«There is a new normal in the Portuguese investment market: above €3000M»

«There is a new normal in the Portuguese investment market: above €3000M»

This was one of the main conclusions drawn by Francisco Horta e Costa, Managing Director at CBRE in Portugal, during the Tendências do Imobiliário (Real Estate Trends) conference, organised by CBRE this week at Teatro Capitólio (Capitólio Theatre), in Lisbon.

According to Horta e Costa, this amount is compared to the 1.400 million euro invested in 2007. The 3.500 million euro in commercial investment appear at a time when yields are compressed in all sectors and office, housing and logistic rents increase, showing that investors maintain their interest in the Portuguese market, and that there is still much liquidity in the market.

Thus, in 2020 «investment may comfortably remain above 3.000 million euro. We must not underestimate the market, 4 out of the last 5 years were above 2.000 million euro», pointed out Nuno Nunes, from CBRE’s investment department. According to him, «if the transactions we have on the pipeline, were to be closed during the first quarter, we would have a volume of 2.000 million euro».

In terms of the corporate market, in 2020 it will be hard to maintain the 200.000 sqm take up registered last year, since «offer and demand are still deeply unbalanced», pointed out André Almada, from CBRE’s office department. Out of the new offer expected to enter the market, a large part already has leasing contracts and Nunes appeals to «the ability to improvise in order to place this demand».

Following the market’s dynamics, the logistic segment should continue growing this year, boosted by new developments, in particular by Merlin Properties’ new project in Castanheira do Ribatejo. The change in consumption is an opportunity for the market, which is now looking for logistic assets closer to the cities.

Concerning retail, the trends for 2020 are the expansion of high street retail towards streets which are parallel and perpendicular to the main arteries, with some leasings being closed above 130 euro/sqm at the Avenida da Liberdade area, in Lisbon. No new shopping centres are expected to open this year, only several expansions and refurbishments so as to improve the experience, but two new retail parks are expected to open in Matosinhos and Estoril.

In terms of housing, news is expected for municipalities such as Montijo, Seixal or Setúbal, after a year during which the number of houses under licensing increased 4% in Lisbon and between 32% and 92% in those municipalities, explained Patrícia Clímaco, from the consultant’s housing department. There is still a lack of offer, and that was the only reason for the stabilisation trend in terms of number of transactions last year.

Tourism registered a natural and healthy slowdown, after several years of growing more than 10%. New offer will increase and demand will remain at the same level across the country, the occupancy rates are very high in Lisbon and Porto. «We are confident that 2020 will be a positive year for the national economy», confirmed the consultant.


 Market «definitely choses development»

In 2019, around 1.500 million euro were invested in development, including terrains and buildings for rehabilitation. This shows that «the market definitely chose real estate development in 2019», commented Francisco Horta e Costa.

Miguel Paiva Couceiro, from the consultant’s Development department, explained that «the investment increase in development shows the investors’ confidence on the market». He highlights the appearance, last year, of new speculative office projects, «which hadn’t happened since 2012», besides several high-end and middle range housing projects.

It is certain that «in 2020 we will need to meet the strong demand for offices, we are competing with the whole of Europe». On the other hand, «the national market needs offer. We need developments to sell, but also to lease».

Nuno Nunes points out that this type of market will «grow very fast», and he anticipates that «this year we might trade 600 million euro in rented houses, double last year».

And Porto was no exception. The city is «alive and kicking», and investment «was directed not only towards rehabilitation and tourism, but also towards development, destined for the middle class, students and offices, for a total 200 million euro», explained Luís Mesquita, coordinating director at CBRE in Porto. He predicts that investment on senior and student residences, office development and housing for the middle class will continue, «in particular in the Northern and Western areas of the city».

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