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The Income Era

The next Phase of European Living

For much of the past two decades, Living investors benefited from powerful demographic tailwinds, persistent housing shortages and increasing allocations from institutional capital to the sector.

But our latest research suggests that the drivers of outperformance are changing. While rents have grown consistently across European Living markets, rental growth has not been a strong predictor of recent investment performance. Instead, operational efficiency has emerged as the clearest differentiator. In fact, asset selection had a much larger impact on outperformance than market selection.

As the sector matures, we believe future success will increasingly depend on the ability to generate and protect income through high-quality assets, operational excellence and effective execution.

Five Key Insights

Living has become a core institutional asset class
Growing scale, diversification and liquidity have transformed Living from a niche allocation into a core component of institutional real estate portfolios.
Structural demand remains firmly intact
Population growth, ageing, urbanisation, affordability pressures and greater educational attainment continue to underpin long-term demand across European Living markets.
Income is set to play a larger role in returns
As the market matures, the drivers of performance are likely to become more balanced, with income growth playing an increasingly important role.
Operational excellence is becoming key to unlocking outperformance
Our analysis of recent performance shows that the most efficient assets generated roughly double the income return of the least efficient assets.
Asset selection increasingly outweighs market selection
Our analysis suggests that being in the most efficient cost quartile is a more important driver of income returns than being in the "right" country, reinforcing the growing importance of operational efficiency and NOI growth.

The next phase of European Living investment will be defined less by market-wide yield compression and more by the ability to grow and protect income through high-quality assets, operational excellence and effective execution.

MSCI Sponsorship

Cushman & Wakefield Living is the exclusive sponsor of the MSCI Index. If you would like to discuss the report further, please contact the team.

Living’s share of the MSCI Europe Real Estate Index has climbed over time from around 12% in 2005 to 25% in 2025, demonstrating its evolution into a core institutional asset class.

Living's Weight in European Real Estate Benchmarks Has Consistently Grown*

Source: MSCI, September 2026 *Residential Weight in Annual MSCI Europe Index, All Assets

The efficiency gap: recent performance data shows that operational efficiency has been essential to convert rental growth into total returns.

Efficiency even more critical now to convert rental growth info total returns*

Source: MSCI and Cushman & Wakefield, September 2026 *MSCI Europe Multifamily sector broken into quartiles based on total net operating cost as % of gross income, December 2022-2025