Investing in Retail in Portugal: 2024 an Exceptional Year

Investing in the retail sector in Portugal has been catching the eye of investors in 2024, including investors placing their money in shopping centers, retail parks, supermarkets, and high street stores.  

2024 has been a remarkable year, and this momentum is expected to continue in 2025, with the conclusion of transactions carried over from 2025. 

2024: Record Year for Retail Transactions

The golden years for retail transactions in Portugal over the past decade were 2018 and 2019. However, if the transactions currently in the pipeline are finalized by the end of 2024, 2024 could be a record year. 

What is driving this trend?

The retail sector in Portugal has been attracting real estate investors for many years, although there was a significant dip in 2021 and part of 2022, particularly in shopping centers, as a result of the COVID-19 pandemic, which caused a drop in sales and footfall. Despite this, the food retail segment, such as supermarkets, continued to attract investment.

Since then, the overall performance of retail assets has been on the rise, with increases in the latter stages of 2022 and more widespread trends in 2023, surpassing sales volumes in 2019, before the dip due to the pandemic.

The retail sector remains dynamic, with many new international brands entering the market, particularly in retail parks. In shopping centers, occupancy rates have remained high, even during the pandemic, highlighting resilience and reinforcing confidence in the sector. This has also eased the fear that online retail would impact physical stores.

Why has 2024 seen high interest?   

There are also two important contextual factors that have driven continued interest in retail in Portugal in 2024.  

1. There was a nearly two-year hiatus in retail transactions due to the COVID-19 pandemic, which created a backlog of products and capital that came to fruition in 2024. 
2. Bank financing is more accessible than it was before for shopping centers and retail parks (large retail volumes). It’s also expected that financing costs will decrease further compared with 2022 and 2023 due to central interest rate cuts.  

In short, the main factor influencing investor interest in retail assets in Portugal is the excellent performance of retail assets, alongside more flexible financing options and a period of more available capital.  

Portugal Firmly on the Radar of Investors

Key to Portugal’s popularity with investors – which has fostered confidence in the market – is the political and financial stability that the country offers, alongside the fact that sovereign debt is seemingly under control and is highly competitive compared to other European countries.

High occupancy rates and international brands

This strong demand underpins the current high occupancy rates of retail assets. The fact that several international brands are either entering or expanding their operations in the Portuguese market is a further, highly significant confidence boost for investors.  

Quality of Portuguese assets 

Portuguese assets are high quality, for example with shopping centers boasting excellent stock quality, prime locations, are easily accessible and have high sales and occupancy.  

Retail parks, which are a relative novelty in Portugal, were less impacted by the pandemic and recovered quickly and continue to attract strong tenant demand. Alongside this, food retail operators have been expanding their supermarket networks, creating more assets, and opportunity, for the investment market.  

Tourism and English Widely Spoken 

Portugal is also a top tourism destination with the country continuing to be one of the most sought-after spots in Europe to travel to. Portugal is expected to close 2024 with 27 billion euros in tourist revenue and with the outlook for growth standing at 9 percent for 2025. Portugal’s real estate market is also looking to diversify as more tourists look outside the hotspot locations to discover the interior areas of the country. 

English is widely spoken in Portugal, ranking in sixth position in the English Proficiency Index 2024, above countries such as Denmark, Germany, and South Africa, another pull factor for prospective investors.  

What is the most attractive retail to invest in? 

Investing in retail has proved to be incredibly popular, with 2024 looking set to be a record year. 

• Shopping centers: In 2024, investments in shopping centers have been particularly high, with more transactions expected by the end of 2024 and the first quarter of 2025. This is the result of high occupancy rates, high sales, and more accessible bank financing, in addition to accumulated products from 2020 and 2021 and increased liquidity. 
• Retail parks: Similar to shopping centers but more limited, although significant transactions were closed in 2024. 
• Supermarkets: Supermarkets offer attractive leases for investors due to the long-term nature of their leases, but are still on the radar of specific investor profiles. 
• High street retail: High street retail has been the least attractive retail segment this year because of limited supply. However, the location is the key factor here, with the most desirable areas for investors having restrictions. In the past, yields were compressed, which created a significant gap between the price that property owners are willing to sell it at and what the market can offer. This limited the number of high street retail transactions this year.  

Major Retail Deals of 2024

The highest-value transactions in the retail sector in 2024 were:

• The sale of Alegro Montijo by Ceetrus (the real estate arm of the group that also owns the supermarket chain Auchan) to Lighthouse, a South African company that specializes in shopping centers for €178 million.
• The sale of a portfolio of three shopping centers, Rio Sul, Loureshopping, and 8Avenida, by Harbert, a US private equity fund, to Castellana, a South African capital-backed company, for €177 million.
• At the start of 2024, the Sintra Retail Park was sold by Ceetrus to AMAlpha, A German capital company.

Growth from 2024 expected to carry over to 2025

While the golden years for retail transactions in Portugal were 2018 and 2019, before the COVID-19 pandemic, if the projects that are in the pipeline are completed by the end of 2024, then this year could be a record year.

Within this 12 to 15-month period, around €1 to €1.2 billion in retail transactions are expected, of which €400 million have already been closed. During the second half of 2025 it is expected that there will be a normalization.

Why Invest in Retail in Portugal?

Portugal’s success speaks for itself with the country, having cemented itself as a smart option for foreign investment. When it comes to investing in Portugal real estate, and specifically retail, the market is underpinned by solid assets located in prime locations that have strong sales, high visitor numbers, and high occupancy levels that are on par with the best in Europe. On some occasions, Portugal has even been used as Europe’s benchmark.

One thing to bear in mind is that, if you are an investor new to Portugal, it is essential to understand the country’s legal and tax systems.