But this emerging group of potential Portuguese multifamily investors should only advance if «they find the adequate product» in the country, has alerted the consultant in its latest report "Portugal Residential Market Performance & Outlook 2020".
Despite just starting out in the country «the first build-to-rent projects are beginning to be designed, namely in Lisbon and Porto», revealed the document.
The fact is that the housing rental market offers several benefits for investors such as rental stability on the long-term, guaranteed by high levels of occupancy, which also have the potential to grow, given the high demand for the structurally low offer. To invest in this segment is also an opportunity for investors to diversify their portfolios.
Multifamily’s anti-cyclic characteristics are also in favour of this segment, given its resilience against crises. The Covid-19 pandemic has proven it: «the outbreak caused an immediate inversion of the cycle observed in recent years, with an increase in lease contracts and the stagnation of the upsurge in rents», revealed Joana Fonseca, Strategic Advisory Associate Director at CBRE. She considered that «this situation is correlated with a growth in the rental offer resulting from the transfer of a number of local accommodation units to the traditional rental market and the cancellation of various leases to students».
At a time when «housing acquisition is further constrained», the rental market «may even benefit from an increase in the aftermath of the pandemic», highlighted Joana Fonseca. «We are confident in the revamping of the residential market in Portugal, once the pandemic is controlled, as the market fundamentals remain robust (…) and there is still a significant shortage of houses, both for sale and for rent» she resumed, highlighting that as CBRE «we continue witnessing a high level of interest from both developers and investors».
Multifamily grew 10 times in Europe
While Portugal is still taking the first steps in terms of multifamily investment, in Europe investment on this segment has been accelerating. «Over the last decade, multifamily investment across Europe has undergone a ten-fold increase, following the trend in the US, where multifamily is a well-established industry, providing efficient and affordable housing solutions with professional management, as well as interesting investment returns. Over the last decade, the multifamily return has outperformed both offices and retail in many markets across Europe, and has outperformed both bonds and equities», it can be read in the document.