Amidst the economic challenges in Europe marked by soaring inflation, increased loan costs, and a disparity between property prices and purchasing power, Portugal's real estate investment has taken a hit.

According to the Savills Portugal Real Estate Market Overview, investment in real estate has almost halved since last year. From January to September, €1.021 billion was invested in Portuguese real estate, a 48% decrease since the same period last year.

The office segment has seen the biggest drop, but residential real estate sales have also cooled throughout the year. A total of 31,809 residential properties were sold in Continental Portugal during the summer of 2023, a 20% drop from the same period last year and 5% less than the previous quarter.

Experts attribute the cooling to high prices, elevated interested rates and diminished purchasing power. But while the pace of house price increases has slowed, they're still not dropping, says the report.

Despite the challenging environment for the residential market, the report also showed resilience in the retail and hospitality segments, contributing 38% and 37%, respectively, to the total real estate investment volume from January to September. Senior residences also proved to be resilient.

For more information about investing in Portugal, get in touch with us at Algarve Home Sales.