The European real estate market is gearing up for a strong comeback, and France, Spain, and Portugal are at the forefront of this resurgence. Savills, a leading global consultancy, forecasts that 2025 will mark a crucial turning point: investment values in real estate will hit their lowest and begin rising, larger deals are becoming more common, and favorable financing is once again boosting returns. These positive trends are set to accelerate as we move into 2026, especially in key Southern European markets.
Investment Volumes on the Rise: Spain Leads the Pack
Savills anticipates that by the end of 2025, real estate investment volumes across Europe will reach about €215 billion—a 9% year-on-year increase. Spain stands out with projected investment growth exceeding 20% compared to 2024, joining the ranks of fast-recovering markets like Portugal, the Czech Republic, and others. Looking ahead, overall European property investment is expected to climb by another 18% in 2026, fueled by macroeconomic stabilization and a robust return of institutional capital.
Prime Assets, Offices, and Tourism Hotspots in Demand
As confidence returns, investors are targeting high-quality office buildings in financial districts, reflecting a “flight-to-quality” trend. Spain, France, and Portugal—especially major cities—are drawing interest thanks to prime assets with low vacancy rates and solid contract terms. Tourism hotspots, particularly hotels in Spain, France, Portugal, and iconic destinations like London and Italy, are also attracting capital, driven by a post-pandemic tourism rebound and increased leisure spending.
Residential markets in capital cities and large metropolitan areas—where the housing supply remains tight—are seen as safe bets for institutional investors, promising stable, long-term income. High-street commercial properties in central urban locations are maintaining strong demand, especially as tourist flows continue to grow.
Value-Add and Emerging Opportunities: From Logistics to Mixed-Use Projects
The value-add segment is buzzing with opportunities, particularly around office building renovations in top locations. Growing gaps between prime and secondary asset values, alongside stricter ESG regulations, are prompting investors to upgrade or refit office properties. Modern logistics assets—such as warehouses with redevelopment potential or urban “last-mile” facilities—are also capturing attention, benefiting from shifts in retail and delivery patterns.
Retail parks and shopping centers with operational inefficiencies are seen as ripe for reconfiguration or transformation into mixed-use spaces. Meanwhile, emerging sectors like self-storage, cold storage, dark kitchens, and electric vehicle charging infrastructure offer innovative paths to resilient revenue and higher profitability.
Opportunistic Investors Eye Conversion Projects
For investors willing to take on more risk, converting outdated office buildings—especially in strategic city locations—into residential or mixed-use developments presents lucrative opportunities. In markets with persistent housing shortages, turning underused commercial assets into much-needed homes could deliver both social impact and attractive returns.
Cross-Border Investment Heats Up
2026 is shaping up to be a year of international expansion. British, French, and Swedish investors are expected to increasingly venture beyond their home markets. Interest from the Middle East is set to intensify, while North American investors will continue to play a crucial role as both buyers and sellers on the European stage.
Looking Forward: Adapting to Change and Embracing Technology
Despite the positive outlook, challenges remain. Managing risks linked to demographic shifts, evolving consumer habits, and the need for operational agility will be vital. At the same time, technological innovation—led by artificial intelligence—is set to reshape how property is managed, sold, and valued across Europe.
For buyers, sellers, and developers in France, Spain, and Portugal, 2026 promises renewed optimism, with a wealth of new opportunities emerging across the continent’s most dynamic real estate markets.
Are you ready to seize the next big opportunity in Southern Europe’s property market? Stay tuned for more insights and exclusive updates on the region’s real estate renaissance.
