Southern Europe’s real estate markets: Stronger for longer
According to Savills latest research, Southern Europe is expected to expand faster than the EU average, supporting real estate occupier demand and investor sentiment. For 2026, Oxford Economics forecasts a GDP growth of 2.4% for Spain, 2.1% for Portugal and 1.8% for Greece, compared with an average 1.0% for the EU27.
In 2025, Spain, Italy, Portugal and Greece saw real estate transaction volumes of €35 billion, an all-time high and 24% above 2024 levels. The region’s recent outperformance is increasingly underpinned by structural factors: a deepening investable universe, sustained tourism-led demand, lower e-commerce exposure in retail, and office and logistics dynamics that look more favourable than in several core markets, says Savills.
Energy is an additional differentiator in a more volatile geopolitical backdrop, according to the international real estate advisor. Higher domestic renewable penetration should help dampen exposure to imported energy shocks and improve operating-cost visibility for occupiers, supporting leasing decisions and business confidence in energy-sensitive sectors.
James Burke, director, Global Cross Border Investment at Savills says: “After an exceptionally strong 2025, we expect momentum in the region to continue this year, albeit at a more moderate pace. Investors aren’t just chasing a bounce in the South, they’re underwriting a cleaner demand story and a deeper opportunity set as the Mediterranean shifts from ‘satellite allocation’ to ‘strategic exposure’ in European portfolios.”
Jaime Pascual-Sanchiz, CEO Savills Iberia and head of Southern Europe, says: “Southern Europe has gained significant market share and sits firmly on cross-border investors’ radar. The region has benefited from a growing, more liquid universe of living sector assets such as care homes, senior housing, and student accommodation, alongside strong hospitality fundamentals underpinned by sustained tourism demand.”