Pictet Sees Selective Opportunities in Europe’s Property Markets

Pictet Alternative Advisors (PAA) focuses mainly on logistics and residential property, which Ed Jackson, its head of UK Direct Real Estate, calls “sheds and beds.” The business had $61 billion in assets, including $5 billion in direct and indirect real estate strategies, as of 30th September 2026. Its residential investments concentrate on multi-family housing in large cities; its preferred logistics assets include industrial estates and warehouses.

Jackson described UK residential property as “very difficult and almost non-viable.” He cited the Renters Rights Act of 2026, which bans no-fault evictions and fixed-term tenancy contracts, alongside higher mortgage rates, planning requirements and increased taxes on private landlords. UK residential property featured more prominently in PAA’s first value-add fund, Elevation I, than in its successor, Elevation II. The first fund deployed capital across 15 strategies and deals. PAA funds typically run for eight years, with capital deployed during the first three.

PAA is also looking at residential opportunities in Copenhagen and Madrid, where Jackson said “things are booming.” The team has recently bought apartments in Milan and is monitoring Italy. Jackson said target returns for the firm’s value-add investments are typically above a net 15 per cent internal rate of return (IRR), with a 1.5 times money multiple.

Market conditions vary sharply across Europe. Aberdeen Investments said continental Europe’s annual total returns slowed to 5.2 per cent in the year to June 2026. Southern Europe, Ireland and Denmark led performance, while Germany returned 2.9 per cent and France 4.6 per cent. Aberdeen had downgraded global real estate to “neutral” in September, citing higher bond yields and financing costs. It said a roughly 50-basis-point rise in German Bund yields in the previous quarter was likely to weigh on valuations, although inflation-linked rent adjustments in Europe could offset some pressure.

In offices, Jackson sees a divide between desirable central properties and less sought-after locations. Some offices in weaker areas can offer cap rates as high as 10 per cent, he said, but buying them requires substantial experience. “For great offices, things are going very well but for everything else, it is a struggle,” he said. Aberdeen reported that space under construction in the UK was 37 per cent below its peak and at a decade low. Vacancy was around 3 per cent in Madrid and below 5 per cent in central Amsterdam; in Paris’s central business district, it had risen to around 6 per cent, with concerns it could climb further amid weak demand.

Jackson said PAA also sources off-market deals through its wealth management network, including opportunities referred by offices around the world. Real estate accounted for 19 per cent of the average high-net-worth individual’s portfolio in January, according to Capgemini’s World Wealth Report 2026, published 4 June.