Real estate investment drops 30% to €2,000M

Real estate investment drops 30% to €2,000M

In 2021, the volume of commercial real estate investment in Portugal will have reached around 2,000 million euros, 30% less than in 2020, according to Cushman & Wakefield, already based on the deals closed in the last days of the year.

In its presentation of 2021 results, this Monday, the consultant disclosed that 70% of the invested capital comes from foreign sources, and the Portuguese investment totals 550 million euros. Paulo Sarmento, Partner and Capital Markets Director, explains that “we have very few high-yield logistics or residential assets. If we had more offer, we would have a greater volume of global investment, and also a greater weight of foreign investment».

According to C&W, 39% of the investment made refers to the office market, and 34% to alternative segments. The hotel industry concentrates 15%, and retail had no significant representation. As a matter of fact, "it has been practically two years since shopping centers have been transacted", emphasizes Paulo Sarmento.

Among the main deals of the year are the sale of part of Quinta da Fonte for 130 million euros, the sale of a portfolio of residential assets (PRS), the Tivoli Marina Vilamoura and Tivoli Carvoeiro hotels, for 148 million euros or, more recently, from the Saudinveste fund portfolio, for 213 million euros. Paulo Sarmento emphasizes that the latter was closed with a «record yield», which shows that «if we had more assets of this kind, the value of healthcare transactions would be much higher».

With regard to investment in urban promotion and rehabilitation, 465 million euros were invested in 2021, 10% less than in the previous year. Among the larger operations, highlight goes to the acquisition of Norfin from the Vilamoura Project, worth up to 125 million euros, or the sale by Millennium bcp of the Madeira Palácio project to the Pestana Group, for a total of 45 million euros.

In 2021, prime yields fell by 10%, “far from the glow of other times".

Business pipeline already exceeds that achieved in 2021

Eric van Leuven, general director of Cushman & Wakefield in Portugal, recalls that, in 2021, the economy “almost stopped with the second confinement, nobody made decisions. The first 4 or 5 months of the year were very weak in terms of real estate activity, although investors never stopped being interested, but they had difficulties in getting around». In the 1st half, only around 570 million euros were invested.

Then, the summer slowed down again, especially in the area of ​​investment. A third of the year was more or less lost, despite a good recovery, which was not enough time to break records as we have been used to in recent years».

The official believes that «2022 has everything to be an absolutely fantastic year». And he reveals that "we already have more institutional investment pipeline than achieved in the entire year of 2021, there is a lot of expectation". Thus, the consultant would not be surprised if the investment volume beat the 2018 value of 3,300 million euros.

This is because “the pandemic may be at a lower risk stage, we want to move forward. It will be a year with more activity, which will be reflected in the economy in general, with growth prospects of over 6%. All of this bodes well for the year that is now beginning», he concludes.

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