MARKET STATUS
BETWEEN RECOVERY AND DISENCHANTMENT
The year 2025 began with expectations of being a period of stabilization. Portugal showed encouraging signs of economic growth, interest rates were falling (and continued to fall) and a moderate recovery was expected after the shocks of recent years. However, it took just a few weeks for the new US administration to radically change the scenario.
The announcement of significant increases in customs tariffs by the US, with an impact of more than 20 percentage points on effective tariffs, brought back the specter of a trade war. The measure was partially suspended for 90 days (with the exception of China), and the unease set in. The market reactions were immediate: sharp falls in the stock markets, increased volatility and widening of credit spreads. Uncertainty returned with a vengeance, at a time when the world needed exactly the opposite.
The motivations behind these measures are questionable. The imposition of tariffs will not resolve the US external deficit, which is rooted in a structural mismatch between savings and investment. Nor will it bring back jobs in sectors where the US has long since lost competitiveness. This is a lose-lose game. And contrary to what one would expect from the world’s largest economy, this decision appears to be more of a shot in the foot than a strategic move.
The consequences for the global economy could be severe. A scenario of escalating tariffs would harm international trade, jeopardize investment and put pressure on inflation. The response of the central banks (Fed and ECB) has shown caution. Both admit limitations in their ability to provide guidance in a context dominated by political uncertainty. In both the US and Europe, there is fear of an economic slowdown accompanied by high inflation, a real risk of stagflation. The dollar has also suffered.
Since the announcement of the tariffs, it has depreciated against the main currencies, driven by the fall in short-term real rates. At the same time, gold has reinforced its role as a safe haven asset, appreciating 8% in the month. The raw materials most sensitive to the economic cycle (oil, natural gas and industrial metals) have seen significant falls.
Global stock markets, especially in developed markets, have seen widespread losses. In Portugal, the initial outlook is favourable. The economy grew by 1.9% in 2024 and benefits from a strong carry-over to 2025. Direct exposure to the US is relatively low (less than 4% of GDP) and the most vulnerable sectors have already been identified. Furthermore, the country currently has much stronger macroeconomic fundamentals than in previous crises: falling household and corporate debt, controlled external and public debt, and a sustained recovery in employment.
Globalization as we know it is giving way to a new order. What has worked in recent decades (the German export model) may not be enough in this new context. The ability to adapt will determine who will be on the winning side. We are facing a new global equilibrium point under construction, and Portugal must know how to position itself.
Sources: INE, BdP, BPI research, Eurostat, yahoo finance; ECB, turismo de Portugal
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"ESG IN REAL ESTATE: SUSTAINABILITY AS STRATEGIC PILLAR FOR THE SECTOR"
A global demographic transformation is shaping new ways of living, working and occupying urban spaces. By 2050, Millennials and Generation Z will represent around 75% of the global workforce. These generations share a critical view of the role of companies in society: it is not enough to generate profits — it is essential to integrate environmental, social and governance (ESG) concerns into business strategy. In the real estate sector, this demand is reshaping priorities and practices.
Sustainability has become, for many investors and developers, the second biggest concern — only surpassed by rising construction costs and the scarcity of suitable assets for acquisition or development. This repositioning is driven not only by changes in user preferences, but above all by regulatory pressure and emerging risks linked to climate change, social inequality and poor corporate governance.
In recent years, European regulation has become a strong catalyst for ESG integration in real estate. The EU Taxonomy, the SFDR (Sustainable Finance Disclosure Regulation) and the CSRD (Corporate Sustainability Reporting Directive) have introduced stricter reporting and transparency obligations, aiming to align financing with sustainable objectives. These measures directly affect developers, investors, asset managers and even institutional occupiers.
Among the most relevant milestones is the requirement that, from 2027, all new public and commercial buildings over 2,000 m² must be classified as nZEB (near Zero Energy Buildings). In parallel:
The transition to more sustainable construction is not limited to materials or energy efficiency. Digitalization is essential to collect, analyze and report data that proves the ESG performance of an asset. IoT (Internet of Things) solutions, BMS (Building Management System) systems and predictive analytics platforms are making smart buildings a key part of smart city planning, with the ability to adapt in real time to the needs of their users and the environment.
In the office segment, there is a growing appreciation for the health, comfort and well-being of occupants. Issues such as air quality, natural lighting, social areas, green spaces and mental health initiatives have become determining factors in the occupancy decision.
The rise of the Work From Anywhere model requires a more integrated approach to flexibility — not only in spaces, but also in the work model. Buildings must accommodate diverse work dynamics, with hybrid infrastructures, collaborative spaces and technological solutions that support remote productivity. These aspects are directly linked to the creation of social value, one of the less tangible — but increasingly relevant — pillars of the ESG component.
Environmental and well-being certifications such as LEED, BREEAM, WELL and DGNB are gaining prominence as tools for objectively measuring the performance of buildings. At a global level, initiatives such as the Net Zero Carbon Buildings Commitment, promoted by the World Green Building Council, set ambitious targets for carbon neutrality of the building stock by 2050.
These certifications are no longer mere marketing elements. They are often associated with increased asset value, reduced operating costs and increased liquidity in the leasing and transaction market, especially among corporate occupiers who want to reduce their own ESG risks.
Buildings have a significant impact on the environment, from the extraction of raw materials through construction, operation and demolition. The concept of embodied energy — associated with the production of materials and construction — is as relevant as the operational energy used for air conditioning and ventilation.
Mitigating these impacts requires a holistic approach, considering life cycle analysis (LCA), material reuse, passive design, renewable energy and continuous monitoring systems. Responsible management throughout the asset's entire life cycle thus becomes not only a good practice, but a market and regulatory requirement.
Ignoring ESG principles poses a real and measurable risk. Transition risks include increased costs associated with obsolete or non-compliant assets. Physical risks, such as extreme weather events, directly affect the value and resilience of poorly prepared assets. Reputational risks can compromise the ability to attract financing, attract talent and build stakeholder trust.
Integrating ESG into real estate is, above all, a question of strategic vision. Players who do so proactively are not only reducing risk, but also generating tangible value — through more resilient, more efficient assets that are aligned with the expectations of an increasingly demanding and aware market.
Nuno Santos, Asset Manager
MONTH'S
SCHEDULE
May 2025
