Commercial Real Estate - Portugal

The Commercial Real Estate market market in Portugal is anticipated to reach a value of US$303.50bn in 2024.
This projection indicates an expected annual growth rate (CAGR 2024-2029) of 1.79%, which will ultimately lead to a market volume of US$331.60bn by 2029.
It is worth noting that in a global context, the United States is projected to generate the highest value in the Real Estate sector, with an estimated amount of US$25.3tn in 2024.
Portugal's commercial real estate market is experiencing a surge in demand due to the country's attractive investment climate and growing tourism industry.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in Portugal has been experiencing significant growth and development in recent years.

Customer preferences: Customers in Portugal are increasingly looking for modern and well-equipped commercial spaces that can cater to their specific business needs. They are particularly interested in properties that offer flexible lease terms and amenities such as parking facilities and access to public transportation. Additionally, there is a growing demand for commercial properties in prime locations, especially in major cities like Lisbon and Porto.

Trends in the market: One of the key trends in the commercial real estate market in Portugal is the increasing demand for office spaces. With the rise of startups and the growth of the technology sector, there has been a surge in the number of companies looking to establish their presence in the country. This has led to a high demand for office spaces, particularly in tech hubs and innovation districts. Another trend in the market is the growing interest in retail properties. Portugal has seen a significant increase in tourism in recent years, which has boosted the retail sector. As a result, there is a growing demand for retail spaces, especially in popular tourist destinations.

Local special circumstances: Portugal's Golden Visa program has had a significant impact on the commercial real estate market. The program offers residency and citizenship to foreign investors who invest a certain amount of money in the country, including real estate. This has attracted a large number of foreign investors, particularly from countries like China and Brazil, who are looking to invest in commercial properties in Portugal.

Underlying macroeconomic factors: The growth and development of the commercial real estate market in Portugal can be attributed to several underlying macroeconomic factors. Firstly, the country has seen a steady economic recovery following the global financial crisis, which has boosted investor confidence and led to increased investment in the real estate sector. Additionally, Portugal's favorable tax regime and business-friendly policies have made it an attractive destination for foreign investors. The government has implemented several measures to encourage investment in the country, including tax incentives and streamlined administrative procedures. Furthermore, Portugal's strategic location within Europe and its membership in the European Union have also contributed to the growth of the commercial real estate market. The country serves as a gateway to both European and international markets, making it an ideal location for businesses looking to expand their operations. In conclusion, the commercial real estate market in Portugal is experiencing significant growth and development, driven by customer preferences for modern and well-equipped commercial spaces, as well as the increasing demand for office and retail properties. The local special circumstances, such as the Golden Visa program, have attracted foreign investors to the market. Additionally, the underlying macroeconomic factors, including the country's economic recovery, favorable tax regime, and strategic location, have contributed to the growth of the market.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.