Catella bets Europe's next decade is a city trade

For most of the past decade, European real estate rewarded the sector call: residential carried a housing-shortage story, logistics carried ecommerce and redefined supply chains, and a fund could hold both across indifferent addresses and still produce a return. Catella's House View Autumn 2026 argues that edge is closing; with beds and sheds now the consensus allocation, the property type explains less of the outcome and the city explains more.

The framework behind that argument draws on 75 metropolitan areas across 20 European countries — some 350 million people — and 16 economic, demographic and social measures, sorting them into six city groups by economic strength and urban attractiveness. Petra Blazkova, who heads market strategy and product development at Catella Group, describes a continent that no longer moves through a single cycle: growth, population and occupier demand concentrate in particular cities and generate local cycles that pull away from one another. A map of those city groups changes allocations only if the return gap between them is wide enough to override the sector exposure it would sit beside, but the published material names neither the six groups nor any performance difference among them. Catella has diagnosed a widening divergence in which local cycles do the work; it has not produced the instrument that tells an allocator which cities to overweight.

For the sectors this desk follows, the logic cuts in a direction allocators will recognize. As this publication has argued, industrial pricing has turned into a rents-and-scarcity trade rather than a building trade, and scarcity is established city by city before it is established sector by sector; two logistics markets in the same country can now behave like different asset classes, which argues for paying up where land and occupier depth are genuinely constrained and refusing to average across a national portfolio. Apartment capital has split along a similar seam into an income half and a scarcity half, and the scarcity half gets priced at the address — which is where the patient money underwriting the 2028-29 supply gap is likely to concentrate, in the cities with the strongest demographic pull rather than in the largest national markets.

City-level underwriting is more expensive than sector allocation, requiring more analysts, more local research and more offices, and pan-European sector funds that must deploy at scale will keep buying the average city because the average city is what scale buys. The next European raise that publishes city-level attribution, or names its city groups, will show which side of that line its manager has chosen.