Portuguese Commercial Real Estate Investment Hits €1.22 Billion in H1 2025, an 82% Surge
A new market analysis has revealed that investment in Portuguese commercial real estate soared to €1.22 billion in the first half of 2025. This figure represents an 82% increase compared to the €668 million invested during the same period in 2024 and marks the most active first semester in five years. The report, published by JLL, indicates a strong return of investor confidence and the arrival of new international players to the market, alongside dynamic activity from domestic institutional capital.
The investment thesis for Portugal's commercial real estate is supported by a strong market rationale, including favorable macroeconomic forecasts and solid property market fundamentals. The investment volume in the first six months of the year has already surpassed the five-year average by 28%, a significant achievement considering the period included national elections, which can often create temporary market uncertainty. The performance signals that investors view Portugal as a stable and high-growth environment for capital allocation.
The target property types for this investment wave have been diverse, with the retail sector leading the charge, capturing 49% of the total volume. This was followed by hospitality at 27%, offices at 11%, industrial & logistics at 9%, and the 'living' and alternative sectors at 4%. The resurgence of large-scale shopping center transactions has been a key driver of the retail sector's dominance, re-establishing them as an anchor asset class in the Portuguese market after a period of lower activity.
Expected returns and investment timeline projections remain positive, according to the analysis. Andreia Almeida, Head of Research at JLL Portugal, stated, “Portugal maintains good macroeconomic prospects, with a prediction of GDP growth above the European average, in a context of continued compression of interest rates.” She added that this is coupled with “very strong indicators from the national real estate market, including reduced availability rates and a growth of rents in the diverse formats of assets.”
While the opportunity is significant, investors must consider risk factors. The market's rapid acceleration could lead to increased competition for prime assets. However, mitigation strategies can be employed by focusing on assets with potential for operational improvements and the adoption of ESG (Environmental, Social, and Governance) principles, which are becoming a key driver of value. The report notes a clear trend towards asset enhancement as a way to secure returns.
The market conditions supporting this investment opportunity are robust. The hospitality sector is growing across all indicators, and retail is demonstrating high dynamism with increased consumption and new store openings. While the office markets in Lisbon and Porto, along with the logistics sector, experienced a comparatively slower first half, JLL anticipates a progressive recovery in these areas for the remainder of the year, suggesting that opportunities may soon emerge there as well.
Comparable investments and performance benchmarks from previous years highlight the exceptional nature of the current market. The first half of 2025 is the strongest since 2020, a year that was itself boosted by an unusual volume of transactions before the global pandemic. The current growth is seen as more fundamentally driven, reflecting a reinvention of physical retail spaces and Portugal's innovative position in the sector.
Professional investment advisory and due diligence are crucial in navigating this dynamic market. The entry of new international investors underscores the need for expert local knowledge to identify the best opportunities and manage the transaction process effectively. JLL's report confirms that both new and established foreign investors were highly active in the first half of the year.
Financing options and leverage considerations are also favorable. With interest rates expected to continue compressing, the cost of capital may decrease, further enhancing the attractiveness of real estate investment. This financial environment provides a solid foundation for both acquisitions and new development projects. Investors are demonstrating a clear willingness to deploy capital, confident in the market's trajectory.
Exit strategies and liquidity considerations are strengthened by the market's depth and dynamism. The high volume of transactions and the presence of a diverse range of investors, from institutional funds to private equity, ensure a liquid market, providing investors with confidence that they can successfully exit their investments in the future. The strong performance is attracting a wider pool of capital, which further supports market liquidity.
Finally, the regulatory and tax implications for investors in Portugal remain a key aspect of any investment decision. While the political landscape saw some uncertainty with early elections, the market's ability to flourish regardless demonstrates a resilience that is highly attractive to foreign capital. The government's pro-business stance is expected to continue supporting the real estate sector's growth.
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