At the end of the third quarter of 2024, the property investment market in Portugal totalled 371.6 million euros, a figure that represents a growth of 42% compared to the same period in 2023, although with a slight drop of 5% compared to the 2nd quarter of 2024. In the year to date, investment has surpassed the one billion euro mark, in line with last year.

Hospitality and retail are the segments that have stood out the most to date. The hospitality sector has already totalled around 275 million euros in investment volume, attracting the attention of investors sustained by the remarkable performance of the main tourism indicators. The robust growth of the tourism market and the superior quality of the assets have driven strong interest, especially in properties located in the Algarve, Lisbon, Cascais and Porto.

Pedro Simões, Capital Markets Senior Consultant at Savills, says: “In 2024, the hospitality market in Portugal consolidated its position as one of the most attractive sectors for investment, attracting national and international capital. With a robust performance and varied opportunities, the country stands out as a leading European destination, attracting global operators interested in expanding their brands. This scenario sets the sector on a path of sustainable growth and long-term success.”

In the retail sector, shopping centres and retail parks are also attracting interest from investors, with capital going into both large, well-located assets and smaller assets in secondary locations that offer the potential for market appreciation.

It is important to emphasise that the amount of investment achieved is strongly anchored by the sale of Alegro Montijo, transacted for 178 million euros, which represents more than half of the total volume recorded up to the 3rd quarter of 2024.

The office market shows less dynamism in the transactional market compared to its historical volumes, having recorded a total investment volume of 184 million euros in the first nine months of the year. However, this year it has already surpassed the total investment volume recorded in 2023, with the transaction of reference assets in the Lisbon office market, in consolidated areas.

This scenario reflects the interest of core investors in Grade A buildings, joined by value-add investors who are actively looking for new opportunities.

In the Living segment, investment in PBSA (Purpose-Built Student Accommodation) continues to stand out as one of the most prominent segments, totalling around 144 million euros to date, corresponding to the sale of student residences located in Lisbon, Covilhã and Braga. Interest lies both in the acquisition of assets that are already operational and in investments in forward purchase operations.

The logistics segment recorded an investment of 66 million euros by the end of the 3rd quarter of 2024. Excluding 2022, which saw an exceptional volume of investment due to the sale of a number of portfolios, the volume for 2024 is in line with the average for the years between 2019 and 2023.

The market continues to show a mismatch between the strong performance of the occupational market and activity in the logistics transactional market. Despite the dynamism observed in the occupation of logistics space, this has not yet translated into significant volumes of investment, although the sector is very dynamic in promoting new projects. The sector is awaiting the entry of new products that are aligned with the demands of modernity, strategic location and efficiency that attract capital for larger-scale transactions.

Foreign investment accounted for 79 per cent of the total volume of transactions, with investors from South Africa, Germany, France and Spain totalling the most significant investment volumes. 

Prime yields have remained stable, following the decompression that took place throughout 2023, and began to stabilise in the first 6 months of 2024.

Interest rate cuts should bring about a change in investment activity. Although the effects may not be immediate, investor confidence will be strengthened.

Paulo Silva, Head of Country at Savills, comments: “The commercial property investment market in Portugal is showing clear signs of dynamism, with the third quarter revealing signs of recovery in investor confidence. Despite latent challenges such as a macroeconomic framework that still suggests caution and geopolitical tensions, we believe that the final stretch of the year will mark a new impetus and 2025 investment volumes should recover to pre-2023 levels.”