European real estate in transition: what to expect from regulation by 2026 (and how to prepare)
The European real estate sector is going through a decisive regulatory cycle. The focus on decarbonization and financial transparency went beyond the sphere of intention to become a condition for the eligibility of assets, financing, and investment products. Between 2025 and 2026, directives such as the EPBD, the CSRD, the European Taxonomy and the revision of the SFDR reinforce requirements that impact promoters, owners, investors and management companies.
EPBD: renewal and efficiency with tight deadlines
The review of Building Energy Performance Directive (published in May 2024) requires Member States to transpose the new rules Until May 2026. Among the goals, the following stand out: renovate the 16% worst non-residential buildings by 2030 (and 26% by 2033); and define national trajectories to reduce primary residential consumption by ~ 16% by 2030 and 20— 22% by 2035. The directive promotes the integration of renewables and electric mobility infrastructures, when technically and economically feasible.
CSRD: phased and auditable ESG report
A CSRD applies in a phased manner: The first companies already report on the 2024 financial year (published in 2025), with extension to more groups in 2025 and 2026, following the ESRS and with external auditing. Even entities outside the direct scope will be pressured by investors and funders to submit consistent ESG information.
Taxonomy: simplification approved for application in 2026
In July 2025, the European Commission adopted a delegated simplification act From the report of Taxonomy. The changes apply as of January 1, 2026 (covering the 2025 financial year), after scrutiny by the Parliament and the Council. The objective is to reduce compliance costs and clarify criteria for “green” activity - relevant to funds and vehicles that intend to qualify real estate assets as aligned.
SFDR: from transparency to labeling (potential)
The Commission launched, To May 2, 2025, a Call for Evidence to rephrase the SFDR, seeking simplification and Possible creation of labels clear for sustainable products (replacing the logic of “articles 6/8/9”). The proposals are scheduled for the end of 2025, with probable effects in 2026; European supervisors have already defended an architecture with “sustainable/transition” labels. The tone here must be prudent: it's about evolution in consultation, not a final decision.
CBAM: construction materials at a new carbon cost
O Frontier Carbonic Adjustment Mechanism Exit the transitional phase and enter Definitive regime on January 1, 2026. Imports of steel, aluminum and cement - critical in construction - now require the purchase of CBAM certificates proportional to the incorporated emissions, with operational obligations for importers and the supply chain.
From regulation to action: how to prepare for 2026
By 2026, new European rules on building efficiency, sustainability reporting, “green” classification of investments and carbon in construction materials come into force. To be prepared, it is essential to know the performance of each asset, define renovation priorities, organize reliable data for reporting, and assess which properties meet sustainable criteria. Anticipating these steps guarantees access to competitive financing and reduces the risk of devaluation.
What does this mean, in practice
- Selective funding: green lines and sustainability-linked favor efficient assets; “brown” assets become more expensive or lose access.
- Valuation and liquidity: buildings with poor energy performance or without a transition plan They devalue and become less liquid; assets with robust ESG certifications and metrics Do they maintain rents, occupancy, and value.
- Governance and data: CSRD/ESRS reporting and Taxonomy require auditable data at the asset and portfolio level, with internal control processes.
- Preparation 2026: Who to align EPC, renovation plan, energy/water metrics, and ESG documentation Eligible for entry into 2026 for capital, transactions, and integration into labeled products.
By 2026, the difference between prepared assets and obsolete assets becomes structural. Real estate valuation no longer depends solely on location: it depends on efficiency, compliance, and the ability to report with quality. Anticipating and executing now means protecting capital, reducing risk, and preserving value in an increasingly regulated and demanding market.
