Italy's retail real estate market leads Europe with €3.3b investment

The European retail real estate market is experiencing a resurgence, with investors injecting nearly €40 bn in 2025, a 26.5% increase from the previous year.

Via Montenapoleone, Milan

This positive trend is expected to continue into 2026, with investments projected to reach nearly €45 bn, driven by value-add strategies for repositioning and modernising properties.

The forecast comes from Scenari Immobiliari's "2026 Report on the Commercial Real Estate Market in Europe and Italy".

Key drivers of this growth include strong performances in France (+6%, €2.9 bn), Spain (+19%, €2.8 bn), and, notably, Italy, which saw the best national and European performance in the retail sector. Italy recorded over €3.3 bn in investments, a 29% increase from 2024, becoming the leading investment sector in the country. This growth is attributed to increased availability of debt capital, particularly for out-of-town sectors like shopping centres and factory outlets, attracting both core+ operators and opportunistic smaller businesses. High streets continue to draw significant interest, especially from foreign investors.

Despite contractions in Germany (-9%, €6.1 bn) and the UK (-12.5%, €6.5 bn), the overall European market saw average sales values and rental prices rise by over 3% in 2025, with a further 3.5% increase anticipated in the current year. This improvement is fueled by growing consumer spending, recovering household confidence, and the positive impact of international tourism and internal mobility, which are revitalising urban shopping centres.

In 2025, the total turnover for the Italian commercial real estate market was approximately €7.8 bn, a 5.5% decrease from the previous year. However, the retail sector's share in real estate turnover, which soared to 38% in 2024, returned closer to its long-term average of 70% in 2025 due to numerous transactions involving large out-of-town retail spaces and national retail networks. While active, the market remains below pre-COVID levels (2017-2019).

Geographically, southern Italy showed the most dynamism in 2025, followed by the northern regions, which still account for just under half of all transactions, primarily in the northwest. Unit values for large retail spaces and shops saw modest increases of 0.6% and 1% respectively, while rents rose by 0.6% and 0.8%. Northern Italy's neighbourhood businesses experienced stronger growth, with unit sales values up 1.8% and rents up 1.3%, reflecting improved performance in vacancy rates, yields, and footfall across its commercial areas. Central and southern regions also saw positive, though less dynamic, variations.

Francesca Zirnstein, General Manager of Scenari Immobiliari, commented: "The significant increase in retail investments recorded in 2025 demonstrates that the European and Italian commercial real estate markets are entering a new phase of maturity. After challenging years characterised by structural changes in consumption and urban balances, the sector has reached a point of stabilisation that now allows operators to return to investing with greater confidence. This trend is particularly evident in Italy, with Milan and Rome continuing to play a central role in defining market standards."