During the first three months of 2019 alone, investment in Portugal and Spain reached 4.9 billion euro. It was one of the highest total quarterly investments ever, which reflects the continuity of the real estate activity in Iberia, but which does not yet reflect the true impact of the pandemic crisis on the market.
This information was advanced last Thursday by António Gil Machado, director at Iberian Property, during the webinar Iberian Property Investment Talks, organised by Real Asset Media together with Iberian Property.
This number – which is double the amount registered during the same period last year – shows, according to António Gil Machado, that despite the constraints, the Iberian real estate market’s activity remains on track. «Transactions haven’t stopped. Renting continues. The take-up was very good in Lisbon and Porto during the first quarter. Construction in Portugal didn’t stop either and in Spain, it only stopped for a few weeks, but it has already restarted. As such, we have the conditions necessary to say that life goes on. Although there is a lot of stress, the business continues», he explained.
The latest data from the platform Iberian Property Data confirms it. Between January and March, 83 transactions were concluded in Portugal and Spain. And since the 1st of April until now 14 more transactions took place, «which shows that the market truly hasn’t stopped», highlighted António Gil Machado. 27% of all investment during the first quarter was carried out in Portugal (around 12% in Lisbon and 15% in other Portuguese cities), around 30% in Madrid, 6% in Barcelona and 37% in other Spanish cities, which shows that «there is still a great interest in the other Spanish cities», he remarked.
Nevertheless, «these numbers don’t show the whole story, and, as such, we must wait to see what will happen during the second quarter, since all the transactions which were negotiated recently are being concluded now», he alerted.
And there is another side to this story, which we will only come to know during the second semester. «The crisis’ real impact will only become apparent by the end of the year. Deals which are being negotiated now and which should be concluded during the third and fourth quarter may never come to fruition. Hence, it is still too soon to assess the current situation’s real impact», explained António Gil Machado.
Hotels and Retail show «strong» activity
In terms of the market’s segments, Iberian Property’s directors revealed that the hotel industry has had a «strong» activity, having registered 15 deals since January until now. One of the highlights within this segment was the sale of the Grupo Bernardino Gomes’ Real Hotels portfolio with 12 units, to Palminvest for 300 million euro. According to him, «the hotel industry is key for Portugal and Spain’s economies. I believe that in the long-term tourism is one of the segments that will evolve. And right now, there may be a great opportunity for investors because there are certainly a lot of «stress assets». Nevertheless, it is certain that in the short-term it will be hard since this is a segment which will be significantly affected by the crisis and which presents high risks».
Another «strong» segment is retail. Despite being one of the segments most affected by the crisis, 16 deals were concluded since January, which shows that this segment has «been very strong and shown a lot of activity», he remarked. One of the transactions which was concluded this year was the sale of a 6 shopping centre portfolio owned by Sonae Sierra for 525 million euro.
Markets will recover at the same pace in Portugal and Spain?
Questioned by Richard Betts, Director at Real Asset Media, on which Iberian market will have a faster recovery, opinions were divided: 50% of respondents assumed that the Portuguese real estate market will recover quicker than the Spanish and the other half assumed the opposite.
On this point, António Gil Machado explained that there are good indicators for both markets. Whereas «Spain has a larger market with more liquidity, and, as such, the capacity to react quickly, Portugal handled the spread of the virus better and its economy never stopped».
The fact is that since 2017 until now, there were more than 1.000 real estate investment deals between Portugal and Spain, which shows that «the market has been very active in these last few years», he concluded.