MACROECONOMIC BACKDROP
In today’s property market, keeping a close eye on the broader economic environment is essential for anticipating how retail assets will perform. According to the Bank of Portugal, the Portuguese economy continues on a steady growth path, with GDP forecast to expand by 1.8% in 2026, following growth of 1.9% in 2025. This provides a reasonably stable foundation, shaped by a number of specific variables that influence demand for commercial space. The overall outlook for retail in 2026 is one of cautious optimism, with genuine opportunities emerging for property investors.
Retail is, of course, closely tied to household spending power. The Bank of Portugal projects that private consumption will grow at a more moderate pace of 2.0% in 2026, down from 3.5% in 2025. This is underpinned by stable real incomes and a historically resilient labour market, albeit tempered by a more cautious approach to savings — household saving rates have steadied, though they remain above their long-run average.
For retail property, particularly in Lisbon, Porto and the Algarve, tourism remains the single biggest driver. Services exports continue to make a positive contribution, generating a steady flow of non-resident consumers. This dynamism goes a long way towards offsetting the more restrained spending behaviour of domestic consumers, keeping occupancy rates and rents under positive pressure along the prime high street pitches in the country’s main urban centres.
With inflation projected at 2.8% for 2026, retailers are still grappling with elevated operational and logistics costs. That said, the expected convergence towards 2% in the years ahead offers greater visibility for long-term lease agreements and brand expansion planning.
Investment is shaping up to be the main engine of the national economy. The 3.8% projected growth in investment for 2026 is largely being driven by accelerated disbursement of EU funds, offsetting a more cautious stance from private investors in the face of international uncertainty.
Taken together, the retail sector faces a backdrop of moderate optimism. Full employment combined with the buoyancy of tourism creates real openings for property investors — provided the product is well aligned with evolving consumer trends and that operators maintain a disciplined approach to costs in what remains a relatively high-cost environment.
OCCUPATIONAL MARKET
Retail was unquestionably the standout sector in the Portuguese property market in 2025. Take-up held firm across the board, and there was room for prime rents to move upwards.
Retail sales accelerated, with an average index of 115.3 in 2025, reflecting year-on-year growth of 5%, driven primarily by non-food products. Online retail growth eased slightly, coming in at 4%.
Shopping centres maintained healthy demand and occupancy metrics, with a number undertaking repositioning efforts to attract stronger brands and footfall. Retail parks, meanwhile, continued to attract developer and investor interest, with several new schemes coming forward. Shopping centres — the dominant retail format in Portugal — posted annual sales growth of 10% in 2025, with transaction volumes up 11% year-on-year. Fashion remained the largest category, accounting for 34% of turnover, followed by supermarkets at 26%, which recorded the fastest growth.
Retail parks have been the most active segment for new supply in recent years. Notable schemes include:
- Retail Center Felgueiras (~7,500 sq m), developed by JOM, opened in early 2025 and fully let;
- Nova Vida Retail Park (23,000 sq m), opened in 2025 in Portimão by Mitiska REIM, fully let;
- Azores Retail Park (15,000 sq m), by Sapore and Retail Mind, scheduled to open in early 2026;
- Retail Park Póvoa de Varzim (21,000 sq m), by Retail Mind and FVC Group, due to open by end of 2026;
- City Center Covilhã (17,900 sq m), by Forumlar, expected in Q2 2026.
Prime rents rose across all retail segments during 2025:
- Lisbon prime high street reached €145.0/sq m/month, surpassing pre-pandemic levels once again;
- Porto prime high street moved above pre-COVID levels to €85.0/sq m/month;
- Shopping centres recorded a prime rent of €115.0/sq m/month, also ahead of pre-pandemic benchmarks;
- Retail parks reached €13.0/sq m/month, continuing their upward trajectory.
INVESTMENT MARKET
Portugal’s commercial property investment market put in a strong performance in 2025, standing out on the European stage. The country ranked among the top 10 markets by growth in 2025, and in the top 3 over both the five- and ten-year averages.
Portugal attracted over €2.75 billion of commercial real estate investment across 89 transactions in 2025 — a 14% increase on 2024 and the fifth-best year on record.
Retail led the way, accounting for €880 million of investment in 2025. Preliminary data for Q1 2026 points to continued momentum, with 12 transactions totalling €340 million already recorded. The standout deal was the sale of a 50% stake in NorteShopping to Sonae Sierra for around €340 million — the largest single transaction since 2025. Lower capital costs and easier access to credit were key enablers of this investment acceleration.
Prime yields across commercial property compressed broadly at the start of 2025, supported by solid market fundamentals and improved financing conditions. By the end of the year, shopping centres were trading at a prime yield of 6.25%, high street at 4.50%, and retail parks at 6.50%.
OUTLOOK
Portugal recorded the strongest retail sales growth in Europe in 2025, driven by a recovery in domestic consumption, still-elevated savings levels and the sustained contribution of tourism — all of which are fuelling demand from new brands and emerging retail formats in the physical space. These conditions are expected to carry into 2026 and continue to underpin sector activity.
The broader trend points towards an increasingly diversified retail market, with growing appetite for alternative formats that blend experience, convenience and omnichannel capability — reinforcing the value of spaces that can adapt to shifting consumer and investor preferences.
In the near term, a modest upward drift in prime rents is expected, supported by a scarcity of quality space and resilient demand in line with the projections outlined above.
Assuming a near-term resolution to the Middle East conflict — at least in so far as it bears on inflation, as the Bank of Portugal’s projections assume — the impact on commercial property investment is expected to remain relatively contained in 2026. The post-COVID era has, if nothing else, fostered a degree of adaptability and resilience among market participants, even through more challenging periods. The most likely scenario at present is a delay rather than a derailment — with a broader recovery in transactional activity now more plausibly pencilled in for 2027.
Silvia Dragomir, Head of Research for Real Estate & Sustainability, Worx Real Estate Consultants, article published in the journal Confidencial Imobiliário.