The French real estate market enters 2026 amid ongoing uncertainty, with no clear expectations for a return to normalcy. Political developments – including local elections in March and the Presidential election in 2027 – combined with regulatory pressures and subdued transaction volumes, contribute to limited visibility regarding the timing of a market recovery. While some analysts anticipate a "K-shaped" trajectory, characterised by increasing divergence between prime and secondary assets, others express concern that 2026 may bring significant challenges related to the "Wall of Debt."
Environmental regulations, particularly those linked to energy performance and decarbonisation, continue to structurally reshape the market. Rather than acting solely as constraints, these regulations increasingly function as value differentiators, accelerating the obsolescence of non-compliant assets and reinforcing the attractiveness of well-located, energy-efficient properties.
From an occupier perspective, cost discipline remains a priority, with real estate still representing, after payroll, one of the largest expense items. This has translated into more selective space requirements, shorter decision cycles and a stronger focus on efficiency, flexibility and quality of use. On the investment side, caution remains although available capital to redeploy is increasing.
That being said, brokers are expecting the real estate market to recover gradually in 2026, driven mainly by private capital, family offices and value‑add strategies. International investors continue to play a major role, attracted by France’s long-term fundamentals, liquidity in core markets and the depth of its occupier base. The market remains polarised, with capital concentrating on assets offering strong fundamentals, income security and repositioning potential.
While expectations of a rapid rebound have been revised, end of 2026 could be viewed as the starting point for new real estate cycle.
Offices
The office sector remains the most structurally impacted asset class, however, indications of stabilisation are beginning to emerge. Hybrid working, flex-office models and changing employee expectations have durably altered demand, leading to persistently high vacancy rates in peripheral and poorly connected submarkets.
In contrast, central, accessible and high-quality locations continue to attract occupiers, albeit with reduced average surface areas. Paris central business district (CBD) remains highly sought-after for prime, well-designed buildings, while La Défense is benefiting from its repositioning, competitive rent levels and improved transport connectivity, attracting tenants relocating from less efficient locations.
The market is now clearly bifurcated: prime, ESG-compliant assets with strong amenities are resilient, while secondary stock faces declining liquidity and requires heavy repositioning or change of use. With limited new office supply, emphasis is now on asset transformation, refurbishment, and mixed-use conversions. Prime rents in Paris CBD remain at historically high levels for best-in-class buildings, confirming the depth of demand for quality.
Retail
The retail sector continues to adjust after a period marked by an unusually high number of business failures, particularly in textiles and home furniture. By 2026, the market has largely completed its correction phase, but recovery remains uneven across formats and locations.
Retail parks and large commercial schemes are increasingly focused on capex programs aimed at energy compliance and operational optimisation, notably in relation to renewable energy production and environmental regulations. These assets remain attractive when anchored by essential retail, leisure or convenience-driven uses.
Prime high street retail spots in major cities have generally stabilised, thanks to factors like tourism, luxury brands, and experiential shopping experiences. However, the recovery is expected to be slow and highly selective, with secondary streets and mono-functional schemes remaining under pressure.
New developments continue to be constrained by local elections, planning uncertainty and the implementation of land-use regulations.
Logistics and light industrial
Logistics and light industrial assets remain among the most attractive segments of the French real estate market in 2026, despite a moderation in rental growth compared to previous years. Structural demand drivers – e-commerce, supply-chain reorganisation, nearshoring and last‑mile delivery – continue to underpin occupier interest.
Several large portfolios have traded in recent years, and international private investors, particularly from the US, remain very active. The focus is increasingly on modern, high-specification assets offering strong power capacity, automation readiness and ESG credentials.
As with large retail and commercial assets, logistics platforms are also impacted by environmental regulations, notably in relation to land use, energy consumption and carbon footprint. This further reinforces the “flight to quality”, with modern assets outperforming older stock and benefiting from stronger rental resilience.
Residential, hospitality and alternative assets
Residential development remains constrained by political uncertainty, planning restrictions and rising construction costs. As a result, investors are focusing primarily on existing assets, pursuing strategies centred on refurbishment, energy upgrading and unit-by-unit disposal.
Beyond traditional residential assets, operated and alternative residential segments continue to attract strong investor interest. Co-living, student housing and senior living benefit from structural undersupply, while offering visibility on cash flows and operational upside. In contrast, the healthcare sector shows more limited momentum.
The hotel sector remains highly dynamic across all categories. A notable trend is the growing appetite from investors to combine real estate ownership with operational control, allowing them to better capture value and manage performance throughout the cycle.
Finally, assets at the crossroads between real estate and infrastructure – particularly data centres – continue to generate strong investor demand. However, their development and operation increasingly require careful consideration of environmental constraints, energy availability and public acceptance, making asset selection and location more critical than ever.
Sources: 2026 market outlooks from CBRE, GRI, PwC and market analysts
