Cross-border investment accelerates real estate M&A
The US remains a central anchor of global real asset capital flows, but cross-border allocations into Europe are increasing. According to MSCI, based on transaction data through the third quarter of 2025, investors deployed nearly $40bn of capital for real estate investment outside their home continent. The UK became the top destination for capital with investment, rising 12% year over year to more than $22bn, driven largely by industrial acquisitions; the US and Germany rounded out the top three destinations with $21bn and $11bn of inflows, respectively. Interest rate policy, currency volatility, and relative financing conditions continue to influence the pace and direction of these capital flows, with foreign exchange dynamics shaping both deal timing and transaction structuring.
Looking ahead, cross-border investment is expected to be a key driver of real estate M&A in 2026 as global investors pursue diversification, scale, and access to sectors unavailable in their home markets. US investors are increasing allocations to Europe, particularly the Nordics, the UK and Germany, where digital infrastructure, renewable platforms, and residential sectors offer compelling growth opportunities. This trend is reflected in transactions such as Apollo’s acquisition of a pan-European data centre platform from STACK Infrastructure. Singaporean and Canadian capital are also expected to remain highly active, targeting long-duration, inflation-linked income. Currency dynamics, regulatory alignment around decarbonisation, and the pursuit of an early-mover advantage in AI and energy transition assets are likely to further accelerate cross-border dealmaking.
Taking the long view reshapes dealmaking
Long-duration institutional capital is becoming a defining force in real estate M&A. Insurers and defined benefit pension systems are increasingly directing premiums and retirement contributions towards private markets to better match long-dated liabilities, enhance yield, and improve portfolio resilience. Within private markets, real assets—and particularly real estate and infrastructure—are benefiting from growing allocations to both equity and private credit strategies.
Private credit has become a critical channel through which this capital is being deployed. Insurers and pension investors are increasing exposure to real estate-backed private debt, preferred equity, and structured credit solutions that offer downside protection, inflation linkage, and predicable cash flows. This capital is supporting acquisitions, refinancings, and platform growth at a time when traditional bank lending remains constrained, effectively acting as a catalyst for M&A activity across operational and infrastructure-adjacent assets.
In 2025, QuadReal announced the launch of a £2.5bn debt platform in the UK and Europe, with the expanded platform focusing on direct lending to key sectors including multifamily, student housing, data centres, industrial and self-storage. This expansion underscores how institutional investors are using private credit to gain exposure to real assets aligned with demographic and technological change.
In 2026, this capital pool is expected to remain a reliable source of funding for real estate M&A, supporting the continued reallocation of capital towards operational, technology-enabled real assets.
