- AI is transforming real estate dealmaking, from sourcing and underwriting to valuation and post-deal integration, as firms prioritize operational efficiency and cross-sector convergence.
- Capital is becoming more selective, with domestic institutions stepping in as global investors pull back due to geopolitical uncertainty and tighter monetary policy.
- REIT consolidation and public-to-private deals are accelerating, driven by scale advantages, governance pressure, and investor preference for larger platforms.
A New Playbook for Real Estate Investment
Heading into 2026, real estate and real asset investors are being forced to rethink traditional strategies. Amid high interest rates, geopolitical tension, and the rise of AI, investors are shifting focus from simply “location” to a much broader set of operational, technological, and capital efficiency metrics, according to PwC’s Real Estate and Real Assets: US Deals 2026 Outlook.
Capital Reallocation: Domestic Players Step Up
In contrast to previous years, global capital flows into U.S. real estate are being dominated by domestic players. Cross-border investors are treading cautiously, leaving a gap that U.S.-based insurance firms, pension funds, and private credit platforms are eager to fill.
Capital is also being reallocated from traditional core real estate assets to private credit and infrastructure, which offer better alignment with long-term yield and duration preferences. At the same time, regulatory changes may open the door for defined-contribution retirement plans to include private real assets, potentially unlocking trillions in new investment.
AI-Driven Value Creation
AI is no longer just a back-office tool—it’s becoming a strategic differentiator. By leveraging machine learning models and advanced analytics, investors are mining massive datasets (tenant behavior, energy use, zoning, etc.) to identify undervalued properties and accelerate due diligence.
Beyond efficiency, AI is driving the convergence of asset classes. Assets like life sciences facilities, logistics hubs, and data centers are now being evaluated not just by asset type, but by operational performance and digital infrastructure needs. This cross-sector perspective is enabling new forms of M&A and joint ventures.
REIT Consolidation Accelerates
Publicly traded REITs are under growing pressure, leading to an increase in take-private deals, mergers, and activist interventions. As large-cap REITs significantly outperform smaller peers in total shareholder return (TSR), the market is gravitating toward scale.
Currently, the top 10 REITs account for 44% of sector enterprise value, highlighting intense concentration at the top. Smaller REITs face balance sheet challenges and higher SG&A burdens, making them prime targets for acquisition or consolidation.
What to Watch in 2026
- Selective capital deployment: Expect more structured capital deals—such as preferred equity and mezzanine debt—as liquidity remains uneven and credit markets slowly open.
- AI integration at scale: As carbon data and ESG metrics become part of underwriting, AI tools will play a bigger role in quantifying sustainable performance and uncovering alpha.
- More M&A activity: With public market valuations lagging and operational synergies in focus, expect strategic partnerships, spin-offs, and take-private transactions to rise.
The Bottom Line
As 2026 approaches, data, technology, and capital concentration are reshaping how investors view real estate and real assets. For dealmakers, the opportunity lies in combining AI-enabled insights with flexible capital strategies to navigate a complex and fast-evolving investment landscape.
