Portugal's Commercial Real Estate Investment Hits €1.23 Billion in H1 2025, Highest Since 2020
Portugal's commercial real estate investment market recorded a transaction volume of €1.23 billion in the first half of 2025, marking a 90% increase year-over-year and the strongest performance for the period since 2020. The findings were published in the latest Dils Recap report by the European real estate consultancy Dils, which highlighted the continued dominance of international capital in the Portuguese market.
According to the analysis, foreign investment accounted for more than 90% of the total capital deployed, with investors primarily targeting core and value-add strategies, which together represented over 70% of the transacted volume. The data shows that the retail and hospitality sectors were the most active, attracting nearly 50% and 25% of the total investment, respectively. Notable transactions that bolstered these figures include the sale of the five-star Hotel Cascais Miragem for €125 million and the portfolio sale of the Nosso Shopping and Fórum Madeira retail centers, which jointly exceeded €130 million. The report also noted that property yields remained stable during the period, following a compression phase at the end of 2024.
The residential sector continues to be characterized by a significant supply-and-demand imbalance, which is sustaining upward pressure on prices nationwide. In the Lisbon market, this disparity is particularly pronounced, with the report indicating a ratio of 14 homes sold for every new unit listed. This pressure has contributed to an average annual price growth of 5% from 2020 to 2024, a trend that is continuing in 2025, largely driven by the appreciation of existing housing stock. In Porto, the market shows similar resilience, with strong demand from national buyers pushing average prices upward.
The report provides a geographic breakdown of pricing in key second-home and luxury markets. In the Tróia/Comporta/Melides coastal region, prices for new projects show significant variation, ranging from approximately €3,500 per square meter to over €10,000 per square meter for premium units. In the Algarve, prices continue to climb, with values averaging around €5,500 per square meter in Portimão and surpassing €13,000 per square meter in prime areas of the Golden Triangle.
Lisbon's office market experienced a 34% decrease in take-up compared to the first half of 2024, with total absorption reaching 83,835 square meters. Dils attributes this slowdown to global economic uncertainty delaying corporate decisions. Despite the lower volume, prime rents in the capital have increased to €30 per square meter per month. This rise reflects strong demand for high-quality, new assets, with a significant development pipeline of 188,000 square meters, of which 67% is already pre-leased.
The industrial and logistics sector saw a 50% reduction in absorption, totaling 206,000 square meters. The Lisbon market accounted for 121,000 square meters of this, a figure in line with recent years despite a 25% annual drop. Major logistics leases were signed by Worten and Tesla. Rents in this sector have held steady at €5.25 per square meter per month in Lisbon and €5.50 in Porto, with expectations of future growth as the quality of available assets increases.
Finally, the hospitality sector is reinforcing its post-pandemic recovery, with the inauguration of 12 new hotels in the first half of the year, adding approximately 1,000 rooms to the national stock. An additional 4,500 rooms are anticipated by year-end. Tourism metrics remain strong, with Portugal recording 81 million overnight stays in the 12 months leading up to May 2025, a 3% increase, driven by key markets like the UK, Germany, and a growing number of visitors from the United States. Stay informed on Lisbon property market developments at realestate-lisbon.com.
