Property investment in Portugal falls in the first quarter of 2023


At the end of Q1 2023, the property investment market in Portugal had a total investment volume of around 234 million euros, 10% lower than the values observed in the same period of 2022. The drop was more noteworthy when compared to the pre-pandemic period: -54% compared to 2019 and -74% compared to 2018.

A total of 14 transactions were closed, with the retail sector leading the table due to the sale by TREI real Estate to LCN Capital Partners, for EUR 150 million, of Portfolio Amália, comprising 49 supermarkets.

The cross-border capital remains dominant in the Portuguese real estate investment market. In the 1st quarter of 2023, North American LCN Capital Partners accounted for 68% of the total investment volume, followed by investors from Germany with 13% and Portuguese investors also with 13%.

"The evolution of the economic context that impacted the increase in financing costs, which are still not stable, has been one of the explanatory reasons for the lengthening in the decision-making processes. The economic and financial forecasts that reveal a more optimistic character for the final stretch of 2023 are at the basis of this extension, while the mismatch of price expectations between buyers and sellers remains, especially in the transaction of assets with a more ‘core’ profile, which have been the most penalised", underlines Paulo Silva, Head of Country, Savills Portugal.

At the close of the first quarter of 2023, the forecasts that had been advanced at the end of 2022 remain unchanged. Office and industrial & logistics assets continue to generate demand, driven by positive absorption levels. However, investment volumes are likely to contract further in 2023, both due to misaligned pricing expectations from sellers and investors and the greater scarcity of product.

Prime yields have been decompressing since the end of 2022, and it is expected that in the next quarter we may see a further expansion adjustment of around 25 bps to accommodate increased financing costs.

Offices - Lisbon

At the end of Q1 2023, the Lisbon office market registered a total take-up volume of approximately 20 000 sq m, revealing a sharp decrease of 69% in comparison to the same period of 2022.

When compared with the average of the first quarters of the last 5 years, the result was also 55% below the average of 43 900 sq m. Zones 3 (New Office Zone) and 6 (Western Corridor) with 3,794 sq m and 3,729 sq m respectively, registered the highest take-up volumes of the first three months of the year. Even so the values achieved were not enough to avoid year-on-year decreases of around 89% and 19%.

“The results Q1 2023 are natural and to be expected, and they should be analysed with the proper framework; 2022 was the year of pre-lettings and owner occupiers which inflated, throughout all quarters, the take-up volume, putting further pressure on the 2023 figures. The pipeline we have for the next two months shows a clear recovery when compared to the first quarter”, says Frederico Leitão de Sousa, Head of Corporate Solutions, Savills Portugal.

This year we expect to conclude approximately 73,500 sqm, already entirely destined for owner-occupation and pre-let, numbers that clearly demonstrate the dynamics of the Portuguese market.

Of the 265,000 sqm expected to be concluded between 2023 and 2025, 55% are already pre-let or destined for own occupation, putting greater pressure on the available supply, which remains scarce compared to demand.

The market remains with a high volume of demand, but it will be necessary for it to be able to release quality supply in order to guarantee market competitiveness.

Despite the lower take-up volume expected for 2023 – albeit in line with the average for the last 5 years – companies continue to look to Portugal as a safe haven, moving operations from other countries to Portugal.

Offices - PortoAt the end of the first quarter of 2023, the Porto office market added up to a total take-up volume of 7,689 sq m, a result 32% higher when compared to the same period of 2022, and only 5% below the average of the first quarters of the last 4 years.

The Boavista CBD Zone recorded the best performance in the 1st quarter of 2023 with a total take-up volume of 2,124 sq m, followed by the Out of Town Zone with 2,924 sq m. However, the biggest growth in take-up volume was observed in the Expansion Zones, registering an increase of 106% when compared to the same period in 2022, corresponding to the closing of three operations for a total of 2,054 sq m.

The recovery of the market is already a fact, with Porto now featuring in the lists of preferred business destinations for international occupiers. Over the next two years, approximately 90,000 sq m of new projects are expected to be concluded, mostly concentrated in the Out of Town area, and which will bring to the market an unprecedented degree of innovation, technology and modernity.

