2020 closed with €2.800M real estate investment in Portugal

2020 closed with €2.800M real estate investment in Portugal

In its overview of 2020, presented this Monday, Cushman & Wakefield announced that around 2.78 billion euro were invested in real estate in Portugal up until the 31st of December, estimating that the year will finish with a total nearing 2.8 billion euro. If confirmed, this will be the third-highest total annual investment registered in the country and only 14% less than the number registered in 2019.

Paulo Sarmento, director of Capital Markets at C&W, highlighted that the three largest deals of the year represented 55% of all investment: the purchase of 50% of Sierra Prime, representing 800 million euro; the purchase of Hotéis Real for 300 million euro and the purchase of Lagoas Park for 421 million euro.

In 2020, foreign capital continued to represent the majority of investment, for a total of 75%, but domestic investment continued growing representing a total of 720 million euro, 40% more than last year. By segments, retail represented 40% of all investment, offices 35% and hotels 18%.

In terms of real estate development and urban renewal, Cushman & Wakefield estimates that 450 million euro were invested, 60% less than in 2019. Amongst the main operations, were the acquisitions of The Keys, at Quinta do Lago, for 95 million euro and Herdade dos Pinheirinhos, in Melides, for 80 million euro.

First rental housing transactions may take place this year

Paulo Sarmento and Eric van Leuven, general manager at Cushman & Wakefield in Portugal, assumed themselves «moderately optimistic» regarding 2021, with the great doubt residing in how quickly the pandemic will be controlled, which can make all the difference within the market. «Vaccination is excellent news and, if all goes well, the second half of the year may be much more dynamic», mentioned Paulo Sarmento.

The «star of the years to come» may be the private rented segment. Eric van Leuven is convinced that «the PRS - private rented segment will boost the market, not only in terms of the final user, but also as an investment product, with many developers and investors already positioning themselves in order to carry out projects in this segment». Paulo Sarmento added that «developers are already developing products in this area for long-term rental, and there are investors searching for it. This year we will witness the first purchasing deals of product still under development».

It should also be remarked that the retail segment remains under several restrictions, which may affect sales. In terms of the office segment, the market is reassessing the way of occupying spaces, due to prolonged remote work and logistics may keep registering an increase in demand.

It is certain that C&W is aware of deals «underway or near conclusion which should be concluded in 2021 representing a total of 1.8 billion euro, besides the off-market deals». To this volume should be added the suspended deals expected to be concluded up until 2022 representing a total of 1.8 billion euro.

Stable legal frame «to allow investment»

Paulo Sarmento recalled that legal stability is fundamental to keep investment in the country and that two of the investors’ main concerns are the new changes to the «golden visa» regime and the municipal licensing times, especially in Lisbon: «we are faced with an enormous conservatism from buyers in Lisbon in terms of their expectations concerning licensing times, which had a very negative evolution throughout the year. And this is reflected in prices».

Eric van Leuven concluded: «I hope real estate, a fundamental sector for the national economy and for the creation of jobs, recover a well-deserved legal and tax stability. If it is certain these have been unprecedented times, where the quick support provided to the companies played a determinant role in maintaining them, the approval by the National Assembly, of several extraordinary measures, some of which unfair, created unbalances which now need to be erased».

Read the full news in Portuguese HERE.

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