The Portuguese commercial real estate investment market witnessed a profound shift in momentum during Q3 2025. Fueled by several major portfolio transactions, the market successfully reversed the previous year's trend, attracting significant capital and driving asset valuations higher. This quarter result was notably concentrated in the Alternatives sector.
Economic Context
Portugal’s economy is forecast to grow by 1.7% in 2025, with further acceleration in subsequent years, supported by resilient domestic demand and improving exports. Inflation is expected to moderate, holding at 2.4% in 2025 before stabilizing at 2.0% in 2026 and 2027. Unemployment continues its downward trend, falling from 6.1% in 2025 to 5.7% in 2026, reaching its lowest level since 2001.
Investment Demand Overview
The market executed a substantial 64 deals in the first nine months of the year, culminating in the €1,879 million volume. As highlighted, the Alternatives sector attracted the largest single quantum of capital in the third quarter
Capital was deployed strategically across all key asset classes:
- Retail saw the greatest number of active buyers, reaching 21 transactions (€653 million).
- Hospitality attracted notable institutional volume via 12 deals (€426 million).
- Offices completed 12 deals (€272 million).
- Industrial executed 16 deals (€181 million).
Notable transactions, including the Mutual office building in Porto and the sale of the Hilton Porto Gaia, provide tangible proof of the market's deep liquidity and broad investor appetite for quality product across all commercial segments.
Yield Trends
Following the contraction of prime yields in the retail and industrial sectors in the first semester of 2025, a prime yield compression of 25 basis points was registered in Porto office in Q3-25.Prime yields currently stand at:
| Sector | Prime Yield (Q3 2025) |
|---|---|
| High Street Retail | 4.00% |
| Offices | 5.00% |
| Industrial & Logistics | 5.50% |
| Shopping Centres | 6.25% |
| Retail Parks | 6.75% |