European commercial real estate investment rose 8% year-on-year to just over €187 billion over the past 12 months, despite a slowdown in activity during the latest quarter, according to BNP Paribas Real Estate. Retail investment fell by 5%, while hospitality declined by 7%. In contrast, office and logistics investment increased by 14% and 8%, respectively.
Retail remains the third-largest asset class, with €37 billion invested over the past twelve months, representing 20% of total investment volumes (compared with 23% at the end of September 2025). The sector ranks behind offices (28%) and logistics (24%), while remaining ahead of hospitality (11%). While the United Kingdom, Germany and France have traditionally accounted for the majority of retail real estate investment in Europe, investment dynamics are now shifting in favour of other markets.
Indeed, while investment volumes in the United Kingdom declined by 33% year-on-year, volumes in Germany and France remained broadly stable. Conversely, Spain stood out with a 15% increase in invested volumes. Italy continued its growth trajectory for the third consecutive year, reaching a record level with more than €4 billion invested. In this changing environment, Southern European markets are strengthening their appeal to investors. Other countries also recorded exceptional growth in investment activity, notably Norway (+62%) and the Netherlands (+52%), albeit from a much lower base.
Furthermore, it is worth noting that over the past few quarters, variations in investment volumes between countries have been strongly influenced by differences in the retail subsectors attracting capital: retail warehousing in Northern Europe and shopping centres in Southern Europe. However, on a consolidated European basis, investment volumes across subsectors are tending to balance out.
High street retail assets recorded a slight increase in investment volumes (+4%), reaching €8 billion compared with €7.7 billion a year earlier. However, this result should be viewed with caution, as it was largely driven by the Kering acquisition of 8 Via Monte Napoleone in Milan, completed in the second quarter for €1.2 billion, while activity remained more mixed across the rest of the segment.
Shopping centres recorded a 4% decline in investment volumes over the past twelve months, with €7.8 billion invested compared with €8.2 billion a year earlier. This trend masks significant geographical disparities: France and the United Kingdom posted the sharpest decreases, down 53% and 23% respectively. Conversely, Germany recorded a notable increase of 51%, while Spain achieved a solid growth of 19%.
Several major transactions were completed over the past twelve months, including the acquisitions of the Palladium in Prague (€700 million), the Orio Center in Bergamo, Italy (€470 million), and the Islazul shopping centre in Madrid (€340 million). Market activity has also been supported by a sustained flow of mid-sized transactions ranging between €100 million and €200 million, particularly in Germany and Spain.
Shopping centres continue to attract strong interest from a broad range of investors, at a time when high-quality assets available for sale remain scarce and resilient consumer spending supports the sector’s outlook. This demand comes from both specialist investors and more diversified buyer profiles, including European and South African listed property companies, US and UK private equity funds, and sovereign wealth funds.
Investment volumes in retail warehousing across the main European markets reached €8.8 billion over the past twelve months, outperforming the two other segments despite a year-on-year decline of 20%. This decrease was largely driven by weaker activity in the UK (-31%) and Germany (-44%). By contrast, Spain (+63%) and France (+54%) posted particularly strong performances.
Retail warehousing continues to attract investor interest, particularly for assets with a strong food retail component. However, the limited availability of opportunities on the market is constraining transaction volumes.
More selective investors
“The market is currently experiencing a phase of yield decompression, with differing adjustment rates across markets. Mature markets remain more sensitive to the macroeconomic environment. Against a backdrop of higher interest rates and a lag in value adjustments, investors are adopting a more selective approach, focusing on the highest-quality assets and opportunities offering the strongest fundamentals,” explains Patrick Delcol, Head of European Coverage, Retail, Logistics & Hospitality at BNP Paribas Real Estate.
Retail real estate, and particularly shopping centres and retail warehousing, currently offers one of the most attractive risk premiums over government bonds within the property sector. In an environment where higher interest rates continue to weigh on valuations, these segments are expected to maintain their appeal to investors and demonstrate resilience in the coming quarters, thereby supporting investment activity.
Geographically, investors are particularly focusing on markets supported by strong macroeconomic fundamentals and robust consumer spending. Poland stands out due to its economic dynamism and infrastructure development, while Southern Europe continues to demonstrate strong appeal. Spain is benefiting from favourable economic growth, while in Italy the adjustment in yields has created more attractive pricing levels, likely to attract additional capital, particularly from specialist investors.
European consumption remains resilient
According to Eurostat, consumer confidence in Europe deteriorated again in September and October after recovering during the summer. Despite this renewed uncertainty, retail sales volumes remain generally on an upward trajectory, confirming the resilience of European consumption, albeit with contrasting trends across countries. While France and Germany have broadly maintained their sales levels compared with last year, Spain, Ireland, Portugal, Italy, Poland and the Nordic countries have recorded stronger growth. This resilience, observed throughout the third quarter of 2026, continues to support retail fundamentals and the sector’s attractiveness to investors.
