- In 2024, the volume of investment transactions in income-generating real estate is estimated to reach €2.170 million, a significant year-on-year increase of 28%, with particular expression in the second half of the year.
- There was greater investor interest in the retail sector, which accounted for half of the total volume invested, and in the hospitality sector, which represented nearly a quarter of the total.
- In terms of occupancy, the office sector registered significant increases in absorption volumes in the two main cities of the country, namely an impressive 120% in Greater Lisbon and 33% in Greater Porto.
- Still in terms of occupancy, the retail sector maintained an upward trend, especially noticeable in future retail park offerings and the number of new openings, which registered a 15% increase compared to the previous year.
- The industrial and logistics market’s occupational activity registered a year-on-year increase of 36% in the first three quarters of 2024, ending the period 19% above the annual total for 2023.
- The hospitality sector maintained a positive performance throughout 2024, with a cross-sectional increase in key indicators, despite a natural slowdown in growth rates. Until October, total revenues grew by 10% compared to the same period last year.
Cushman & Wakefield presents a summary of the national real estate market activity in 2024 and its prospects for 2025.
According to Eric van Leuven, managing director of the consultancy in Portugal, “2024 was a year of recovery in a global context of falling interest rates, with greater dynamism in the real estate market (especially in the second half of the year). In Portugal, after a first semester with reduced activity, there was a significant growth in commercial real estate investment in the second half, thus closing the year with a significant increase compared to 2023. Regarding the occupational market, there were year-on-year increases in absorption volumes in all sectors, with special emphasis on the office sector in Greater Lisbon, which reached the second highest absorption value of the last decade.”
Commercial real estate investment market
Commercial real estate investment activity registered growth in 2024, with year-end forecasts at €2.170 million, representing a significant year-on-year increase of 28%.
Foreign capital currently represents 74% of the total volume invested in 2024, an increase compared to the previous year.
Investor interest was greatest in the retail and hospitality sectors, which accounted for 49% and 22% of the total volume invested, respectively. Significant retail transactions included the acquisition of Alegro Montijo by Lighthouse Properties from Ceetrus for €178 million and the purchase of LoureShopping, 8.ª Avenida, and RioSul Shopping by Castellana Properties from Harbert for €177 million. In hospitality, the purchase of Conrad Algarve by Grupo Quinta do Lago from DK Partners for €150 million, the purchase of Sofitel Lisboa Liberdade from Accor Invest by a private investor for €75 million, and the acquisition of The Oitavos by BTG Pactual from Grupo Champalimaud for €70-80 million, heavily influenced the total of €470 million.
The office sector followed, representing 13% of the total invested, with a volume of €290 million, highlighted by the acquisition of the K Tower from Krestlis by Real I.S. for €75-80 million. Alternative assets accounted for 12% of the total invested, with increased activity in the student residence segment, including the purchase of Home & Co Campo Pequeno by Xior for €58 million and the acquisition of two units in Lisbon by Stoneshield Capital for €55-60 million. The industrial and logistics market maintained a low representativity, accounting for only 5% of the total invested, with a volume of €100 million, highlighted by the acquisition of Imocar properties in Azambuja by SIVA from Norfin for €25-30 million.
Across all sectors, yields remained stable in the first three quarters of 2024, having registered a 25 basis point (bps) compression only in the retail sector in the last quarter of the year. At the end of 2024, prime yields remained at 5.00% in offices and 5.75% in logistics, while compressing by 25 bps in high street retail (to 4.50%) and in shopping centers (to 6.25%).
Occupational markets
Offices
The year 2024 saw a year-on-year increase of 120% in office market occupancy in Greater Lisbon between January and November, with 193,200 m² transacted – the second highest value of the last decade. This positive evolution is largely due to the completion of some large-scale transactions, with six transactions above 5,000 m² representing 40% of the total absorption recorded.
Notable transactions included the purchase by Caixa Geral de Depósitos of the WellBe building (26,710 m²) for its future headquarters and the lease of 15,840 m² in Oriente Green Campus by Universidade Europeia. The full occupancy of the Álvaro Pais 2 building (17,020 m²) by a confidential entity was also noteworthy. These zones accounted for 59% of total demand.
The vacancy rate increased slightly to 7.2%, and 61,200 m² of new spaces were completed, all of which are now fully occupied. Future supply for the next three years remains limited, with 46% of the 234,800 m² under construction already pre-let.
