London, UK: Europe's property recovery is real, but it is not arriving everywhere at once. Savills forecasts that European real estate investment volumes will reach €156bn for the first three quarters of 2026, a 4% year-on-year increase, yet behind that headline figure sits a continent splitting into clear winners and laggards. Central and Eastern Europe is expected to finish the period 34% above the equivalent nine months last year, with the Nordics up 25% and Southern Europe up 20%. Western Europe, by contrast, is down 5%, the only region moving in reverse.
Spain continues to pull significant capital, supported by resilient economic performance and an attractive relative sovereign risk premium against other eurozone markets. In Italy, a handful of large transactions are carrying the wider investment total, with out-of-town retail, hospitality and logistics drawing the strongest interest, alongside value-add capital that remains the dominant force even as core investors gradually re-enter the market. In the Nordics, Sweden's softer Q3 estimate follows a strong first half built on several sizeable deals, with Savills still seeing robust appetite from domestic and Norwegian groups and scope for improvement in the final quarter. In CEE, Poland is benefiting from intra-regional capital flows, particularly from Czech investors, while defence and manufacturing activity increasingly underpins the outlook for industrial demand.
"The living sectors now account for more than 30% of European investment volumes over the first three quarters of the year. This has been complemented by a continued revival in retail investment activity, with shopping centres attracting particular interest," said James Burke, Director, Global Cross Border Investment at Savills. "In terms of capital sources, we continue to see robust intra-European capital flows from UK, French, Swedish and German investors. US investors remain the largest source of international capital into the European market, with Canadian investors expected to become even more active in the future."
What deserves closer attention from investors is a structural shift beneath these regional numbers, the living sector crossing the 30% threshold of total European investment volume is no longer a diversification trend but has become the dominant allocation decision shaping where capital actually lands, ahead of logistics, offices and retail individually. For developers weighing where to place new capital, the combination of record living sector share, a genuine retail revival concentrated specifically in shopping centres, and a widening gap between CEE and Western Europe growth rates points toward a market rewarding sector and geography selection far more than broad-based timing calls.
"Prospects for broad-based yield compression have faded, and outward movements are now expected across more markets and sectors. Offices and retail are likely to show the greatest divergence, as pricing increasingly distinguishes prime assets from secondary stock. In this environment, investment performance will depend less on market-wide yield shifts and more on income growth, effective asset management and the ability to uncover opportunities where pricing does not fully reflect the underlying potential," said Lydia Brissy, Director in Savills' European commercial research team.
That shift from yield compression to asset management as the primary return driver marks a genuine change in how European real estate performance will be won over the coming year, rewarding operators who can actively manage income and identify mispriced opportunities over those simply waiting for market-wide tailwinds to lift all assets equally.
People mentioned
- James Burke, Director, Global Cross Border Investment, Savills
- Lydia Brissy, Director, European Commercial Research, Savills
Image Source: Generated image for illustrative purposes only.
Companies mentioned
- Savills, international real estate advisor behind the research
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