Investment Market Overview

Updated in May 2025

Emerging from a recent period of heightened risk aversion, the total investment volume in 2023 amounted to €1.6 billion, which is half of the investment in 2022. This significant reduction reflected the conservative stance adopted by investors amid prevailing economic uncertainties and high interest rates.

However, in 2024 a notable recovery took place in the investment market. The volume of real estate investment reached approximately €2.31 billion in 2024, reflecting a 44% increase compared to the previous year. This growth signifies a renewed confidence among investors, driven by the stabilization of economic conditions and the attractiveness of the Portuguese market.

In recent years, significant global events such as the financial crisis of 2008-2009, the COVID-19 pandemic, and geopolitical conflicts have profoundly impacted the prime yields of various asset classes. Additionally, emerging trends such as nearshoring and digitalization have also shaped the current landscape of the real estate market. The strong investment activity observed since 2015 has particularly targeted the office and shopping center sectors, although the interest has diversified to other asset classes. Effectively, greater risk acceptance has attracted the interest of various investors to other operational assets, such as hotels, student housing, and healthcare.

Higher interest rates have impacted property yields due to ongoing market adjustments. Nevertheless, 2024 saw some yield compression, particularly in High Street Retail, where the prime yield reached 4.25% in Q4 2024 — an 50 bp decrease compared to the same period in the previous year. Similarly, the Purpose-Built Student Accommodation (PBSA) sector recorded a prime yield of 5.25% in Q4 2024, reflecting an 50 bp decrease year-on-year. These trends indicate growing confidence from international investors in the Portuguese real estate market. Looking ahead to 2025, with continued key interest rate cuts, further yield compression are expected.