Commercial Real Estate Investment Grows by 151 Percent in First Quarter of 2025

Commercial real estate investments in Portugal have seen a 151 percent increase in the first quarter of 2025 compared with the figure recorded for the same period last year, with this significant growth fuelled by the retail and hospitality sectors and amounting to a total of €651 million. Northern Portugal, particularly Porto, has been a key driver in attracting investment in Portugal at the beginning of 2025.

Total Investment and Year-on-Year Growth in Portugal

The latest Savills Market Overview shows that commercial real estate investments totalled €651 million in the first three months of the year, with the sector showcasing a very positive start of the year despite the current global uncertainty.

• 151 percent increase compared with the same period in 2024
• 144 percent increase compared with the three-year average for Q1

This indicates that investing in commercial property in Portugal could see a record year with significant investment volumes should current trends continue.

It looks as though that, alongside retail, the hospitality sector will continue to play a key role in shaping the commercial property sector – with tourism projected to increase by 9 percent in 2025.

Key Sectors Driving Growth

Key sectors responsible for this growth in the commercial sphere are:

• Retail: €385.5 million (59 percent of total)
• Hospitality: €155.7 million (24 percent of total)
• Offices: €88 million (13 percent of total)
• Logistics: €24 million (4 percent of total)

Regional Breakdown: North and Porto Driving Current Growth

Northern Portugal, with the city of Porto at its helm, has attracted a tremendous amount of investment – around 67 percent of all capital invested.

The North of Portugal is an increasingly relevant region that has seen a steady growth in investor interest over the years. Many offices, industrial, and logistics companies are expanding operations here, drawn by highly qualified labor, quality infrastructure, and its strategic location to key transport routes.

The Algarve accounted for almost 17 percent of the total version, while Lisbon and the Lisbon Metropolitan Area were responsible for around 15 percent of the growth.

Domestic investors are leading the way – responsible for around 77 percent of the total Invesment volume in the first three months, followed by investors from the UK and Switzerland.

Outlook for Offices and Logistics

The office sector is projected to experience growth in 2025, continuing its gradual recovery from the COVID-19 pandemic. The strong performance and resilience of the occupational market are additional factors that give peace of mind and confidence in the market to investors.

Regarding logistics, the market remains resilient, with many investors placing their money in this sector, especially when it comes to development opportunities. Currently, it could be that 2025 is one of the best years for investment growth in the logistics real estate sector in Portugal.

Positive Outlook for the Hospitality Sector

As we’ve mentioned, tourism in Portugal is set to continue to thrive in 2025, with more diversification of tourism across the country and more tourists seeking to visit areas outside the hotspot locations of Lisbon and the Algarve.

Hospitality continues to establish itself as one of the key drivers for commercial real estate investments. This trend should continue in the coming years, with many projects in the pipeline, particularly in Lisbon and Porto, and an increased focus on redevelopment.

At the beginning of this year, this segment saw the second most growth, accounting for almost a quarter of total investment (24 percent). This was driven by the sale of high-quality assets acquired by real estate investment trusts and asset managers seeking prime properties for their portfolios.

Challenges to Commercial Real Estate in 2025

Global uncertainties are having a bearing on commercial real estate, particularly the retail sector, which has been impacted by uncertainties regarding the US – China trade war and the application of new customs tariffs.

This has led consumers to be more cautious, with a “wait and see” approach by investors and operators planning expansion projects in Portugal.

Shopping centers, retail parks, and supermarkets remain the most attractive assets to investors, with them accounting for the highest volume of investment this quarter.

The acquisition of 100 percent of NorteShopping’s share capital to Sierra Prime Fund, managed by Sonae Sierra, contributed significantly to the retail sectors growth in Q1.

Despite the current geopolitical climate, the start of the year has been positive, and its likely that we’ll see sustained market growth in the commercial sphere in 2025.