New report warns of worsening supply shortages and highlights the potential of Build-to-Rent.
Cushman & Wakefield (C&W) has released its first report dedicated to residential development in Greater Lisbon and Greater Porto, concluding that Portugal’s housing problem is structural and requires much more than occasional fiscal measures such as VAT reduction.
Against a backdrop of growing demand pressure and insufficient supply, the study warns of worsening access to housing, particularly in the mid-market segment, and emphasizes the need for new development models—namely Build-to-Rent (BTR)—as a key solution to generate scale and increase supply.
The report analyzes market evolution over the past decade in the main municipalities of both metropolitan areas, identifying where the most construction has taken place, which territories concentrated licensing activity, and how demographic dynamics have influenced housing development. It also examines the evolution of sales and rental prices, highlighting territorial disparities and a growing divergence between urban centers and peripheral areas.
“Portugal has faced for several years a serious shortage of housing supply, a structural and multifaceted issue that must be clearly understood in order to find effective solutions,” says Ana Gomes, Partner and Head of Research at Cushman & Wakefield Portugal. “The ambition is for this report, published every two years, to become a benchmark for tracking market developments and objectively assessing the impact of public policies.”
The study highlights the potential of the Build-to-Rent model, still underdeveloped in Portugal but already highly relevant in other European markets. This model, based on purpose-built rental housing, can play an important role in creating large-scale supply, although it faces significant challenges in terms of costs, regulatory framework, and rent affordability.
The report also reviews the most recent public measures to stimulate housing supply, including the “Construir Portugal – Arrendamento e Simplificação” package, which introduces new tax incentives and support mechanisms for development and rental. Nevertheless, Cushman & Wakefield warns that the impact of these measures will depend on their ability to generate projects at scale and effectively reduce costs.
In this context, Ana Gomes stresses that “it is important not to create the expectation that a VAT reduction alone will trigger a new wave of construction. The market primarily needs scale, larger projects, and conditions that help reduce costs and risks for developers. In the rental segment, it is essential to treat purpose-built development as a distinct product, with its own rules, so that it can become a genuine alternative to build-to-sell development.”
Key findings of the study:
• The housing transaction market continues to be dominated by existing homes, with new development having limited impact in meeting growing demand;
• Lisbon and Porto stand out as structurally stronger markets, supported by their ability to retain working-age populations, sustaining higher values and enabling new developments, albeit with more compact unit types;
• In peripheral municipalities, younger demand is more limited, but the number of households has increased, reflecting a mismatch between housing needs and purchasing power. This constrains absorption, pressures project viability, and explains lower prices;
• The lack of new development—especially at scale—points to a worsening of housing affordability in the mid-market segment and in peripheral locations, which are already nearing affordability limits;
• It is essential to develop new development models that enable scale, shorten timelines, and reduce construction costs;
• The development of Build-to-Rent depends on recognizing it as a distinct product from build-to-sell, requiring appropriate fiscal, regulatory, and urban planning conditions;
• In some suburban areas, population aging may lead to the release of existing housing stock, creating opportunities for rehabilitation and increased supply without relying solely on new construction.
