On this subject, Eric Van Leuven, Head of Portugal at Cushman & Wakefield, confessed that «there is so much uncertainty that we really do not know». Actually, «assessment is a difficult issue at the moment».
Nevertheless, he predicted that «maybe the prime assets like offices and logistic may not suffer much in terms of valuation». Logistic assets are, in fact, adapting «to the new reality and clearly, in the short-medium term they will be well-positioned to benefit from this crisis», revealed Eric Van Leuven during the initiative Iberian Property Investment Talks.
However, assets located in secondary areas are in a «more unique» situation. «Hospitality and retail are most vulnerable. In retail, it is very difficult to evaluate the operating income which is a basis of valuation. We will see how the rents will do next month and over the next couple of months», he explained.
While the real estate market adapts to this new reality, there are already «opportunistic players which are clearly positioning themselves looking for distressed» operations, revealed Eric Van Leuven. On the other hand, «there is a lot of core money within the funds». Although for now «most of them are probably seating and waiting to see where it can be applied, the core funds would be very active quite quickly», he advanced.
Investment in Portugal this year should reach €2B
The operations which should take place in Portugal during the rest of the year could help consolidate the numbers reached during the first semester, which according to Eric Van Leuven, «was the best quarter in history», reaching an investment volume of around 1.5 billion euro.
In fact, during the first three months of the year, there were «very large transactions, for example, the selling of Sonae Sierra Prime’s portfolio which represented an investment of 525 million for Allianz and Elo», he explained.
For the end of the year, the Head of Portugal at Cushman & Wakefield believes that the investment amount could reach «next to 2 billion, maybe 2.5 billion euro», and, thus, inferior to the 3 billion euro registered in 2019.
The crisis’ consequences should be «quite brutal»
Eric Van Leuven’s macroeconomic prospect for the country is not optimistic. The consequences of the crisis should be «quite brutal and quite devastating», with the closing of several small and medium-sized companies and an increase in unemployment.
From his point of view, the public debt this year should «go back or even exceed the previous peak in public debt levels», which in 2014 reached 132.9% of the GDP. According to data from the International Monetary Fund, Portugal’s public debt should reach 135% of the GDP by the end of the year.
Given the projections which predict the GDP’s drop and the debt’s increase, Eric Van Leuven confessed that «it will be very difficult not to have austerity», in the coming years. And he believes that this scenario «will affect the levels of occupancy and spending, new development projects and financing».