The commercial (non-residential) property sector in Portugal continues to show signs of recovery, with the third quarter of 2024 revealing growing dynamism, especially in the retail and hotel segments. During this period, investment of 342 million euros was attracted, for an accumulated total of 1,014 million euros up to 30 September, results that are in line with the same period last year, according to CBRE's outlook.
The outlook for the remainder of the year is particularly positive, with the last quarter of the year getting off to a promising start, with turnover higher than the previous quarter only in the first 10 days of October. The reason for these figures is the closing of two major retail transactions, each in the hundreds of millions of euros.
As a result, the commercial property sector is expected to end 2024 with a performance of between 2.1 billion and 2.3 billion euros, which represents significant growth compared to 2023, when the figure was around 1.6 billion euros.
Also noteworthy is the living segment, which includes other housing alternatives such as senior and university residences, which continues to gain prominence in the market, which only proves the growing need for diversified housing solutions.
‘The retail and hotel sectors have stood out on the property scene, benefiting directly from the tourism boom that Portugal has been experiencing. Last year we broke records for visits and overnight stays, driving growth in these segments. Hospitality continues to attract significant investment, and retail has followed this trend, with expectations that it will be the sector with the highest turnover by the end of this year. These sectors show strong resilience and adaptability, confirming their central role in the dynamism of the property market in 2024,’ says Francisco Horta e Costa, CEO of CBRE in Portugal.
‘In the office segment, Lisbon and Porto remain areas of high demand, especially in prime areas such as the riverside zone and the CBD1 and CBD2 areas. However, the scarcity of quality projects (flight to quality) has been limiting the market,’ he adds.
As far as the residential market is concerned, there is a growing trend, with a total of 37,000 transactions carried out in the first half of 2024, surpassing the 33,000 of the same period in 2023. The total value of accumulated transactions totalled 14.6 billion euros, compared to 13.7 billion euros last year.
This increase in transactions reflects the high dynamics of the market, where despite the rise in interest rates, particularly EURIBOR, the average price per property continues to rise. For example, if a property in 2013 was worth an average of 102,000 euros, in 2023 the same asset is valued at 212,000 euros, which represents an increase in price of 106%.
‘In 2022, around 90 per cent of active property loans had variable interest rates, making owners particularly vulnerable to rising interest rates. As a result, the value of residential property transactions fell from an all-time high of €31bn in 2022 to €28bn in 2023. However, despite this downturn in the volume of transactions, house prices have maintained an upward trajectory marked by a lack of supply, a trend that has continued since 2013, when there was a general decline in the construction of new properties. This shortage of supply continues to sustain the rise in prices, even in a scenario of greater economic uncertainty,’ explains Francisco Horta e Costa.
