Southern Europe's institutional deal flow: the operators reshaping a €27 billion market

Combined real estate investment volumes across Southern Europe, spanning Italy, Spain, and Portugal, exceeded €27.4 billion in 2025, a 19% year-on-year increase, according to Cushman & Wakefield. The figure reflects a structural reallocation of institutional capital toward Mediterranean markets that, until recently, sat on the periphery of core European allocations. Behind the headline numbers, a cohort of operators and public-sector leaders is shaping the investment landscape through infrastructure-linked platforms, regulatory reform, and cross-border partnerships.

This article examines the profiles and market context surrounding Riccardo Paganelli, Pedro Baganha, and the broader Southern European ecosystem, drawing on verified transaction data, regulatory frameworks, and forward-looking projections.

A continent-wide recovery, led from the south

Investment into European real estate climbed to €241 billion in 2025, up 13% from 2024, according to CBRE. Southern Europe outperformed the continental average. Spain recorded €18.4 billion in real estate investment in 2025, the highest level since 2018 and a 31% year-on-year increase, per CBRE. Italy reached €12.5 billion, a 23% jump driven by retail, hospitality, and logistics, according to Cushman & Wakefield.

The outperformance is significant. Southern European markets collectively grew at roughly 1.5 times the rate of the broader European market, a reversal of the historical pattern in which capital concentrated in London, Paris, and the Randstad. For institutional allocators attending GRI events across the continent, the question is no longer whether Southern Europe deserves a seat at the table but how to access it efficiently.

Savills forecasts European real estate investment volumes to rise by around 18% in 2026 as pricing firms up and macroeconomic conditions stabilise. Spain alone is expected to see investment increase by between 5% and 10% in 2026, placing total volume between €19 billion and €21 billion, according to CBRE.

Who is Riccardo Paganelli and what role does he play in Italy's infrastructure pivot?

Riccardo Paganelli is the Managing Partner at Actarus Investments, a platform positioned at the intersection of real estate, infrastructure, and renewable energy. Paganelli is leading a biomethane project in Southern Italy in collaboration with Eren Industries and Macquarie Capital, according to GRI Institute data. The initiative aligns with Italy's broader push to decarbonise its built environment and energy supply, placing Paganelli at the centre of a deal structure that bridges multiple asset classes.

The regulatory tailwind is considerable. Ministerial Decree DM 09/2022, issued under the PNRR (Italy's National Recovery and Resilience Plan), enables access to €1.9 billion in capital contributions and incentive tariffs for new and converted biomethane production plants. The decree has been allocating incentives between 2023 and 2025, creating a defined window for first-mover operators. PwC projects that Italy could achieve a biomethane production capacity exceeding 320,000 Smc/h in the near future, driven by NRRP-funded projects.

Italy's biomethane opportunity sits alongside the revised Energy Performance of Buildings Directive (EPBD), which mandates that by 2030, 15% of the least efficient properties must reach at least energy class E, and class D by 2033. All new buildings must be zero-emission by 2030. For a country with one of Europe's oldest building stocks, the directive creates both a compliance burden and an investment opportunity in renovation, retrofit, and energy infrastructure.

Paganelli's work with Actarus Investments illustrates how institutional capital in Southern Europe increasingly flows through hybrid platforms that combine real asset ownership with infrastructure development. The collaboration with Macquarie Capital, one of the world's largest infrastructure investors, signals that global allocators view these Italian projects as institutionally scalable.

Institutional capital in Southern Europe increasingly flows through hybrid platforms that combine real asset ownership with infrastructure development, and Italy's regulatory framework is actively incentivising this convergence.

How is Pedro Baganha transforming Porto's housing market for institutional investors?

Pedro Baganha, Porto's City Councillor for Urbanism, Public Space and Housing, announced an ambition to increase public housing supply in Porto from 2% to 10% over the next six years, according to Iberian Property and GRI Institute reporting. The target represents a fivefold expansion that would fundamentally alter the city's residential landscape and, by extension, the risk-return profile for institutional residential investors.

Portugal's housing policy has undergone considerable upheaval. Law No. 56/2023, known as Mais Habitação, sought to address housing shortages by restricting short-term rental licenses and imposing an extraordinary contribution known as CEAL. The current government has partially reversed this framework through the Construir Portugal programme, which eliminated the CEAL tax and returned short-term rental decision-making power to municipalities.

Baganha's housing expansion target in Porto operates within this evolving regulatory environment. For institutional investors in living assets, a category that became Europe's dominant real estate sector at €53 billion in 2025 according to CBRE and GRI Institute data, the Portuguese policy trajectory creates both opportunity and complexity. Municipal-level decisions on licensing, density, and public-private partnerships now carry greater weight than national frameworks in determining project viability.

Porto's ambition to increase public housing from 2% to 10% over six years represents one of the most aggressive municipal housing targets in Western Europe, creating a potential pipeline for institutional residential capital.

GRI Institute members active in the Iberian Peninsula have tracked this regulatory evolution closely, particularly through discussions at España GRI and Portugal-focused convenings where policymakers and investors engage directly on housing supply constraints.

Living assets and the Southern European opportunity

The €53 billion invested in European living assets in 2025, encompassing residential, student housing, and senior living, confirms a secular shift in institutional allocation. Southern European cities, with younger demographic profiles relative to Northern Europe, constrained housing supply, and growing urbanisation rates, present compelling fundamentals for this capital.

Spain's record investment year and Italy's logistics-led recovery both reflect a deepening of the institutional buyer base. Cross-border capital flows into Mediterranean markets are supported by improving transparency, standardised lease structures, and a growing pool of local operating partners capable of managing assets at institutional scale.

The convergence of housing policy reform, energy transition mandates, and record transaction volumes creates a distinctive moment for Southern European real estate. Operators who can navigate regulatory complexity while structuring assets for institutional ownership are positioned to capture outsized deal flow.

What does the 2026 outlook hold for Southern European deal flow?

The forward indicators are constructive. Savills' projection of an 18% rise in European investment volumes in 2026 suggests that the recovery observed in 2025 has further room to run. CBRE's Spain-specific forecast of €19 billion to €21 billion in 2026 investment would represent another step-change for the Iberian market.

In Italy, the continued deployment of NRRP-funded incentives for biomethane and energy infrastructure provides a measurable pipeline of investable projects. The EPBD's 2030 deadlines are beginning to influence capital expenditure decisions across the Italian building stock, creating demand for renovation-linked investment vehicles.

Portugal's regulatory recalibration, with the shift from national restrictions to municipal-level housing policy, creates a more nuanced but potentially more investable landscape. Baganha's Porto housing target, if executed through public-private structures, could serve as a template for other Portuguese municipalities facing similar supply deficits.

Southern Europe's 19% investment growth in 2025 outpaced the broader European market and reflects a structural, rather than cyclical, reallocation of institutional capital toward Mediterranean markets.

For GRI Institute members, the Southern European thesis rests on three pillars: regulatory frameworks that actively channel capital toward housing and energy infrastructure, a growing roster of operators with institutional-grade capabilities, and demographic and urbanisation trends that underpin long-term demand. The operators profiled here, from Paganelli's infrastructure-linked platform to Baganha's municipal housing ambition, represent distinct but complementary entry points into a market that has decisively moved from periphery to core.

Sources and methodology

All data points cited in this article are drawn from CBRE, Cushman & Wakefield, Savills, PwC, Iberian Property, and GRI Institute research. Transaction volumes refer to completed deals as reported by the respective consultancies. Projections are attributed to their originating institutions and carry the confidence levels assigned during verification. GRI Institute editorial standards require that all statistics be traceable to named sources.