Portugal is expected to record the highest retail sales growth in Europe in 2025, with a projected increase of 4.8%, according to Savills’ European Retail Report 2025. The country’s performance surpasses Luxembourg (4.4%) and the Czech Republic (4.1%), confirming the positive momentum of the Portuguese market in a broader European context of gradual recovery.

The study points to a progressive rebound in retail sales across Europe, supported by falling inflation and consistently high savings levels, despite an international environment that remains uncertain.

After five years marked by the effects of the pandemic and average growth of just 0.8%, Savills estimates average real retail expansion of 2% in 2025, followed by 1.7% in 2026 and 1.9% in 2027 - figures close to pre-pandemic levels, in an environment of greater stability but with consumers who are more selective and focused on value for money.
By 2030, average retail sales growth in Europe is expected to stand at around 1.8% per year, reflecting a transition to a new normal of more moderate but sustainable expansion.

Portugal stands out thanks to the resilience of domestic consumption, strong tourism activity and improved disposable income, along with factors such as the increasing attractiveness of cities and a high-quality retail offering.
In contrast, the largest economies in Western Europe show more contained trajectories: Germany (2.7%), France (2.3%) and the United Kingdom (0.8%), while Italy is expected to record a slight contraction of -0.1%.

José Galvão, Head of Retail at Savills, comments: "As has been the case in recent years, tourism is one of the main drivers of growth in the retail sector in Portugal. This study also shows that the socio-demographic changes underway in Europe will have a direct impact on commercial activity and will be decisive for the emergence of new retail concepts and formats."

Despite the expected decline in the European population from 2028 onwards, with a net loss estimated at around six million residents by 2050, the demographic impact on retail is far from linear. Savills notes that rising per capita income and accumulated wealth serve as buffers, helping sustain sales in Europe’s major urban markets.

The study also highlights the importance of tourism in European retail performance. Europe remains the world’s top tourist destination—with 750 million arrivals in 2023 and more than €500 billion in spending—and projections for 2025 point to an 8% increase in foreign arrivals, which translates into more footfall and higher sales in the main shopping areas of European cities.

Prime rents in Europe continue to rise, with an average increase of 8% since 2022. On major shopping streets, the luxury segment leads with gains of around 14%, the mass market is approaching 9%, and in shopping centres and retail parks, rents are growing by around 4%. In the last year alone, high-street rents increased 2.5%, shopping centre rents 1.8%, and retail park rents 0.5%.

In the investment market, retail is regaining weight relative to other sectors, with volumes estimated at €35.5 billion in 2025, up 5% from 2024. Retail parks lead in the number of transactions, followed by shopping centres, while prime locations register fewer deals due to the scarcity of available assets.

Major European cities remain key platforms for the expansion of global retailers, with London, Paris, Milan, Madrid and Amsterdam among the top destinations. The study identifies a new wave of international brands - particularly in sports and athleisure, health and beauty, foodservice and leisure - supported by strong capital inflows in recent years.

Over the next five years, the limited supply of new stock is expected to reinforce the focus on upgrading and optimising existing assets, promoting flexible uses and integrating ESG criteria, both from occupiers and investors.