«We are aware that the market isn’t growing at the same pace, so it is convenient to be cautious as demanded by the “change of season”», commented Francisco Rocha Antunes, RICS’ Chairman for Portugal, during the Iberian Commercial Property Monitor’s presentation, in Lisbon.
This is one of the main conclusions from the report presented by RICS this Wednesday at CMS’s offices in Lisbon. This survey, concerning this year’s first quarter, aims to « “forecast” the real estate market», summed up Francisco Rocha Antunes, RICS’ Chairman in Portugal, who added «most respondents keeps believing in capital value’s ability to grow, although not as strongly as during the last few years. It shows we can keep growing in terms of value in Europe».
Close to 70% of these respondents believe that, despite the announced slowdown in the economies’ growth, the next 3 years will keep being «interesting in terms of capital appreciation». Portugal and Spain are currently above the European average in terms of investment valuation, «despite the sentiment being somewhat less positive than in the previous quarter», according to Francisco Rocha Antunes.
Offices still «going strong»
In Lisbon, «offices are still going strong in terms of value. There is a reinforcement in terms of the prime offices’ valuation». Portugal and Spain are «well positioned amongst all the markets where the survey was taken in terms of sentiment concerning occupancy», such as the drop in terms of unemployment, exemplified Francisco Rocha Antunes.
Retail is the «ugly duckling»
The difficulty in accessing credit through traditional banking and the possible effects of e-commerce are leading to a smaller valuation expectation within the Iberian retail sector, and more.
Many banks «don’t even look at retail. There are shopping centres that can only get proportional debt through debt funds, which are not traditional players in Portugal», explains Carla André, Managing Director at CR Management.
There is also the e-commerce question mark hovering over these assets. Paulo Silva notes that «there will be a disruption in the spaces’ occupancy. Some see it as a threat, some see it as an opportunity due to the retreat of others, but it is clear that retail won’t disappear».
Late cycle begins to settle in
Nelson Rego, Prime Yield’s Chairman, attests that «our clients’ sentiment is that the «party» is almost over». An example of that is the NPL market, «where our portfolios are being placed on the market as fast as possible due to that perception». however, «the economic fundamentals are there, and the tendency is to stabilize this growth», he adds.
In Portugal, the market is still waiting for the first SIGIs (REITs), an instrument which may help retain value in Portugal, according to the people in charge. Nuno Santos, Tax Law Partner at CMS, considers that this may be an alternative for investors who want to avoid funds and suggests «less taxation for residents for example, or making SIGIs eligible for investment through the “golden visas”» to promote investment.
This event had the support of CMS and the sponsorship of Prime Yield Global.