Real Estate Emerges From Reset as AI Drives $5T Buildout | Apollo Real Estate Outlook

What's New

Apollo Global Management's 2026 Real Estate Outlook, penned by Scott Weiner, Partner and Global Head of Real Estate Credit, declares that commercial real estate has emerged from its post-rate-shock turbulence with renewed conviction, as capital markets reopen, valuations stabilize, and AI infrastructure buildout becomes a transformative growth engine—with Barclays estimating over $2.3 trillion already committed to data centers this year and another $3 trillion expected through 2028.

Why It Matters

The convergence of cyclical recovery and structural transformation creates a rare moment where reset valuations, constrained new supply, and massive AI-driven capital deployment are reshaping real estate into a more integral component of private markets—rewarding investors with scale, specialization, and operational expertise.

Big Picture Drivers

• Capital markets reopening: Banks, insurers, and alternative lenders are active again, with transaction volumes surpassing 2024 levels across industrial, multifamily, retail, and office sectors

• Valuation stabilization: Prices found a floor in early 2024 as buyers and sellers accepted higher base rates as the new normal

• Supply constraints: New construction has slowed sharply while elevated replacement costs support existing asset values

• Housing shortage: Structural undersupply across US and Europe creating persistent demand for residential-linked investments

• AI infrastructure wave: Data center buildout is reshaping project financing and influencing costs across every property sector

By The Numbers

• $5.3T: Total data center commitments expected through 2028 ($2.3T this year + $3T additional)

• 3x: Increase in CMBS issuance since 2023

• 4M: Projected US housing shortfall by 2029

• ~2%: ECB deposit rate, supporting European deal activity acceleration

• 2x: How much the cost of homeownership has increased relative to renting

Key Trends to Watch

• Private real estate relative value: With public equities at stretched valuations, private real estate offers compelling relative value as the NCREIF ODCE Index posts consecutive quarters of positive returns.

• European credit fragmentation: Lack of integrated securitization markets and cautious traditional lenders creates attractive spreads for global platforms with cross-border structuring capabilities.

• Housing as structural theme: Widening rent-vs-own gap is fueling sustained demand across multifamily, manufactured, student, senior housing, and build-to-rent models.

• Vertical integration premium: Managers with in-house operating platforms and property-level expertise will be better positioned to capture incremental value others miss.

The Wrap

Apollo positions 2026 as the year real estate emerges stronger and broader from its reset—where scale, operational expertise, and flexibility matter more than ever as AI buildout, housing fundamentals, and European fragmentation create distinct opportunity lanes for investors who can move with speed and precision.