Portugal and Spain remained among Europe’s strongest-performing real estate investment markets in the first half of 2026, building on a period of sustained outperformance and recovery that has increasingly differentiated the Iberian region from several other European markets.
The recovery has been supported by resilient income returns and improving capital growth. While income has remained a stable contributor throughout recent market cycles, capital values have strengthened as positive rental growth and more supportive yield movements have contributed to improving valuations.
This marks an important evolution following the repricing experienced across European real estate markets in 2022 and 2023. As valuation pressures have eased, stronger occupational market fundamentals are increasingly translating into capital appreciation, broadening the drivers of investment performance.
Positive momentum continues into 2026
According to the MSCI Europe Quarterly Property Index, Portugal recorded a total return of 9.2% over the 12 months to June 2026, while Spain delivered 8.8%. Both markets continued to outperform the European market average, highlighting the resilience of Iberian real estate during the region’s recovery phase.
Income remained a significant contributor, generating returns of 5.8% in Portugal and 4.9% in Spain. Capital growth also supported performance, reaching 3.3% and 3.8%, respectively.
The underlying drivers differed between the two markets. In Portugal, rental value growth of 4.0% provided significant support to valuations, alongside a marginally positive gross reversionary yield impact of 0.1%. In Spain, rental value growth of 2.6% was complemented by a stronger positive yield impact of 1.8%, highlighting the contribution of both occupational market fundamentals and improving yield conditions to capital appreciation.
Importantly, this positive performance is not confined to 2026. The MSCI Europe Annual Property Index showed that Portugal delivered total returns of 8.5% in 2025 and 9.8% in 2024, following 7.0% in 2023. Spain’s recovery gained momentum more recently, with returns increasing from 5.2% in 2024 to 8.6% in 2025, following negative performance in 2023.
These results underscore the sustained strength of Iberian real estate, where resilient income returns are increasingly being complemented by positive capital growth.
From market performance to investment excellence
Against this backdrop, independent and consistent measurement remains essential to understanding market dynamics and evaluating investment outcomes.
The MSCI Property Indexes provide robust, transparent and independently verified measures of market performance, supporting investment analysis, benchmarking and strategy across the Portuguese and Spanish real estate markets. In an asset class where comparability remains limited, consistency and transparency continue to be critical for investors seeking to assess performance, risk and market trends over time.
While broader market conditions influence returns, differences in portfolio performance continue to highlight the importance of investment strategy, asset selection and active management.
This connection between market measurement and portfolio-level performance is reflected in the MSCI European Property Investment Awards 2025, which recognised the best-performing balanced and specialist real estate portfolios in Portugal and Spain over the last years.
In Spain, Mutua Madrileña was recognised as the Best Performing Specialist Real Estate Portfolio for the second consecutive year, while Square Asset Management's CA Património Crescente fund received the award for Best Performing Balanced Real Estate Portfolio.
In Portugal, Fundiestamo (Fundiestamo I) was awarded Best Performing Specialist Real Estate Portfolio for the second consecutive year, while Square Asset Management's Property Core Fund was recognised as the Best Performing Balanced Real Estate Portfolio.
The awards recognise managers and portfolios that have delivered superior risk-adjusted performance and demonstrate how investment strategy, asset selection and active management can create value across different market environments.
