Commercial real estate in Portugal remains closely linked to the performance of the tourism sector, which continues to be a major driver of economic activity. According to the latest data from INE, July 2025 saw strong results in tourist accommodation, with 3.4 million guests (+4.3%) and 9.4 million overnight stays (+3.5%), generating €891.1 million in total revenues.
For investors, these dynamics highlight the resilience of tourism-linked assets and their importance in shaping real estate investment strategies. With ADR and RevPAR both recording steady growth, the latest figures provide critical insight into where opportunities — and risks — may lie across Portugal’s hospitality-driven commercial property market.
Key Market Insights
- Demand Mix: Domestic tourism grew by 6.7%, while international visitors rose 2.2%. Strong gains came from the U.S. (+12.3%) and Poland (+14.0%), offsetting declines from Spain and France. This diversification of source markets benefits long-term stability in commercial real estate tied to hospitality.
- Regional Performance: The Algarve held 30.8% of total overnight stays, but higher growth rates were seen in Madeira (+7.2% stays, +20.8% revenues) and Alentejo (+9.8%). These shifts highlight opportunities beyond established hubs for future commercial property development.
- Revenue Drivers: Average Daily Rate (ADR) climbed to €151.8 (+5.6%), while RevPAR reached €101.1 (+5.1%). High values in the Algarve (ADR €194.4; RevPAR €139.4) show continued strength in mature markets, though emerging regions posted stronger percentage growth.
- Occupancy Pressures: National occupancy declined slightly, with room occupancy at 66.6% and bed occupancy at 58.1%. For commercial real estate, this signals a potential plateau in certain saturated submarkets.
Implications for Commercial Real Estate
The July figures reinforce that hospitality-related commercial real estate remains one of Portugal’s strongest performing segments. Hotels and resorts benefit directly from rising ADR and RevPAR, while supporting assets — such as retail, food & beverage, and mixed-use developments in prime tourist corridors — gain indirectly from higher visitor spending.
Investors should note, however, that occupancy softness suggests pressure on capacity in mature markets. This makes regional diversification increasingly important. Secondary regions like Madeira and Alentejo not only show above-average growth but also present less exposure to saturation risk, positioning them as attractive options for new projects or acquisitions.
Forward Outlook
Looking ahead, several factors will shape the trajectory of commercial real estate linked to tourism:
- Seasonality and Q3 performance, which will indicate whether July’s acceleration can be sustained.
- Air connectivity and exchange rates, especially as transatlantic routes continue to expand U.S. arrivals.
- Regional diversification, with markets such as Madeira and Alentejo gaining share, offering strong fundamentals for medium-term real estate investment.
Conclusion
The July 2025 INE data confirms the resilience of Portugal’s tourism sector and its crucial role in supporting commercial real estate. While occupancy slipped slightly, revenue growth and expanding international demand highlight solid fundamentals. For investors, the strategic approach lies in balancing mature, high-yield markets with emerging regions that show faster growth trajectories. Effective risk management, diversification, and close monitoring of demand shifts will be key in capturing long-term value across Portugal’s commercial property market.
For tailored insights and access to high-potential opportunities in Portuguese commercial real estate, contact Roca Estate today.
