Economic Context
Portugal's economy demonstrated steady growth in 2025, with GDP expanding by 1.9%. Forecasts anticipate even stronger performance in 2026, with a projected growth of 2.3%. This economic upswing is complemented by moderating inflation, expected to settle at 2.3% in 2025 and dip below the 2.0% mark in subsequent years, fostering a stable economic environment. The labour market remains robust, with unemployment projected to fall from 6.1% in 2025 to 5.7% in 2026. This positive trajectory, driven primarily by strong domestic demand and private consumption, sets a promising stage for the commercial real estate sector.
Investment
The first quarter saw a significant rebound in investment, with total commercial real estate volume reaching €898 million, a 37% increase year-on-year. The retail sector led the way, accounting for 38% of the total investment, driven largely by the landmark sale of the ArrábidaShopping & GaiaShopping portfolio (70%). Hospitality was a close second at 37%, highlighted by the acquisition of the Ritz Carlton, Penha Longa Resort, whilst the alternatives sector, including data centres, contributed to a notable 16% of the volume.
Investment activity was dominated by a few large-scale deals, with the five largest transactions making up over 60% of the total volume. This indicates a market preference for high-quality, large-scale assets. The average deal size increased to €32 million, reinforcing this trend.
By sector, the investment breakdown was as follows: Retail saw €340 million across 11 deals, Hospitality reached €336 million in 6 deals, and the "Other" category (including alternatives) amounted to €140 million from 3 deals. The Office sector recorded €43 million over 3 deals, and Industrial investment totalled €39 million across 4 deals.
Yield Trends
During the first quarter of 2026 prime yields remained stable across all sectors. These figures currently stand at 5.00% for offices, 4.00% for high street retail, 5.50% for logistics, 6.15% for shopping centers and 6.40% for retail parks.
