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Investment dropped 66% during the 1st semester
30 July 2021 | Ana Tavares

The numbers for Portugal «show a country which started the year with a mandatory second lockdown, putting a break on the recovery», according to Savills.

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Real estate investment in Portugal reached 569 million euro during the year’s first half, 66% less yoy, according to Savills. In total, 26 investment operations representing equal amounts to those of 2020, were registered. 

According to the consultant, «it is very important to look at the investment market’s behaviour during the first semester and observe the positive evolution in terms of investment as the country moves forward, with success and at a good pace with its plan to end the lockdown». He remarked that at the end of the 2nd quarter, the domestic real estate market reached a total of 348 million euro, representing a 57% quarterly increase.

During this period, international investors represented more than 80% of all concluded transactions, with a «strong presence» of investors from France, Spain and United Kingdom. Domestic investors increased their market share, through investment management funds and private investors, who were seeking opportunities within the office and retail segments, particularly high-street retail».

Amongst the main transactions concluded until June, Savills highlighted the sale of Navigator’s portfolio for 120 million euro, the purchase of WPP Portugal headquarters’ building by Tishman Speyer for 50 million euro and the purchase of Edifício D. Manuel II building in Porto, by Incus Capital advised by the Savills. 

Housing is an «emerging trend»

By segments, offices concentrated 41% of all real estate investments, particularly in prime locations within Lisbon and Porto. Retail, continued to be impacted by Covid-19, which resulted in an 85 million euro investment, substantially lower than the average of the last five years which totalled 500 million euro.

On the other hand, investors’ interest in the housing and alternative segments, which had 190 million euro invested (21% of which corresponded to the alternative segments), increased.

Savills believes that, during the second half of the year, the market will witness «the conclusion of some operations which will raise the total investment for 2021. As all the countries of the players present in Portugal advance in their end of lockdown leaving plans and travel regains its regular pace, so will the decision processes become quicker».

Savills further forecasts that «demand for prime assets will remain fiercely competitive when faced with a higher lack of product, along with a demand directed towards development products. With some heavy portfolios in the race, Portugal will remain firm under international investors’ radars, with the office, hospitality and alternative segments attracting their interest the most. The industrial and logistic segments, despite the dynamics observed in the occupancy market, will continue to see their growth slowed down by lack of offer».

Year may close at 2.8 billion euro

Savills predicts the global volume of commercial investment might reach 2.8 billion euro this year, which will be «very dependent on the conclusion of one key-operation to reach these numbers». 1.9 billion euro is the most conservative number.

Nevertheless, «a recovery of the domestic real estate investment levels at a higher and more consistent pace is expected for 2022». 

Alberto Henriques, Capital Markets Associate Director at Savills Portugal, commented in a release that «the strong start of 2021’s 3rd quarter, which at the end of July, has had more than 300 million euro invested, with the potential of becoming the segment with more transactions in 2021, is an excellent indicator of the second half of the year’s activity pace».