Industry & Logistics

In the 1st quarter of 2023, the total take-up volume of the Industrial & Logistics market in Portugal slightly exceeded 200,000 sq m, which represents an increase of 159% when compared to the same period in 2022 and a very significant increase of 284% compared to the same period in 2021.

The Greater Lisbon region had a weight of 52% in the total take-up volume, followed by the Centre region with 25%. The Industry & Manufacturing and Distribution & Logistics sectors led the market with a weight of 90% in the total volume of occupied area. In the Greater Lisbon market, the 1st quarter registered a take-up area close to 112,000 sq m, which represents an increase of 79% when compared to the same period in 2022.

The Alverca – Loures axis registered the best performance of the quarter with a total take-up volume of 66 264 sq m, a result mainly leveraged by LIDL’s logistics operation with 54 000 sq m. The Azambuja – Vila Franca de Xira prime axis had the second best performance of the quarter with a total take-up of 27,896 sq m.

“The first quarter of the year gives us positive indicators for the rest of the year, having closed with a take-up in the quarter near to that of the first half of last year. Rents remain in line with the end of last year, but the upper hand is on the landlord side, driven by the current shortage of available quality space. The decision period is longer. but the intention to occupy remains, with several occupancies expected in the projects under development in the coming months. The general market sentiment is one of cautious optimism”, points out Pedro Figueiras, I&L Director, Savills Portugal.


Despite the reduction in private consumption, the retail market remains resilient with the restaurant and food distribution sectors, in particular, leading the demand. F&B businesses are taking advantage of opportunities arising from the increase of tourism in Portugal.

The take-up period for retail assets has increased, with greater pressure on rents from occupiers. However, this pressure is only felt outside the high-street areas. The luxury sector, aimed at classes with greater purchasing power, does not appear to be affected by the uncertainty of the current economic climate. Retailers offering low-cost products and services are also showing great dynamism, being responsible for several openings in the first quarter of the year.

Quality product continues to be scarce, being quickly absorbed if it is provided in high footfall areas.

“The first months of 2023 have demonstrated a trend that has been consolidating in recent years: the retail sector in Portugal is strongly supported by the tourism sector. F&B businesses are responsible for most of the new shop openings where customers are essentially tourists. The need for proximity food retail is also consolidated, and new low-cost international concepts, with a wide offer in the fashion and home sectors, are very active. There are also major international brands eager to enter the national market”, said José Galvão, Retail Director, Savills Portugal.


In the residential market, during the first quarter of 2023, 35,529 residential properties were sold in Portugal, a number that reflects a decrease of approximately 16% when compared to the same period in 2022, when 41,310 homes were transacted.

Miguel Lacerda, Lisbon Residential Director, Savills Portugal, indicates, “The market is still uncertain, making people more cautious when it comes to making decisions such as buying a home. In addition, the steady increase in construction costs, which has been reflected in final house prices, rising interest rates and stricter bank financing rules are taking their toll. Notwithstanding the challenges that 2023 holds for the residential market, the demand remains very dynamic and the interest of foreign investors will not questioned. Prices are now showing a slowdown in the pace of growth”.

The city of Lisbon closed the first quarter of the year with an average price, in the high-end market (25% more expensive), of EUR 8,696/m² for new properties and EUR 5,932/m² for used properties.


In the tourism sector, Portugal is not only on the road to recovery; it is also about to surpass the pre-pandemic tourism figures: until February 2023 the country recorded 7.5 million overnight stays. The same period of 2019 recorded a total of 6.4 million overnight stays, a figure that translates into a difference of more than 15%. This is a very optimistic result considering the events and challenges of 2022.

Regarding the number of guests counted until the end of February, 3.1 million tourists, were registered against 2.7 million in the same period of 2019 and 2.1 million in 2021. Spanish citizens (240,201), British (188,998) and French (152,888) make up the top three nationalities that visited Portugal during the first two months of the year.

“2023 should be a successful year. The forecast is for full recovery, which means that tourism-related figures should break new records and surpass pre-pandemic levels. We expect 70 new hotel openings by the end of the year, offering over six thousand rooms across the country. In Q1 2023, we have witnessed the opening of 29 new hotels” says Alberto Henriques, Business Development Director, Savills Portugal.