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CONTRIBUTORS

Indraneel Karlekar

Global Head of Research & Strategy
Clarion Partners

Bruno Berretta

Head of Research, European Markets

Clarion Partners

Preview

The global uncertainty created by US tariff policy has unsettled financial markets and has cast a shadow on economic growth prospects. While the situation remains fluid with many moving parts, we believe that a corner of stability may be found in European commercial real estate, which has significantly repriced since market peaks in 2022, and where market fundamentals remain solid and macro-drivers broadly supportive. Defensive, income-oriented strategies—such as European net lease—can be especially interesting for non–European investors seeking stability, yield, and geographic diversification. This report sets out the rationale for that conviction.

Our conclusion

European net lease presents a compelling investment case for global investors seeking secure, inflation–resilient income in today’s fragmented and shifting macroeconomic landscape. With favourable yield spreads, structurally sound fundamentals, and inflation–linked rental streams, the strategy combines downside protection with long–term upside potential. While European net lease market complexity requires specialist expertise, it also creates inefficiencies from which well-positioned investors can benefit. In a world of growing divergence, European net lease offers a strong risk–adjusted investment opportunity for global real estate capital allocation.

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All investments involve risks, including possible loss of principal. Please note that an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results. 

Equity securities are subject to price fluctuation and possible loss of principal.

International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

Commodities and currencies contain heightened risk that include market, political, regulatory, and natural conditions and may not be suitable for all investors.

Risks of investing in real estate investments include but are not limited to fluctuations in lease occupancy rates and operating expenses, variations in rental schedules, which in turn may be adversely affected by local, state, national or international economic conditions. Such conditions may be impacted by the supply and demand for real estate properties, zoning laws, rent control laws, real property taxes, the availability and costs of financing, and environmental laws. Furthermore, investments in real estate are also impacted by market disruptions caused by regional concerns, political upheaval, sovereign debt crises, and uninsured losses (generally from catastrophic events such as earthquakes, floods and wars). Investments in real estate related securities, such as asset-backed or mortgage-backed securities are subject to prepayment and extension risks.

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WF: 5532376

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