Real Estate investment in Portugal up 10% in 2025 thanks to overseas capital
Commercial real estate investment in Portugal raked in €2.6Bn in 2025, a 10% increase on 2024 according to real estate consultants Cushman & Wakefield.
In 2025 the sector enjoyed a stable year and 2026 shows signs of continued dynamism because of pipeline projects and because many deals originally slated for the end of 2025 should be concluded in the first quarter of 2026.
And overseas capital represented a considerable slice of the commercial real investment pie in 2025, representing around 60% of the total invested, although shy of the historic highs seen before the Covid-19 pandemic.
Retail led with 29% of total volume, followed by the offices segment with 26% and hotels with 20%.
Alternative asserts including specialised residential developments and senior and students residences represented 13% of investment while the industrial and logistics segment accounted for 11%.
However, both the offices and logistics segments saw a downturn in occupancy rates compared to 2024 with falls of 23% in Lisbon and 51% in Porto for offices and a fall of 30% for logistics take-up.
Retail saw a 20% reduction in the number of new openings, although with strong dynamism in the restaurant sector.
The hotel industry remained resilient, with more than 80 new hotels opened, offering about 4,800 additional beds.
Despite the lower absorption, rents rose in practically all sectors, especially in prime areas, showing that the drop in occupancy resulted from the scarcity of quality supply and not from the lack of demand. All yields compressed throughout the year, with the exception of the offices in Lisbon, which remained stable at 5.00% (yields move inversely to prices, so the compression of the yield implies an appreciation of the asset).
Commercial real estate yields decrease as asset value rises (yield compression) because intense investor demand, often fuelled by low interest rates, falling perceived risk (flight to quality), and strong economic outlooks, drives up property prices faster than rents, meaning more is paid for the same income stream, making the percentage return (yield) smaller, as seen in prime locations and stable markets.
At the end of the year, prime yields stood at 5.00% for offices in Lisbon, 6.50% for offices in Porto, 5.50% for logistics, 4.00% for street commerce and 6.15% for shopping centers.
