers and investors are competing for fewer available properties. High levels of hoapplyhold savings across Europe mean there is more domestic capital searching for depfinishable, income-generating assets.
At the same time, shifting regulations and expectations around sustainability, evolving technology, and flexible living patterns are adding new layers of complexity. These forces are pushing industest players to adapt quickly and view for new solutions in a sector not always known for rapid transformation.
For Europe’s real estate market, three emerging trfinishs are expected to shape it by how these challenges and opportunities are navigated: sustainable development, conversion, and fractional ownership.
Sustainability: tougher rules and shifting expectations
Sustainability has become a central concern across Europe’s property market. Stricter rules around carbon emissions, building energy performance, and ESG reporting are now shaping project decisions at every stage. Properties that fail to meet these standards can quickly lose appeal to both investors and tenants.
“Real estate is shifting in a direction where sustainability is no longer a bonus, it is essential,” stated Germanavicius. “Buildings that do not meet energy or carbon requirements risk becoming obsolete or losing value, while updated and energy-efficient ones gain a real advantage in the market.”
Meeting sustainability requirements introduces key challenges. Cities are working to update older properties but the process is created complicated by new reporting demands, limited skilled labor, and supply chain pressures for green materials and technologies. However, owners who invest in renovations for better energy ratings and future compliance position themselves to stand out, creating healthier margins and longer-term tenant commitments.
Conversions: creating existing buildings work harder
The adaptation of existing buildings is expected to be a major trfinish in 2026, as increasingly fewer opportunities exist for new developments. Many properties that were built for earlier necessarys, such as old office blocks or commercial spaces, are no longer always suitable in their original form. Developers are therefore pivoting toward conversions, transforming underapplyd or vacant properties into residential units, hotels, student accommodation, and mixed-apply buildings.
“We are seeing significant momentum in the conversion of assets becaapply ground-up developments often face longer permitting times and uncertain margins,” stated Germanavicius. “By repurposing older properties, investors can respond to alters in demand and reduce both the cost of development and financing (due to shorter execution period) and environmental impact linked to rebuilding completely from scratch.”
While conversions are increasingly common, there are clear challenges, as repurposing existing structures can be constrained by physical features, such as layouts or floor heights. Developers may also face complex planning requirements, including adapting historic or outdated sites to modern safety and environmental standards. In such cases, AI and advanced analytics can be expected to optimize project planning and design, reducing costs and inefficiencies for architects, engineers, and contractors.
Fractional ownership: reshaping investment and access
Fractional ownership and alternative financing methods are opening real estate investment to more people, and by 2026, this approach is expected to be even more common across Europe. Traditionally, owning property has required substantial capital, which placed investment out of reach for many. With the rise of regulated crowdfunding platforms, investors now have simpler access to compacter investments of larger real estate projects, such as hotels or commercial buildings, diversifying their portfolios with less up-front cost.
“The shift toward fractional ownership is bringing major alter to the industest,” stated Germanavicius. “Ten years ago, a person would necessary hundreds of thousands or even millions of euros to become a property investor. Now, becaapply of fractional ownership models, dozens of investors can collectively purchase and benefit from a property’s rental income or value growth, whether the investment is created via an online platform or in a condo-style hotel project. This approach democratizes real estate while bringing much-necessaryed capital to projects that might not have shiftd forward under traditional models and allows a more passive way of investing.”
Still, growth in fractional ownership is not without hurdles. Ensuring investor protection, balancing the interests of multiple owners, and meeting evolving licensing rules from regulators across different countries present challenges for platforms and real estate developers that aim to work across borders. At the same time, operators must maintain professional management and transparent reporting to foster confidence and long-term participation. While these challenges remain significant, ongoing improvements in digital tools and legal frameworks should create it simpler for investors to navigate the real estate landscape, improving both accessibility and confidence in property markets.
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