Portugal's Commercial Real Estate Investment Surges Over 60% to €1.8B, Savills Reports, with Lisbon Leading the Charge

Portugal's commercial real estate (CRE) market has delivered a powerful performance in 2025, with investment volumes surging to an impressive €1.8 billion by the close of the third quarter. This figure marks a remarkable 60% increase year-on-year and significantly surpasses the three-year average by 35%, according to a comprehensive new market report from Savills. After a period of cautious repricing due to interest rate hikes, the market is now showing clear signs of stabilization and a renewed, confident transactional rhythm, particularly in high-value segments within Lisbon and Porto.

The market's vigorous rebound is a testament to its underlying strength and the appeal of Portugal's economic fundamentals. The Savills report highlights that the average transaction size has also increased by 47%, indicating that investors are willing to deploy larger amounts of capital into single assets, a sign of deep market conviction. This trend is explored in-depth in our market intelligence and analysis blog. The performance has been so strong that it positions 2025 to be potentially the second or third-best year on record for CRE investment in the country.

Pedro Figueiras, Head of Capital Markets at Savills, provides an expert perspective: "Similar to the dynamism of the national economy, the Portuguese commercial real estate market continues to capture the attention of an increasingly diverse base of global investors, with different capital profiles. In parallel, the increase in liquidity and appetite from national investors is notorious." This broadening of the investor base, from institutional funds to private equity and domestic players, creates a more resilient and liquid market, a crucial factor for foreign investors seeking stable returns. Our guide on investment risks provides further context on the importance of market liquidity.

Deep Dive: Sector-Specific Investment Trends

A closer look at the data reveals a nuanced and sector-driven recovery. The retail sector has been the standout performer, with investment volumes nearly doubling (99% YoY growth). Within this, shopping centers have re-emerged as a favored asset class for institutional capital, attracting over €500 million in investment. This reflects a belief in the long-term viability of prime, well-managed retail destinations. The hospitality sector also posted strong results with 21% growth, directly benefiting from Portugal's record-breaking tourism numbers and positioning itself as a core asset class for many investors.

The office market, particularly in prime zones of Lisbon where quality supply is notoriously scarce, has also attracted significant capital. Resilient occupancy rates and rising rents for premium buildings make a compelling case for investment. Perhaps most interestingly for forward-looking investors, alternative assets are rapidly maturing. Purpose-Built Student Accommodation (PBSA) is leading this charge, with strong demand in academic hubs like Lisbon, Porto, and Coimbra driving yield compression. This trend highlights the market's diversification away from traditional asset classes. Investors exploring this niche can find specialized investment property agents to guide them.

Analysis of Investor Profiles and Yield Dynamics

The report indicates that investment funds and dedicated real estate asset management firms were the most significant capital source, responsible for over half of the total volume. This institutional-grade participation is a strong vote of confidence. For investors, the most critical data point may be the stabilization of prime yields in Q3. After a period of expansion, this stabilization suggests that asset pricing has found a solid footing, reducing uncertainty for new acquisitions. Our investment analyzer tool can help model scenarios based on these stable yield assumptions.

The observed yield compression in specific sub-sectors like supermarkets and PBSA is a direct result of intense competition for a limited pool of high-quality, income-producing assets. This dynamic rewards investors who can identify and secure these properties. It also suggests that value-add strategies, such as renovating or repositioning secondary assets, could offer significant upside. Executing such strategies requires a top-tier team of constructors and architects.

Broader Market Context and Strategic Outlook

The exceptional performance of the commercial real estate market does not exist in a vacuum. It is intrinsically linked to Portugal's robust economic health, political stability, and its growing reputation as a global hub for talent and tourism. These macroeconomic tailwinds provide a solid foundation for continued growth in property values and rental income.

For investors, several key market drivers should be on the radar:

• Supply-Demand Imbalance: In core markets like central Lisbon, the chronic shortage of new, high-quality office and residential space continues to put upward pressure on rents and capital values.
• Flight to Quality: Tenants and investors are increasingly prioritizing quality, well-located, and ESG-compliant buildings, creating a clear distinction between prime and secondary assets. Our guide on sustainability is relevant here.
• Infrastructure Upgrades: Ongoing public investments, including the expansion of Lisbon's metro and airport, are set to further enhance connectivity and unlock value in new sub-markets.
• Diverse Economic Engines: The growth of Portugal's tech scene and other high-value industries provides a resilient and diversified tenant base for commercial properties.

These factors combine to create a highly attractive investment environment, which is further detailed in our trend analysis and future forecasting blog.

Actionable Insights for Investors

The Savills report confirms that the Portuguese CRE market is in a growth phase. For investors, this translates into several actionable strategies. First, the data supports a diversified approach, with opportunities across retail, hospitality, offices, and particularly, alternative assets like student housing. Second, with prime yields stabilizing, the focus should be on assets with strong rental growth potential or value-add opportunities.

A successful investment in this market requires meticulous planning and expert advice. This includes conducting thorough legal due diligence, understanding the tax implications with the help of English-speaking accountants, and calculating the true acquisition costs using a true cost calculator. Partnering with a local real estate agency with a strong track record in the commercial sector is indispensable.

Future Outlook

The powerful momentum built up over the first three quarters of 2025 positions the Portuguese commercial real estate market for a very strong finish to the year and a positive outlook for 2026. The market has demonstrated its resilience and has emerged from a period of global uncertainty with renewed vigor. The depth and diversity of the investor pool suggest that this growth is sustainable.

As Portugal continues to shine on the international stage, its real estate market will remain a top destination for global capital seeking a balanced profile of security and growth. For tailored advice on how to capitalize on the opportunities within Portugal's dynamic commercial real estate sector, contact realestate-lisbon.com.