Economy: Sustained Growth And Inflation Convergence
Portugal's economic performance is expected to remain resilient in 2026 and 2027, despite a less favourable international environment. According to Moody's Analytics, GDP is projected to grow by 1.9% in 2026 and 2.0% in 2027, reflecting steady, albeit moderate, economic expansion. Growth will be driven primarily by domestic demand, while a challenging external environment is expected to continue weighing on overall economic activity. Heightened external pressures are projected to higher inflation in 2026, reaching 3.2%. As these pressures ease and labour cost growth moderates over the following years, inflation is expected to gradually converge towards the European Central Bank's target, reaching 2.1% by 2028. Labour market conditions are expected to remain favourable, with the unemployment rate forecast to decline slightly from 5.8% in 2026 to 5.6% in 2027. This reflects the continued resilience of the labour market, despite a moderation in employment growth.
Investment: First Semester Investment Volume With A 13% Year On Year Rise, With Hospitality Being The Largest Contributor
Commercial real estate investment reached €473 million in the second quarter of 2026, contributing to a cumulative volume of €1,375 million in the first half of the year, representing a 13% increase compared with the same period in 2025.
The three largest transactions accounted for over 60% of the total amount invested in the second quarter. International investors provided 76% of capital invested in the second quarter, and 56% in the first half of the year.
Hospitality was the largest contributor to investment activity in Q2 2026, accounting for 37% of the total volume invested during the quarter – with the sale of Corinthia Lisboa Hotel (72%) for approximately €150M being the largest transaction.
This was followed by the Industrial & Logistics sector, which represented 28% of total investment in the second quarter, with the sale of Project NAU from Blackstone to Sagax for €90M being the largest transaction in this sector.
Retail activity was lower than in previous quarter, representing 16% of the total volume invested in Q2 2026, mainly supported by the sale of Aqua Portimão (50%). Alternative assets continued to gain prominence during the quarter, particularly senior housing assets. Office investment remained relatively subdued, reflecting investors' cautious approach.
During the second quarter of 2026 prime yields remained stable across all sectors. These figures currently stand at 5.00% for offices, 4.00% for high street retail, 5.50% for logistics, 6.15% for shopping centers and 6.40% for retail parks.
