Investment Market Overview

High global liquidity, together with a wealthy economic growth and the strong fundamentals observed in the Portuguese real estate markets, have shifted property investment to a new level after the financial and economic crisis, more than duplicating the previous peak volumes.


Investment Turnover income properies in Portugal
Source: CBRE Research


The origin of investment has changed significantly from the previous cycle of the market, with a considerable weight of foreign capital versus domestic inflow. While in 2007 more than a half of the acquisition volume was driven by Portuguese investors, in the 2015-2019 period only 13% of capital inflow was domestic.

The strong investment activity observed since 2015 has particularly targeted the office and shopping centre sectors. However, investment in hotel assets gained a relevant weight since 2018.

Simultaneously, greater risk acceptance has attracted the interest from various investors to other operational assets, such as student housing and multifamily rental housing. Investment in student housing started around three years ago, with the acquisition of land sites for development, as the supply of purpose build accommodation was still very residual in Portugal. In 2019 two large transactions occurred, comprising a mix of operating assets and forward purchase developments. Likewise, the multifamily sector is currently very incipient in Portugal, but we expect to see a couple of forward purchase deals over the next year.

In 2020, CBRE registered a total of 2.9 billion euros inflow to commercial real estate in Portugal, a 20% decline compared with the previous year, but a result that came very close to the 3 billion euros benchmark forecast at the beginning of 2020. This was the year with the third highest investment turnover recorded, and highly leveraged by the first quarter, when 55% of the year’s investment volume took place.

2021 started with a timid investment volume, as a result of another full lockdown over the first three months of the year, including restrictions on travelling and visits to properties. A total of 200 million euros were channelled to the Portuguese real estate market, which is 40% above that observed in the second quarter of 2020, at the time of the first major confinement, but half below the previous quarter.

Notwithstanding, there is still a high interest in the Portuguese market and, with the gradual lockdown lifting and a vaccination plan in progress, we believe in a very dynamic second semester. Portugal is within the radar of the international investment community and there is a wider range of active local players. Capital inflow in 2021 is expected to exceed 2.5 billion euros.

Yields have been compressing since 2013 in all sectors, achieving historic record lows. The Covid-19 pandemic drove an upsurge in hotels and retail prime yields, while there was a contraction in logistics and supermarkets.

Prime yields in the main property asset classes




Source: CBRE Research, March 2021