Retail Resilience - Spotlight on Portugal

Portugal's retail market stands out as a beacon of resilience and innovation in Europe. In our first instalment of our 2025 series, Retail Resilience, we caught up with Augusto Lobo, Lead Director Retail Capital Markets, Iberia. In this article we delve into the unique characteristics that make Portugal a prime destination for retail investment. From its high-performing shopping centres to the extended operating hours that cater to the nation's love for shopping, Portugal offers a retail landscape that's both dynamic and enticing.?

Tell us something unique about the retail market in Portugal??

Portugal, although a small country, has some of Europe’s best performing shopping centres. It’s a market where shopping centres are the preferred retail destination, and even assets in smaller cities have amazing footfall.??

That’s no surprise, as most shopping centres are open from 9am to 11pm or even midnight, every day of the year. We love to shop!?

We’ve seen this first hand, from our access to daily turnover figures from shopping centre tenants, which allows asset managers to better understand and improve the tenant mix. s?

Why should investors consider Portugal as a prime retail investment destination??

Firstly, the Portuguese economy’s growing fast; major cities like Lisbon or Porto have strong demographics. Most assets have been developed with a level of sophistication that acts as a benchmark for other markets. I’d also say the quality of tenant mix and lease agreements are very strong reasons for investing here. And of course there’s strong rental growth alongside appetite from financial institutions to finance assets which generate impressive accretive value. The market’s also easy to understand, and there’s strong liquidity, as too in the wider Iberian market.??

Which city would you recommend investors to invest??

Being from the “most noble, loyal and invincible” city of Porto, I’m a bit biased! So Porto is top of mind, of course along with Lisbon, the nation’s capital. However, I have to say that great opportunities can also be found in secondary cities like Vila Real, Coimbra, Guimaraes or Leiria, where there’s usually just one or two absolutely top performing assets that generate very strong returns.?

What type of investors are most active in Portugal??

It really depends on the type of asset. We’re seeing shopping centre activity by international investors, especially REITS with a presence already in neighbouring Spain. We’ve seen more than €600m of shopping centre transactions, with strategic acquisitions from specialised retail investors such as Lighthouse Properties or Castellana Properties. Meanwhile, there’s a really diverse pool of investors focused on retail parks, with recent activity by French SCPI vehicles.?

As well as local family offices and UHNWI, we are witnessing a very strong increase in appetite by Spanish private capital for high street retail.?

We’ve also been able to bring new investors to Portugal, thanks to our global reach and coupled with our strong local knowledge.?

Which sub-sector do you expect to be the most prominent in 2025??

Shopping centres had a stellar performance in 2024, and we believe they’ll keep on playing a predominant role in 2025. But we also expect that transactions in retail park transactions will take off. There’s strong demand from French SCPI vehicles and other investors focused on convenience retail, looking to benefit from the interesting returns offered by our market. From the many conversations we’re having with international investors, it’s clear that 2025 should be another great year for Portuguese retail investment.?