Portugal Market Overview Q3 2023
The rise in interest rates showed during last 20 months has affected the Portuguese real estate sector. Investment in real estate assets has fallen by nearly 50% compared to the previous quarter. As of Q3 2023 YTD c. €1 billion has been invested, representing a considerable drop in investment (-45% vs. Q3 2022 YTD).
The return to normality in tourism, after a few years of restrictions caused by the Covid 19 crisis, has caused investment in hotel assets to soar, being the main investment sector, representing c. +40% of the total invested in this 3Q.
The second most invested sector is the Retail sector, with +100 million euros invested, with a few remarkable transactions. The Retail sector continues to perform well, and a large number of deals in progress are expected to be completed in the coming months.
The sector that has suffered the most is the office sector, which after the Covid 19 crisis continues to seek its place in the market by adapting to the new measures demanded by investors that are looking for flexible spaces that meet ESG criteria.
As we have mentioned, there is a clear slowdown in the investment market in Portugal, caused especially by macroeconomic uncertainty and the sharp rise in interest rates. It is also expected that, by the end of 2024, more especially from Q3 onwards, the market will be increasingly clearer and that, little by little, investment capacity will recover.