- 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 the natural slowdown in growth rates. Until October, total revenues grew by 10% compared to the same period last year.
Cushman & Wakefield today 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[1] registered growth in 2024, with year-end forecasts currently standing at €2.170 million, representing a significant year-on-year increase of 28%.
The proportion of foreign capital currently represents 74% of the total volume invested in 2024, increasing its share compared to the previous year.
The allocation of capital by sector demonstrated the greatest investor interest in the retail and hospitality sectors, which respectively accounted for 49% and 22% of the total volume invested. In retail, out of a total of €1.050 million invested, the two largest market transactions stood out, both in shopping centers: the acquisition by Lighthouse Properties from Ceetrus of Alegro Montijo for €178 million and the purchase by Castellana Properties from Harbert of LoureShopping, 8.ª Avenida, and RioSul Shopping for €177 million. In hospitality, the total of €470 million was particularly influenced by the purchase by Grupo Quinta do Lago of Conrad Algarve 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 by BTG Pactual of The Oitavos from Grupo Champalimaud for an amount between €70-80 million.
The office sector followed, representing 13% of the total invested, with a volume of €290 million, highlighted by the acquisition by Real I.S. of the K Tower from Krestlis for an amount between €75-80 million. The so-called alternative assets accounted for 12% of the total invested, with increased activity in the student residence segment, including the purchase by Xior of Home & Co Campo Pequeno for €58 million and the acquisition by Stoneshield Capital of two units in Lisbon, for an amount between €55-60 million. Finally, 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 by SIVA from Norfin of the Imocar properties in Azambuja for an amount between €25-30 million.
After upward corrections over the past two years, 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. Thus, 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 was characterized by 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 standing out, which together represented 40% of the total absorption recorded in this period.
Among the main transactions to date, two operations in still under-construction buildings in Parque das Nações (zone 5) stand out: the purchase by Caixa Geral de Depósitos of the WellBe building, with 26,710 m², for the installation of its future headquarters, and the lease of 15,840 m² in Oriente Green Campus by Universidade Europeia. Also noteworthy is the full occupancy of the 17,020 m² Álvaro Pais 2 building by a confidential entity in the New Office Zones (zone 3). These two zones together accounted for 59% of total demand.
The vacancy rate recorded a slight increase of 0.2 percentage points (p.p.), to 7.2%, and 61,200 m² of new spaces were completed, all of which are already fully occupied. The volume of future supply for the next three years remains limited, with 234,800 m² of offices under construction, 46% of which already have secured occupancy.
The office market in Greater Porto also maintained a positive trajectory, having registered a year-on-year increase in absorption of 33% up to November, with a total volume of 65,900 m² - the second highest value since we have this indicator. The two main transactions corresponded to full occupancy of buildings, with the largest transaction being the pre-lease of the Mutual building, with 10,370 m², by Deloitte. This transaction contributed to CBD Boavista (Zone 1) being the most active, representing more than one-third of the demand. The second-largest transaction includes the full occupancy of 5,090 m² of the Pharmacia building in CBD Baixa (Zone 2) by an entity that remains confidential.
In this region, the vacancy rate increased by 0.5 p.p., to 9.0%, particularly influenced by the completion of some buildings in the first half, which still have available area for occupancy. A total of 27,100 m² were completed, of which 27% are still available for occupancy. Regarding future supply, 116,200 m² are under construction, with 36% of this area having already secured occupancy.
Regarding market rents, the reduced availability among higher quality buildings contributed to a new increase in prime rent in Prime CBD (zone 1) of Greater Lisbon to €28.50/m²/month and in CBD Boavista (Zone 1) of Greater Porto to €21/m²/month.
Retail During the year 2024, the retail sector maintained an upward trend, particularly noticeable in the future supply of retail parks and the number of new openings.
In terms of retail complex supply, 23,400 m² of Gross Leasable Area (GLA) were completed in 2024, with highlights including the opening of Arco Retail Park (Santo Tirso) with 6,600 m², Penafiel Retail Park with 8,800 m², and Setúbal Retail Park with 4,000 m². By 2027, 160,400 m² of GLA are expected to be completed, 89% of which in the retail park format.
