The words were spoken by Francisco Horta e Costa, Managing Director at CBRE in Portugal, who was talking about the future of real estate during the session “Real estate overview by leading consultants”, at the Portugal Real Estate Summit. But he warned that to reach this optimistic number «there must be offer».
«If that offer reached the market, we know that having top quality offices will attract more companies, and it will be good for the market as a whole», he completed. He considers that within the next few years offices’ prime rents might be at 30 euro/sqm (when compared to the current 20 to 23 euro/sqm).
In tandem with the growth of corporate activity, «Lisbon will have to expand towards the South. The project for the Tagus Bay may become Lisbon’s Broadway, it has enormous potential», he remarked.
Francisco Horta e Costa remarked that the market has witnessed a series of phenomena which were not believed possible: «we never thought there would be people living in the Baixa area, or that there would be a luxury destination at Avenida da Liberdade».
2013 was the «turning point»
All changed in real estate in 2013, believes Paulo Silva, Head of Country at Savills, who focused, during this session, on the sector’s present.
With the change to the rent laws, there was a boost on urban rehabilitation and investment, generated also by the creation of instruments such as the «golden visa»: «we have now created the SIGI (Portuguese REITs) regime, which will be very important for Portugal in the coming years».
And, if in 2013 all attentions were turned towards the city centres, that focus has currently expanded, with investment on the city of Lisbon going from 128 million euro back then to 970 million euro in 2018. «If we had waves of investment in the past, today we receive investment from all over the world».
Attentions have also turned towards distinct assets, such as offices, student residences and co-living. But the great novelty resides in Porto, currently a new office destination, which «is playing a very important role in attracting investment».
Commercial investment has reached unheard levels
If we go back a little, to the years before the crisis, we will see that commercial real estate investment is much higher than the levels considered normal during that period.
Eric van Leuven, Head of Portugal at C&W, who was analysing the market’s past, remarked that this level of investment is «very much higher than the pre-crisis investment levels, and this year it could reach 3.000 million euro once again».
The highlight goes to the diversity of capital, in terms of nationalities and investment profiles, as well as in terms of the size of the operations which «are much larger». Indeed, shopping centres have been among the preferred assets, and «investors don’t seem to be bothered by e-commerce».
The «good work carried out to leave the crisis behind», after the troika’s intervention has played in favour of the country. Exports represent a large part of the economy’s growth and they don’t just concern tourism – but this sector represented 57.6 million stays in 2018. Unemployment rate has also been dropping significantly, which has had a very positive effect on the office market and on the take up in particular.