According to Savills, real estate investment volumes in southern Europe (Spain, Portugal and Italy) reached a record high of €31.7 bn in 2022, a 36% increase on the previous year.
Multiple factors played into the region’s success, which benefitted particularly from the return of domestic consumption post-Covid and being more insulated against energy price hikes compared to the rest of Europe.
Southern Europe felt the effects of the pandemic more harshly than other European countries with Italy and Spain among the first hit.
Their economies suffered greatly from travel bans and lockdown restrictions due to a heavy reliance on tourism and as a result, the rebound was greater than elsewhere in Europe, says the international real estate advisor.
Strong tourism seasons post-Covid and the return of retail spending consequently led to higher investment volumes in 2022. Growth was driven by the service sector, with hotels and leisure once again a source of income.
Georgia Ferris, European research analyst at Savills, said: 'Southern Europe had the largest recorded share of total European investment volumes last year at 11%, up from 6% in 2021 and higher than the previous five-year average of 7%.
'On a city by city level, for the first time since 2011, Milan received a higher volume of investment than Madrid.'
Carlos Ruiz-Garma, director, European capital markets at Savills, said: 'While we don’t expect another record year for the region in 2023, some market fundamentals will remain solid and will continue to attract investors. This is notably the case for beds and sheds.
'Across southern Europe, the structural supply and demand imbalance for multifamily and logistics properties favours rental growth, or at least stabilisation, and occupier demand will continue to support the investment market.'