The office market in Greater Porto also registered a year-on-year increase in absorption of 33%, with a total volume of 65,900 m² – the second highest value since this indicator was tracked. The largest transactions included the pre-lease of the Mutual building (10,370 m²) by Deloitte. The vacancy rate increased to 9.0%, influenced by building completions in the first half, with 27% of the 27,100 m² completed still available. Regarding future supply, 116,200 m² are under construction, with 36% already secured for occupancy.
Prime rents increased, with values reaching €28.50/m²/month in Prime CBD (zone 1) of Greater Lisbon and €21/m²/month in CBD Boavista (zone 1) of Greater Porto.
Retail
During 2024, the retail sector maintained an upward trend, especially noticeable in the future supply of retail parks and the number of new openings.
23,400 m² of Gross Leasable Area (GLA) were completed in 2024, including Arco Retail Park (Santo Tirso), Penafiel Retail Park, and Setúbal Retail Park. By 2027, 160,400 m² of GLA are expected to be completed, 89% in the retail park format.
Approximately 800 new openings were registered in 2024, reflecting a 15% year-on-year increase. High street retail was dominant, representing 71% of the total, followed by shopping centers (13%). The restaurant sector was the most represented, accounting for 51% of new units, followed by the “other” sector (furniture, decoration, and DIY) with 18%.
Due to a supply shortage compared to active demand, market rents reached historical highs. In Lisbon high street retail, values increased by €10 to €135/m²/month in Chiado. In Porto, Baixa recorded an increase of €5, to €82.5/m²/month. In shopping centers, prime rents rose by €12.5 to €120/m²/month, and in retail parks, by €0.75 to €13/m²/month.
Industrial & Logistics
Occupational activity in the industrial & logistics market registered a year-on-year growth of 36%, with 513,400 m² transacted between January and September, ending the period 19% above the annual total for 2023. This growth was driven by large-scale transactions, with the five largest representing one-third of total absorption. Key transactions included the future Coloplast industrial unit in Felgueiras, and leases by Torrestir and CTT in the Benavente Logistics Park. The Greater Lisbon and Greater Porto regions accounted for 40% and 25% of absorption, respectively.
The vacancy rate in the Greater Lisbon logistics market stood at 4.6%. A total of 340,100 m² were completed, two-thirds in Greater Lisbon. There are currently 277,400 m² of logistics spaces under construction in Portugal, with more than half already secured for occupancy. Most of the construction is concentrated in Greater Lisbon and Ribatejo.
Prime rental values increased, reaching €5.20/m²/month in Castanheira – Azambuja (zone 1) and €5.75/m²/month at Porto de Leixões – Aeroporto (zone 10).
Hospitality
Tourism activity in Portugal was positive during 2024, despite a natural slowdown in growth rates. Between January and October, the number of guests and overnight stays increased by 3% and 4%, respectively. Total revenues were 10% above the year-on-year period, with RevPAR growing by 8% to €83.2.
Nearly 60 new hotel units with 3,500 rooms were inaugurated in 2024, with a focus on 3-star and 4-star classifications. Future projects include over 120 new hotel projects, totaling 11,900 rooms, expected to open over the next 3 years.
Perspectives for 2025
Forecasts for 2025 anticipate the continuation of central banks’ reference rate contractions. Eric van Leuven comments, “expectations suggest a positive impact on the national commercial real estate market, continuing the recovery trend of the second half of 2024. Yields are expected to decrease and values to increase across sectors.
Current estimates for 2025 foresee an investment volume in line with 2024, with growth in the industrial and logistics, hospitality, and alternative sectors.
The office sector is expected to consolidate occupant demands, focusing on user experience and sustainability. Companies are expected to invest in modern, well-located spaces with premium infrastructure. Retail is expected to maintain a strong performance, driven by digitalization and new consumer demands. The industrial and logistics sector will see continued growth, spurred by e-commerce and proximity logistics.
There is increasing investor focus on alternative assets. Sustainability and ESG considerations will continue to be paramount, with greater attention to energy transition and the carbon footprint of construction.
[1] Investment in completed and income-generating commercial real estate.
(1) Retail demand data aggregated by Cushman & Wakefield based on public sources and targeted fieldwork.
