Proof of that is the volume aggregated until September in Portugal’s northern region, which reached 400 million euro, around twice as much as the amount invested during the same period last year. The data is provided by JLL’s latest study Market 360º Porto 2020.
For Fernando Ferreira Head of Capital Markets at JLL, these results show that «Porto and the North region are starting to become relevant in terms of investment plans, becoming increasingly more the first option for investors, instead of being just Portugal’s second city», it can be read in the document presented during VIII Semana da Reabilitação Urbana do Porto (Porto’s Urban Renewal Week VIII).
Pedro Lancastre, JLL’s General Manager, has no doubts that «Porto positioned itself throughout last year as the first option for many companies and investors, not being seen as an alternative market to Lisbon’s lack of an offer. This also explains the favourable performance in terms of both office occupancy and investment», he stated in a release, further pointing out that Porto is « increasingly more, a city of choice within the European market».
The truth is that, according to Pedro Lancastre, «Porto’s reached the pandemic following a robust growth cycle and with an enormous potential to fulfil, which explains that it is not only resisting but also evolving in a positive way, even within this adverse context». Within this scenario, the municipality has played a very important role. «Porto’s municipality is very quick to respond, as are its licensing procedures, which allows a greater flow of investment», further highlighted Pedro Lancastre.
Commercial real estate investment in the North region has thus been following the national market’s dynamic, representing around 20% of the aggregated investment until September – around 2.2 billion euro, according to JLL’s calculations.
This «strong growth» compared to the 200 million euro accumulated until September last year is also explained by the transaction of assets integrated into portfolios with assets in multiple locations. The highlight goes to the sale of 50% of Norte-Shopping, part of Sonae Sierra’s shopping centre portfolio, and the office buildings included on PREOF’s portfolio. The sale of building Trindade Domus for more than 40 million euro was also important.
During the first 9 months of 2020, retail represented most of the investment in the North of the country with 68% of all investment. In this segment, supermarkets and shopping centres had very significant investments. Only 10% of the capital was allocated to the office market in this region and around 3% were invested in the industrial and logistic segments. The remaining 22% were invested in other segments, according to the study.
The activity should «slow-down», but investors remain alert
Today, the market remains attractive and JLL announced that there are several investors «with high liquidity levels, who continue actively looking for products to invest in the region».
Some of those investors are family offices. This type of investors is «particularly active in terms of seeking opportunities, with the industrial and logistic segments, currently seen as some of the most attractive, given the region’s strong industrial propensity, as well as the lack of nearby logistic», explained the consultant.
The office segment is also under the investors’ sights, «although they constitute a scarce product, given the lack of speculative construction», it can be read in the document.
The hotel and retail segments continue causing investors to be cautious, assuming a «wait and see» stance towards where and when the economy will evolve. But while the image of shopping centres was «negatively affected by the legislation the current situation imposed in terms of rent payments», investors remained «expectant and believing» concerning hotels, since there is a recent entry of two hotel/tourist operators in Porto.
As a consequence of Covid-19’s second wave, the market should slow-down until the end of the year, forecasted the consultant. However, JLL guaranteed investors remain interested in the region and follow «very carefully» the performance of all segments.