According to preliminary retail demand data aggregated by Cushman & Wakefield, 800 new openings were registered in 2024, reflecting a significant year-on-year increase of 15%. High street retail dominance was accentuated, representing 71% of the total new openings, followed by shopping centers with 13%. The restaurant sector remained the most representative, with 51% of the new units, followed by the "other" sector (including furniture, decoration, and DIY) with 18%.
In a context of supply shortage compared to currently active demand, market rents reached historical highs. In Lisbon high street retail, values increased by €10 in Chiado to €135/m²/month, while 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.
Retail
During 2024, the retail sector maintained an upward trend, particularly noticeable in the future supply of retail parks and the number of new openings.
In terms of commercial complex supply, 23,400 m² of Gross Leasable Area (GLA) were completed in 2024, with highlights including the opening of Arco Retail Park (Santo Tirso) with 6,600 m², Penafiel Retail Park with 8,800 m², and Setúbal Retail Park with 4,000 m². By 2027, 160,400 m² of GLA are expected to be completed, 89% of which will be in the retail park format.
According to preliminary retail demand data aggregated by Cushman & Wakefield1, 800 new openings were registered in 2024, reflecting a significant year-on-year increase of 15%. High street retail dominance was accentuated, representing 71% of the total new openings, followed by shopping centers with 13%. The restaurant sector remained the most representative, with 51% of the new units, followed by the "other" sector (including furniture, decoration, and DIY) with 18%.
In a context of supply shortage compared to currently active demand, market rents reached historical highs. In Lisbon high street retail, values increased by €10 in Chiado to €135/m²/month, while 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
In 2024, 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 some large-scale transactions, with the five largest representing one-third of total absorption. Among the main transactions, the future Coloplast industrial unit in Felgueiras stands out, which will be the largest of the Danish multinational, and whose construction began in mid-2024, with an investment of €100 million. This was followed by the leases by Torrestir and CTT in the newly inaugurated Benavente Logistics Park, totaling 73,000 m², making this development the most active during this period. In terms of the geographical distribution of demand, the dominance of the Greater Lisbon and Greater Porto regions remained, accounting for 40% and 25% of absorption, respectively. There was also a higher proportion of sale or lease operations (80%), as opposed to “built-to-suit” projects for occupants.
The vacancy rate in the Greater Lisbon logistics market stood at 4.6%, reflecting the scarcity of quality supply – which continues to encourage the promotion of new projects, many of them speculative. In this context, between January and September 2024, 340,100 m² were completed, two-thirds of which were located in Greater Lisbon. Additionally, 277,400 m² of logistics spaces are currently under construction in Portugal, with more than half of that area already secured for occupancy. Most of the construction is concentrated in Greater Lisbon (115,400 m²) and Ribatejo (80,000 m²).
Given this framework of increased market activity, particularly in high-quality projects, there was a general increase in prime rental values. In Greater Lisbon, rents in Castanheira - Azambuja (zone 1) rose to €5.20/m²/month, while in Greater Porto, at Porto de Leixões – Aeroporto (zone 10), values reached €5.75/m²/month.
Hospitality
Tourism activity in Portugal maintained a positive performance during 2024, with a cross-sectional increase in key indicators, despite the natural slowdown in growth rates. Between January and October, the number of guests and overnight stays increased by 3% and 4%, respectively. In terms of hotel operation indicators, total revenues were 10% above the year-on-year period, with RevPAR (Revenue per Available Room) growing by 8% to €83.2.
In terms of hotel supply, nearly 60 new units with 3,500 rooms were inaugurated in 2024, with 3-star and 4-star classifications representing more than one-third each. Among the largest openings were some 3-star units, such as Locke de Santa Joana (Lisbon), with 370 rooms, B&B Hotel Porto Gaia (Vila Nova de Gaia), with 210 rooms, and Icon Apartments (Porto), with 170 rooms.
