The European office market is gearing up for a new investment cycle in 2026. The stabilisation of prime yields, the recovery of investor confidence, and increasing liquidity are opening a window of opportunity, with the Southern European markets, particularly Portugal, standing out as the most attractive destinations.

According to Savills’ European Office Investment - Q4 2025 report, the average prime office yield in Europe remained stable at 4.9%. In Lisbon, it stood at 4.75% — a competitive level compared with Madrid (4.80%) and higher than Milan (4.25%), Paris (4.00%), and London West End (3.75%). This positioning reinforces the Portuguese capital as one of the markets offering the best balance between income return and capital appreciation potential.

Lisbon combines competitive pricing with rising rents and a widening gap between prime offices and outdated buildings, in a market where quality assets are scarce.
According to Frederico Leitão de Sousa, Head of Offices at Savills Portugal, the solid performance of the occupational market and the growing conversion of office buildings into residential use — an expanding trend across Southern Europe — are also underpinning the recovery of office investment.

On the investors’ side, priorities have also evolved: uncertainty over the future of offices has given way to a strategy focused on prime assets with high occupancy and secure income streams.
The INREV (European Association for Investors in Non-Listed Real Estate) sentiment survey for the fourth quarter of 2025 confirms this dynamic, showing increased preference for Southern European markets and renewed interest in Germany.

According to Frederico Leitão de Sousa, “Portugal is now entering a particularly favourable cycle. After a 2025 clearly marked by recovery, we believe 2026 will be the year of consolidation, with landmark transactions and an even stronger positioning of Lisbon among international institutional investors.”

International capital and occupier demand
The strength of international capital is reinforcing this shift. The share of cross-border investment in European offices increased between 2024 and 2025, reflecting stronger appetite for markets offering liquidity, a stable environment, and scarce prime product.
In markets such as Lisbon, this additional pressure on the best assets is expected to accelerate the absorption of available stock and may lead to some yield compression in this new cycle.

On the occupational side, the market continues to show resilience. Savills projects an average 3.7% increase in European prime rents in 2026. According to Mike Barnes, European Office Research Director at Savills, the shortage of prime space and a 67% rise in fit-out costs over the past five years are leading many companies to renew leases rather than relocate. In his view, “landlords are thus able to capture rental growth through renewals, which translates into real income growth and attracts more buyers to prime assets.”

James Burke, Global Cross Border Investment Director at Savills, also notes that investor sentiment is shifting, with a marked increase in interest in markets such as Germany. He adds that “favourable financing conditions are bringing more investors into the market, which is likely to drive a new increase in European real estate investment volumes throughout this year.”

In this context, Oxford Economics forecasts Eurozone GDP growth of 1.0% in 2026 and 1.6% in 2027, with Southern Europe among the most dynamic regions.
In a market where stability, quality and confidence have once again become key drivers, Portugal stands out as one of the most competitive destinations for international capital seeking prime office opportunities in the region.