In a higher cost of capital world, the importance of effective asset management increases. Value has to be created at the asset level, by protecting income, improving buildings and, where demand has moved on, reimagining what a building is for.

That puts asset management expertise at the centre of real estate performance in today’s market, and investors are increasingly pricing in the gap between assets that are actively managed and those that aren’t.

More broadly, investor sentiment towards real estate today is perhaps best described as cautious optimism.

According to Savills’ European Investment Nowcast, investment volumes in Europe reached approximately €53bn in Q2 2026 (6% above the same period last year), with full-year volumes forecast to grow by around 16% year-on-year. But while overall activity is up, growth remains fragmented. Some major economies recorded Q2 2026 volume decreases – The UK and Germany for example – as capital remains selective amid ongoing economic uncertainty and higher interest rates.

Occupational markets tell a similar story of divergence. Rental growth is soft and vacancy is rising for non-prime stock, while high-quality, efficient buildings remain in demand and limited pipelines are creating rental growth opportunities in supply-constrained markets.

The gap between the two is telling: it is the efficient, well-run, sustainably positioned assets that continue to perform and attract what capital is out there, while the rest struggle. That divide is why manage-to-green strategies and operational efficiency are no longer optional refinements – they are what now can separate outperformance from the rest.

Managing green

Manage-to-green strategies go well beyond compliance. The impact of transition risk on value is being driven by converging forces: occupiers increasingly won’t lease space that doesn’t meet sustainability standards and investors are underwriting to net-zero targets, meanwhile physical risks like flooding and storms are starting to weigh on long-term hold and exit planning. Red Book valuers have noted that EPCs, despite known imperfections, are already moving pricing on efficiency grounds alone.

The “green premium” and “brown discount” are no longer theoretical; they’re increasingly visible in transaction evidence.

At Savills IM, decarbonisation ambitions were incorporated into our investment approval processes some time ago, both for new acquisitions and for approving capex budgets on refurbishments of assets already under management.

At Stage 1 due diligence we screen physical climate risk and energy rating gaps, and for Stage 2 we run a CRREM analysis to understand stranding risk. If needed, we then design a carbon strategy for the asset’s full management period, broken down into concrete actions within each annual business plan from quick wins like LED and sensor retrofits, to larger capex items like heat recovery upgrades.

Managing sector to sector

How asset management strategies are applied in practice, though, depends heavily on the sector. For example, what ‘good asset management’ looks like in living is very different from what it looks like in logistics.

In living, asset management looks closer to running an operating business than a traditional landlord model. Performance depends on actively managing rental revenue streams and continuously optimising operating costs to protect NOI. Increasingly, that means closely integrating with the property management company , having in-house legal and regulatory expertise, and using PropTech for larger scale tenant management. It rewards managers who specialise by sub-sector – build-to-rent (BTR), PBSA, build-to-sell (BTS), affordable – rather than applying a generalist playbook with regulatory and operational demands differing sharply per jurisdiction and even between sub-sectors.

In logistics, where we manage €7.0bn of AUM (As at 30.06.2026) across Europe, good asset management increasingly comes down to specialisation and staying ahead of trends defining the sector – think sustainability, nearshoring and access to power.

Indeed, access to grid capacity is now a real factor in occupier location decisions and portfolio liquidity. We recently saw this first-hand on a potential acquisition in the Netherlands, where an outgoing tenant with light energy needs had let the building’s grid capacity lapse, and the incoming, more energy-intensive tenant needed more power than the congested local grid could supply – requiring the landlord to invest in solar panels and battery storage just to keep the asset lettable. It’s why we build grid-capacity protections into our leases, and why energy security sits alongside leasing structuring and technical capability as a core asset management skill in this sector. Moreover, tenants are more and more adopting electric vehicle (EV) truck mobility, meaning assets will increasingly have to consider capacity for this electrification.

Managing smarter

Technology is changing asset management on two fronts. The first is data: professional investment management today requires collecting and structuring vast volumes of property data (technical, operational, market and ESG data for example) to support the right decisions.

That’s why we built our own ‘SIM Data Warehouse’ – fed by platforms collecting and analysing data on asset operations, technical property standards, ESG data and climate risks – giving us a live, structured view that feeds directly into investor reporting and performance monitoring.

The second front is operational reality, particularly in residential: managing thousands of residents and their lease contracts isn’t feasible without proper technology support. Technology plays a vital role in serving our tenants, improving the efficiency of day-to-day operations and providing more timely financial analysis.

On top of both, our team is actively using artificial intelligence (AI) to improve process efficiency and sharpen investment performance, automating parts of reporting and analysis and freeing up time for the judgment calls that move the needle on an asset’s business plan.

Managing on the ground

In practice, asset management takes different forms depending on what an asset needs – from careful refurbishment to reimagining a building’s use altogether.

In Stuttgart, we completed a three-year refurbishment programme in collaboration with in-situ tenants. The project delivered a redesigned lobby, an upgraded outdoor amenity space, and a range of efficiency measures – including heating systems, photovoltaic (PV) panels, LED lighting, motion detectors and water-saving fittings. Despite the disruption of the Pandemic and the war in Ukraine, the programme was delivered on budget and achieved LEED Gold certification.

Value can also come from a more fundamental shift: repurposing an asset entirely, moving it to its highest and best use when the original use no longer fits demand.

In Lisbon, we are currently working on a change-of-use conversion of a listed historic palace, from office to hotel and branded residences. Located within a protected heritage and urban regeneration zone, the approach preserves the building’s historic façade while unlocking significant value from a use far better suited to the location.

In Madrid, we recently completed a comprehensive retrofit of one hotel and two office buildings into a 267-unit residential scheme – c. 239 BTR units and 28 BTS units, alongside co-working space, a gym, spa, pool and urban garden. Sold this year, the project captured a material value uplift by moving the asset to its higher-and-best use.

An active, hands-on management approach is what separates outperformance from the rest – perhaps more so now than ever. As the market continues to reward quality, long-term income streams, asset management will only become more central to how real value is created.