As for future supply, more than 120 new hotel projects, totaling 11,900 rooms, are in the design and/or construction phase, with openings expected over the next 3 years. This future supply demonstrates a clear focus on hotel qualification, with a greater concentration in 4-star and 5-star hotels (40% and 41%, respectively) and in the metropolitan areas of Lisbon and Porto.
Perspectives for 2025
Regarding forecasts for 2025, the continuation of the contraction movement of central banks' reference rates, which began in the second half of 2024, is anticipated. In this context, Eric van Leuven comments, “expectations point to a positive impact on the national commercial real estate market, continuing in 2025 the recovery trend already recorded in the second half of 2024. After a period of yield stability across all sectors for most of 2024, the last quarter of the year saw a yield compression only in the retail sector. For 2025, a yield reduction and consequent value increase are expected for the remaining sectors. In terms of rental values, the increase in demand for spaces and the shortage of quality supply should continue to justify occasional increases in gross reference rents for the best assets.”
In terms of commercial real estate investment, current estimates for 2025 foresee an investment volume in line with the 2024 volume, with the industrial and logistics, hospitality, and alternative (living) sectors showing growth.
In the occupational market, the office sector is expected to be marked by the consolidation of new occupant demands, with a greater focus on user experience and sustainability. Companies are expected to invest in modern, well-located spaces that offer premium infrastructures, such as support areas, gyms, and rooftops, promoting well-being and collaboration. These trends reflect a clear commitment to creating environments that motivate employees to return to the office, aligning with hybrid work models.
The retail sector is expected to maintain its strong performance, driven by greater digitalization of the sector and new consumer demands, providing new shopping habits. Retailers are increasingly focused on creating unique and integrated experiences, and property owners are increasingly attentive to space adaptations to meet new requirements, both adding value to the shopping process. These adaptations are being considered in both high street retail and retail parks and shopping centers, seeking a balance between technology, sustainability, and customer experience, which is fundamental for the sector's continuous evolution in 2025.
In the industrial and logistics sector, occupants continue to seek increasingly functional locations, willing to pay a higher value for strategic locations. The growth of e-commerce is also driving logistics operations, especially in the search for urban warehouses. Portugal is still seen as an attractive destination for the installation of industries and logistics by companies looking to relocate production to Europe and reduce supply chain interruption risks.
With the shortage of quality supply in the main axes, there is an increase in the development of new logistics spaces, especially in the Greater Lisbon and Porto regions. Additionally, the demand for land in industrial areas for the data center market has significantly increased, and this sector is expected to remain highly dynamic.
In hospitality, the diversification of source markets will provide continued activity growth in 2025, with a direct impact on attracting investment in existing hotel products and new projects.
In the area usually designated as living, we will have to consider its different niches separately. There are still no residential rental projects, neither built nor planned, but some public-private or even 100% private initiatives whose developments may start in 2025 are beginning to appear. The student residence and elderly residential structures segments gained more relevance in 2024 and are essential bets for the growth of the alternative residential real estate market in the medium term.
Investors' attention is increasingly focused on so-called alternative assets (such as hospitals and clinics, schools, and universities) resulting from the greater private supply in response to the increasingly reduced public investment.
Across all sectors, the year 2024 was a year of sustainability and ESG consolidation in buildings. In the Portuguese market, particularly at the banking level, different interest rates are already being applied to financing according to the sustainability of the investment. There is definitely a willingness among investors and tenants to pay a green premium for more sustainable assets, and the adoption of building certification, alignment with the European Taxonomy, and the development of climate risk analysis are already unavoidable and increasingly significant. There is also a tremendous effort for the energy transition of buildings, through their renovation or even conversion, to comply with future legal requirements. Finally, the future challenge of supplier selection, particularly in construction, such as reducing the carbon footprint of activities, should be highlighted. The responsibility of the entire value chain will be one of the major challenges in the coming times.
[1] Defined as investment in completed and income-generating commercial real estate.
(1) A non-random sample of retail demand aggregated by Cushman & Wakefield based on public sources and targeted fieldwork.
