Portugal could become bolt hole for real estate investment as wars continue – but it’s only a maybe

History has shown that real estate investors tend to seek safer markets like Portugal during periods of greater international instability and wars.

The same may be true in the current geopolitical context marked by the wars in Iran, Ukraine and overall instability in the Middle East.

“Portugal continues to be perceived as a stable market within Europe, which may (…) reinforce the interest of international investors seeking to diversify or protect capital in safer geographies,” says Manuel Maria Gonçalves, CEO of the Portuguese Association of Real Estate Developers and Investors (APPII), in an interview with on-line estate agency and real estate news source Idealista.

The current conflict in the Middle East is causing a sharp rise in energy costs – largely due to the paralysis of the Strait of Hormuz – as well as increasing uncertainty in financial markets, which are already anticipating interest rate hikes by the European Central Bank to contain a new inflationary cycle. This uncertainty has taken on new dimensions globally, and may even affect future investments, particularly in real estate.

“In real estate investment, as in any other, the expectations that market players generate about the future are crucial. This means that if the market actually generates a real expectation of rising interest rates, it may start to be more selective in its choices,” indicates Gonçalo Nascimento Rodrigues, a specialist in real estate finance.

Since real estate investment is carried out “from a longer-term perspective” – especially if it involves construction or rehabilitation, which takes several years – economist Vera Gouveia Barros believes that the impacts will “depend heavily on the perception of the duration of the conflict, and it is too early to make predictions.” But she acknowledges that “wars cause a greater sense of apprehension about the future, a lack of confidence, which is detrimental to economic growth.”

The CEO of APPII also believes that, “in the short term, geopolitical conflicts tend, above all, to increase uncertainty in international markets and lead investors to adopt a more cautious stance,” while also considering it “too early to anticipate significant direct impacts on real estate investment in Portugal.”

Safe markets win in a context of instability

“The prolongation of the war may cause disturbances in the international economy and in the financial markets, which, in turn, may dictate changes in investor behavior, interest rates and risk assessment, which in the case of Portuguese real estate, considered overvalued by European institutions, may have negative consequences,” warns José de Matos, Secretary-General of the Portuguese Association of Construction Materials Traders (APCMC).

But Portugal could also benefit, because it continues to be seen as a haven for investment, “a stable market within Europe, which may, in some cases, reinforce the interest of international investors seeking to diversify or protect capital in safer geographies,” argues the investors’ spokesperson in statements to idealista/news. “If instability in the region persists, it is possible that some investors will strengthen the geographical diversification of their portfolios and look at markets like Portugal as an attractive alternative for long-term real estate investment,” he further emphasises.

Middle East invests little in Portuguese real estate – but interest is growing

“Investment from the Middle East has had a relatively limited presence in the Portuguese real estate market when compared to other regions, such as Europe, the USA or, more recently, some Asian markets,” indicates Manuel Maria Gonçalves.

Regarding the residential segment, Manuel Reis Campos, president of the Association of Civil Construction and Public Works Industries (AICCOPN), recalls that “direct investment in residential real estate in Portugal from countries outside the European Union is residual,” representing only 4.7% of the total amount transacted in the first nine months of 2025, according to data from the National Institute of Statistics. That is why “no impactful effect is foreseen in our country in the immediate future,” he concludes.

Nevertheless, the CEO of APPII acknowledges that investors from the Middle East have “shown increasing interest” in the country, “especially in larger-scale, institutional assets such as hotels, high-quality residential projects and, in some cases, logistics and mixed-use assets. More than the absolute volume, the Middle East stands out for its long-term investment profile and its search for stable projects in safe markets,” he concludes.

For example, the Savills group has approximately 800 employees in the Middle East, representing about 5% of underlying pre-tax profit in 2025, according to the annual results of the real estate consultancy, which also has a presence in Portugal.

Source: Idealista/News; Credits: Christophe Schulz, Unsplash