The year 2025 proved to be a period of stability in the Portuguese real estate market.
Investment in commercial real estate reached around €2.67 billion, an increase of nearly 10% compared to 2024. The start of 2026 also promises to be lively, as some deals initially expected to close at the end of last year should instead be finalized in the first months of the new year.
Foreign capital remained significant, accounting for about 60% of total investment, though far from historical highs—highlighting the growing importance of domestic investors. By sector, retail continued to lead with 29% of total volume, followed by offices (26%) and hospitality (20%). Alternative assets, including specialized residential (student housing and senior living), accounted for 13%, and industrial and logistics for 11%.
In the occupational market, there was a general decline in absorption levels for offices (down 23% in Lisbon and 51% in Porto year-on-year) and logistics (down 30%). In both cases, these results are not discouraging, as 2024 was an exceptional year. Retail saw a 20% reduction in the number of new openings, although restaurants remained highly dynamic. Hospitality proved resilient, with more than 80 new hotels opening, adding around 4,800 additional beds.
Despite lower absorption, rents rose across almost all sectors, especially in prime areas, showing that the drop in occupancy was due to a lack of quality supply rather than weak demand. This trend reinforces the attractiveness of the Portuguese market, in a context of active demand and limited supply. All yield rates compressed throughout the year, except for Lisbon offices, which remained stable at 5.00% (yields move inversely to prices, so yield compression implies asset appreciation). At year-end, prime yields stood at 5.00% for Lisbon offices, 6.50% for Porto offices, 5.50% for logistics, 4.00% for high-street retail, and 6.15% for shopping centers.
According to Paulo Sarmento, Head of Portugal at Cushman & Wakefield,“This was a year of consolidation for commercial real estate, marked by some geopolitical uncertainty but also by the stabilization of interest rates. This scenario has supported strong occupational activity and is bringing institutional investors back to the market, reinforcing appetite for quality assets, anticipating appreciation, and adjusting strategies for a sustainable growth cycle.”
Affordable Housing as the Main Challenge for 2026
From the consultant’s perspective, one of the major challenges and opportunities for 2026 will be affordable housing, driven by new measures expected to be enshrined in law early in the year. These initiatives could create conditions to boost the development segment, accelerating residential projects aimed at the mid-market in the outskirts of major urban centers. Developers who manage to overcome legal and technical hurdles and meet the demand for more affordable homes will be well positioned to benefit from the market’s positive momentum. A more favorable legal and tax framework for Build to Rent could be decisive in unlocking a sector that is essential in Europe in terms of investment but still has little presence in Portugal.
“2026 will be the year when sustainability, technology, new occupancy formats, and solutions for affordable housing cease to be trends and become structural pillars of the real estate market, continuing to position Portugal as one of the most attractive destinations for international investment,” adds the consultant’s head in Portugal.
The coming year is expected to accelerate the sector’s transformation, with sustainability continuing to play a central role in asset valuation and technology redefining how spaces are used. Hybrid offices and flexible spaces should consolidate, especially in central locations, while in retail, the integration between physical and digital will become even more evident. In logistics, proximity to urban centers and investment in smart warehouses will gain importance.
