Residential property values ascending at double the pace of commercial real estate values.
In 2024, the increase in the price of commercial properties traded in Portugal slowed compared to the previous year, with the average annual growth rate of the Commercial Property Price Index (IPPCom) falling from 5.5% in 2023 to 4.7%, according to data from the National Statistics Institute (INE).
The slower growth rate is in stark contrast to the housing market, where prices experienced a 9.1% year-on-year rise in 2024, almost double that of commercial properties. This gap widened compared to the previous year, with house prices increasing 4 percentage points more than commercial real estate.
The intense growth in the residential sector, which saw an 11.6% year-on-year increase in house prices in Q4 2024, is attributed to strong demand from foreign investors and attractive tax incentives. By contrast, commercial real estate investment in Portugal saw a substantial increase in the first quarter of 2025, but specific data for 2024 is not detailed.
Household transactions increased by 15.2% in 2024, with other institutional sectors, including companies, also demonstrating a growth in home purchases, highlighting the sector's attractiveness for investment. In 2024, these institutional sectors purchased 21,785 homes, a 10.3% year-on-year increase, with the total amount moved increasing by 13.1%.
Prices of houses purchased by companies grew at a slower pace in 2024 compared to the previous year. The first quarter saw a 5.1% increase, which slowed to 2.7% in the second quarter. Price growth picked up in the second half of the year, reaching 4.1% and 5.2%, respectively, in the third and fourth quarters.
Despite the growth in commercial property prices, the INE concludes that the price of houses in Portugal in general grew more than the price related to housing acquisitions by other institutional sectors in 2024.
- The housing market, particularly residential properties, exhibited a robust growth in 2024, with prices rising by 9.1%, significantly higher than the 4.7% growth rate for commercial properties in the same year.
- Contrary to the residential sector, commercial real estate investment in Portugal saw a notable increase in the first quarter of 2025, but specific data for 2024 remained undetailed.
- In 2024, despite the growth in commercial property prices, the price of houses in general increased more than the price related to housing acquisitions by other institutional sectors, suggesting a stronger appeal for investors in the residential real-estate market.
