The Recovery Is Real. Access to It Is Not.

The European living market has entered a recovery. It has not entered an evenly distributed recovery.

Investment in multi-housing and purpose-built student accommodation reached €17.4 billion in the second quarter of 2026, the strongest quarterly result since 2022. First-half volume reached €31.2 billion, 10 per cent above the prior year and 16 per cent above the five-year first-half average.

Those figures appear to describe a broadly improving market. The composition of the activity tells a more useful story. Average deal size rose to €72 million from €39 million while the number of transactions fell by 19 per cent. Transactions above €100 million represented 68 per cent of volume. Their combined volume rose by 103 per cent. Volume below €100 million fell by 8 per cent.

Capital is returning, but it is moving through scale. That distinction matters to anyone preparing a financing, sale or capital-formation process for a smaller asset.

The barbelled recovery

€72mAverage deal size, versus €39m in the prior-year period

-19%Change in the number of transactions

+103%Change in volume above €100m

-8%Change in volume below €100m

Source: JLL, EMEA Living Market Dynamics Q2 2026, published 31 July 2026.

The upper end of the market is benefiting from three reinforcing factors. Large transactions put capital to work efficiently. Portfolios support specialist operating teams and institutional reporting. Platforms offer a repeatable route to deployment rather than a one-off asset decision.

The lower end faces the inverse problem. A smaller single asset may be high quality, well located and operationally sound, yet still sit outside the most active flow of institutional capital. Its buyer universe is narrower. Diligence costs consume a larger share of the transaction. Financing is more fragmented. The next owner has fewer ways to achieve scale after acquisition.

This is not an argument that smaller assets are unattractive. It is an argument that liquidity must be underwritten as a separate variable. A strong property does not automatically create a broad transaction market.

That is the risk behind an optimistic market headline. A sponsor can observe improving aggregate volumes and assume that refinancing or exit conditions have normalised for its own asset. It then enters a process designed for a market that does not exist at that transaction size.

THE GREENPEAK TAKE

I would not describe this as a simple recovery. I would describe it as a redistribution of liquidity. Capital has returned to transactions that offer scale, governance and a credible deployment system. Sponsors below that threshold need to manufacture institutional relevance or finance explicitly for a longer and narrower route to exit.

For a sponsor, the immediate response is often to assemble more assets. Aggregation can be valuable, but scale alone is not the solution. Ten disconnected assets do not necessarily form an institutional portfolio. The portfolio must also provide a coherent operating and governance proposition.

Institutional capital increasingly asks whether the strategy is repeatable, whether information is available quickly, whether decision rights are clear and whether the platform can absorb additional capital without losing discipline. Those questions are as important as the rent roll and valuation.

JLL's August global perspective reinforces this direction. Global living investment rose by around 9 per cent in the first half of 2026. More than $114 billion was deployed directly into the sector, with additional capital invested through entity-level transactions. The research identifies specialised formats and platform scalability as priorities for institutional capital.

The implication is that the unit of finance is changing. A single asset remains the collateral. The investable proposition increasingly includes the acquisition system, operating capability, reporting architecture, governance and exit pathways around it.

A portfolio should solve a financing or investment problem. It can diversify income, support a specialist operator, create efficient due diligence or establish a credible institutional exit. If aggregation does none of these things, it may add complexity without adding liquidity.

Reporting, governance and operating controls are often treated as post-fundraising infrastructure. In the current market they are part of the capital proposition. Investors and finance providers need to see how information, decisions and intervention rights work before they commit.

Where aggregation is unavailable or inappropriate, the capital structure should acknowledge the narrower liquidity path. That may require more duration, greater covenant headroom, phased capex, a clearer stabilisation plan and fewer assumptions about a rapid exit into a broadly recovering market.

These choices should be made before a process launches. Once a refinancing is constrained by time, the sponsor loses the ability to redesign the unit of finance without appearing defensive.

Large platform transactions can distort quarterly data. A small number of exceptional deals may not establish a permanent market structure. Smaller deals may also recover later as confidence broadens and capital moves down the risk curve.

That is possible, but it is not a financing assumption. A sponsor should not structure today's transaction around the hope that market breadth will arrive before the next maturity or exit decision. The prudent approach is to treat the observed concentration as the current market and preserve upside if liquidity later broadens.

The same logic applies to valuation. A portfolio or platform premium should not be assumed merely because assets are grouped together. The premium must be earned through operating coherence, governance, reporting and credible scale economics.

A borrower approaching a maturity should separate asset performance from market access. The first file should demonstrate cash flow, occupancy, capex status and the operating plan. The second should map the realistic capital universe at the required transaction size. A strong first file does not repair a weak second one.

The process should then be designed around evidence rather than optimism. If the most credible outcome depends on portfolio scale, the work required to create that scale must begin before the financing timetable becomes critical. If the asset will remain standalone, the structure should be tested against a smaller buyer and capital universe. If a platform proposition is being advanced, its reporting, governance and pipeline must be visible in the data room rather than described as future potential.

Borrowers should also distinguish indicative interest from executable capacity. In a concentrated market, early engagement can appear broad because the sector narrative is positive. The more important questions concern transaction size, governance requirements, hold period, information needs and the internal route to approval. A credible process narrows those questions early and preserves time for a different structure if the preferred route proves unavailable.

Finally, contingency planning should be specific. “Extend or refinance” is not a plan unless the responsible parties, required consents, information package and decision dates have been identified. Liquidity risk becomes manageable when it is converted from a market assumption into a sequence of controlled decisions.

The recovery in European living investment is real. The growth in large transactions is real. The decline in transaction count is also real. Together they describe a market that is functioning, but functioning selectively.

Sponsors should resist both extremes. The market is neither closed nor broadly normalised. It is open to transactions that fit the capital's preferred scale and operating form, and less forgiving to assets that require the capital to create that form after acquisition.

The useful question is therefore not whether capital has returned. It is whether the asset, portfolio or platform has been designed for the capital that has returned.

Sources

JLL, EMEA Living Market Dynamics Q2 2026, published 31 July 2026.

JLL, Global Real Estate Perspective, August 2026, published 3 August 2026.

All financing frameworks, interpretations and recommendations are Greenpeak analysis. No private counterparty or lender intelligence is disclosed.