Italy
Netherlands
Portugal
Spain
In the third quarter of 2025, according to analysis by the Dils Research Team, the European commercial real estate market showed renewed vitality, with an overall positive trend across Southern Europe and stable performance in the main Central and Western European markets.
Based on the investment volumes recorded since the start of 2025, Portugal and Spain posted the strongest growth in commercial real estate activity (+83% and +64% respectively). Italy also performed well, with a +22% year-on-year increase, in line with its historical highs. Together, these results confirm the outperformance of Southern European markets, which have become key drivers of growth in the European real estate landscape. This renewed momentum reflects the widespread interest in Southern Europe. After the financial and sovereign debt crises of the 2010s, the region has regained its attractiveness: Spain now shows the highest GDP growth in Western Europe, while Italy has achieved greater political stability and managed to reduce financing costs.
Conversely, France, the Netherlands, and Germany recorded broadly stable investment volumes, remaining below the peaks seen a few years ago due to lingering economic and financial uncertainty. By the end of Q3 2025, these markets had posted results largely in line with the same period of 2024 – slightly positive for Germany and the Netherlands, slightly negative for France. Notably, Spain has now overtaken France as the second-largest investment market in continental Europe.
Widespread growth in investment activity was observed across the retail, living, and hospitality sectors, which acted as the main drivers of investment in Southern European markets. In these countries, the combined share of these three asset classes accounts for 60% of total volumes, compared to around 50% in Central and Western Europe. The office sector showed overall stability, despite slight contractions in the Italian and French markets, while logistics investments declined, weighed down by weaker performance in the French and Dutch markets.
Investment activity is expected to gain support in the coming quarters from yield compression, a gradual trend that began earlier in the year following the stabilization of financial conditions. The ECB has now adopted a neutral policy stance, with the refinancing rate steady at 2.15% and little room for additional cuts – a level consistent with the long-term inflation target of 2%, which has now been achieved across the euro area. At the same time, ongoing political tensions and growing concerns over international trade – driven by the new policies of the U.S. administration – are weighing on business and investor sentiment, increasing overall uncertainty. However, recent PMI data for the manufacturing sector indicate early signs of stabilization in European industrial production.
Amid this broader uncertainty, occupier demand remained largely stable, with some markets outperforming – such as office take-up in Barcelona and logistics activity in the UK and the Netherlands. In the office sector, a wait-and-see approach prevailed among major occupiers, reflected in the limited number of large-scale transactions, particularly in Milan and Paris. Take-up trends are becoming increasingly supply-driven, as tenants remain highly selective, prioritizing modern, well-located spaces. In the logistics sector, activity continues to adjust downward overall, although positive signals are emerging from Germany, Europe’s largest market, where take-up has rebounded by 10% after reaching a low point in 2024.
In parallel, the residential sector continued to benefit from the interest rate cuts introduced in 2024, which improved access to mortgage financing and supported a recovery in housing demand. As a result, most monitored countries saw an increase in residential transactions compared to the same period in 2024, alongside further modest rises in average €/sqm prices in many cases, with more significant increases observed in markets such as Portugal.
