Late cycle remains positive for real estate investment

Late cycle remains positive for real estate investment


«The economic moment and real estate market’s prospects in Portugal» was the theme at the latest Vida Imobilária’s Lunch-Conference. Lisbon is currently the «European hot spot», and it is an «attractive city, especially in the prime segment», commented Hugo Moreira, Managing Director at Värde Partners, one of the speakers at this meeting. He believes that «the late cycle will bring a slowdown» but that «core investment is here to stay, and it is the opportunistic that is on the way out. This is the right time to sell assets which are ready and to think about the next buyer», he warned. Offices are still lacking, but speculative construction «is still a mirage», he believes.

Despite the exit of these occasional investors, Lisbon maintains its dynamic and Porto «is on the map» said Hugo Moreira, who predicts that the volume of investment will decrease in the coming years, «which is normal, 2018 was the exception».

During the late cycle stage, the student residences market will be one the strongest bets, at a time when «there is a tremendous effort to attract foreign students, and it is a sector that is not related to the economy, which can make it a safe harbour».


Economy keeps providing confidence to investment

José Brandão de Brito, Chief Economist at Millennium bcp, highlighted, on this occasion, that the global economy will keep slowing down this year, at a time when credit is growing moderately, with the dollar increasing against the euro. Despite that, the beginning of the year was one of the best ever for the European economy.

And, in Portugal, the economy has been recovering in a sustained manner since 2014, which provides confidence to investment which keeps growing above the GDP. «Companies with less debt are those that invest the most, and that is very positive», he remarked.

More recently, «prices in real estate increased significantly», and «we have to think about where we are going: more own house purchasing? More renting? Put a stop on prices? » And he remarks that «economic theory dictates that demand will slow down, and INE’s (Portuguese National Statistics Institute) data show that prices are already slowing down», denying a real estate bubble.


Real estate sector believes that growth will be maintained in 2019

During this meeting, an anonymous survey was taken by 75 guests. 60% consider that business will be better in 2019 than it was in 2018 and 31% consider it will be the same.

Respondents bet primarily on the office segment. This is the real estate segment that should attract the most investment in 2019, closely followed by housing and tourism. Commerce will motivate less investment, as will the remaining segments.

On the other hand, the slowdown expectation is clear concerning 2020. 58% of respondents believe their business activity will remain the same as 2019 and 29% believe it will be better.

This meeting was sponsored by CBRE, S+ Elevadores, Grupo SIL, Uría Menéndez Proença de Carvalho, Millennium bcp and had the support of InterContinental, Santos da Casa and Luz e Som.

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