Portugal’s commercial real estate investment has reached new heights, with a remarkable surge of 151% in Q1 2025. This growth reflects the increasing confidence in the market, driven by various economic factors and strategic developments. Explore the implications of this investment boom and what it means for future opportunities in Portugal’s real estate landscape.
Portugal has emerged as a vibrant hub for commercial real estate investment, showcasing remarkable growth and resilience in recent years. According to Savills’ latest Investment Market Overview study, the first quarter of 2025 witnessed a staggering €651 million in commercial real estate investments, marking a 151% increase compared to the same period in the previous year. This article delves into the factors driving this growth, the performance of various sectors, and the geographical distribution of investments, providing a comprehensive overview of Portugal’s commercial real estate landscape.
A Surge in Investment Volume
The commercial real estate market in Portugal has experienced a significant uptick, with the €651 million investment in Q1 2025 representing a 144% increase compared to the average of the first quarter over the last three years. This surge is indicative of a robust recovery and growing confidence among investors, particularly in the wake of the challenges posed by the COVID-19 pandemic.
Sector Performance
The retail sector has emerged as a standout performer, capturing approximately 59% of the total investment volume, equating to €385.5 million. This is followed by the hospitality segment, which attracted €155.7 million (24%), the office sector with €88 million (13%), and logistics, which accounted for €24 million (4%). The diverse performance across these sectors highlights the multifaceted nature of Portugal’s commercial real estate market.
Retail Sector Resilience
Despite facing challenges from global economic uncertainties, including the trade war between the US and China and the implementation of new customs tariffs, the retail sector in Portugal remains resilient. Shopping centres, retail parks, and supermarkets have continued to attract significant investment, with notable transactions such as the acquisition of the entire share capital of NorteShopping by the Sierra Prime Fund, managed by Sonae Sierra. This acquisition has been pivotal in solidifying the retail sector’s leadership in the first quarter of 2025.
Hospitality: A Key Driver
The hospitality sector continues to assert itself as a major engine of commercial investment in Portugal. Representing 24% of the total investment volume in Q1 2025, this sector is buoyed by a robust pipeline of new projects, particularly in Lisbon and Porto. The growing commitment to the requalification and repositioning of existing assets further enhances the attractiveness of this sector for investors. High-quality assets have been acquired by Real Estate Investment Companies and asset managers seeking prime properties to integrate into their portfolios.
Office and Logistics: Gradual Recovery
The office segment is expected to register continued growth throughout 2025, reflecting a gradual recovery that has been consistently observed since the pandemic. The resilience of the occupational market, coupled with strong demand for office spaces, instills confidence among investors. The logistics market, on the other hand, remains robust, driven by a high appetite for development opportunities. However, the dynamics of sale and leaseback operations indicate current market pressures and stringent financing conditions, which may hinder a more significant flow of transactions.
Geographical Insights
Geographically, the North Region of Portugal, particularly the city of Porto, has emerged as a leader in attracting capital, accounting for approximately 67% of the total investment made in Q1 2025. The Algarve region followed closely, recording 16.9% of the total investment volume, while Lisbon and its Metropolitan Area attracted 15.5%. This geographical distribution underscores the diverse investment opportunities available across Portugal, with each region offering unique advantages for investors.
National vs. International Investors
In terms of the origin of capital invested, national investors have taken the lead, representing 77.6% of the total investment recorded in the first three months of the year. This trend reflects a growing confidence among local investors in the Portuguese commercial real estate market. Meanwhile, capital from the United Kingdom and Switzerland also played a significant role, highlighting the international appeal of Portugal as a destination for commercial real estate investment.
The Future of Commercial Real Estate in Portugal
As we look ahead, the outlook for Portugal’s commercial real estate investment remains optimistic. The office segment is expected to continue its recovery, supported by the resilience of the occupational market. Additionally, the logistics sector is poised for growth, driven by ongoing demand for development opportunities. However, the retail sector may face challenges due to global economic uncertainties, necessitating a cautious approach from investors.
Portugal’s commercial real estate investment landscape is witnessing remarkable growth, driven by a combination of factors including sector performance, geographical diversity, and investor confidence. With significant investments recorded in the retail and hospitality sectors, along with a gradual recovery in the office and logistics markets, Portugal is well-positioned to attract both national and international investors. As the market continues to evolve, stakeholders must remain vigilant and adaptable to navigate the challenges and opportunities that lie ahead in this dynamic environment. The future of commercial real estate investment in Portugal looks promising, making it an attractive destination for those seeking to capitalize on the burgeoning market.
