Despite a clear rebound in transaction volumes, the real estate market has not entered a new cycle — it has entered a phase of selectivity.Increasingly, this is perceived as a “reset” phase – as investors themselves note, a period compelling a return to investment fundamentals after years of strong expansion and yield compression.
A selective investment cycle and the redefinition of value
At the same time, we are now in an exceptionally selective investment cycle. While just a few years ago investment decisions were driven largely by location and yield levels, much greater weight is now being placed on the resilience of the operating model and the asset’s ability to withstand market volatility.
Capital is no longer searching for opportunity; it is searching for quality. In practice, this is widening the gap between prime and secondary assets.Best-in-class projects, offering income stability and operational predictability, continue to attract capital and maintain investment liquidity. At the same time, a growing share of assets – particularly older stock requiring refurbishment and alignment with ESG requirements – is undergoing significant repricing or losing investment appeal altogether.
In this context, investors are returning to fundamental analysis. What matters is no longer only what an asset generates today, but above all how it will perform over the longer term and how sensitive it is to changes in the regulatory and market environment.
Capital is structurally shifting toward sectors better equipped to absorb volatility and regulation
We continue to observe a reallocation of investment volumes toward the residential sector, including PRS and PBSA, as well as toward more counter-cyclical asset classes. In parallel, hybrid models and mixed-use projects combining operational functions with an investment component are gaining in importance.
One of the most visible trends observed at both MIPIM and IHIF is the rapid expansion of the branded residences segment. This model is no longer confined to luxury schemes, but is increasingly extending into the upper-upscale segment. For investors, it offers not only the potential for higher operating margins, but also greater predictability of exit.
At the same time, we are seeing deeper integration between the Real estate and infrastructure markets, particularly in the context of data centre development. In this segment, the key considerations are no longer location or technical specifications alone, but access to power, infrastructure and – above all – operator-tenants, including hyperscalers. In practice, this means a shift in analytical focus away from the asset itself and toward its ecosystem and market relationships.
Rising construction costs and project execution risk are making closer cooperation between the developer and the future operator increasingly necessary. More and more often, investment success depends on securing demand in advance and embedding the operating model already at the design stage.
The valuer’s perspective: from “value today” to “value over time”
Importantly, the market shifts currently being observed – recognised today by investors and dealmakers in a largely organic way – coincide with a point at which a new way of defining real estate value is beginning to take shape at the European level.
This shift in investor thinking, from analysing only current market parameters toward assessing income durability, risk resilience and the quality of the operating model, is of course a response to the geopolitical backdrop and the market cycle.
At the same time, it coincides with the implementation of EU regulations – particularly the CSRD and the EU Taxonomy – which, for the first time, introduce a systemic requirement to assess the long-term ability of assets to generate value in a sustainable manner.
Accordingly, within the valuation profession and under international standards (RICS, TEGOVA), the concept of Property Value is becoming increasingly forward-looking measure, understood as a value that reflects not only current market conditions, but also:
- the durability of cash flows,
- the asset’s ability to adapt to future regulatory requirements,
- and the stability of its operating model.
Although this is not yet a formally defined category of value under Polish law, the direction of change is fully consistent with the market’s evolution.
In practice, this means that the market is already – often unconsciously – operating on a definition of value that is only now beginning to be reflected in regulation. In other words, the focus is shifting from valuing the asset itself to assessing its ability to remain viable over time.
As a result, legislation will begin to name and systematise something that investors have always intuitively understood that two assets with the same market value may have fundamentally different investment values.
Wojciech Doliński
Partner
