Investors present at the Portugal Real Estate Summit want to be active in buying real estate in 2022
International investors confirmed their interest for the Portuguese Real Estate summit, the largest Iberian real estate meeting, which took place at Estoril, during the 29th and 30th of September. They are confident on the recovery of the economy and have been active in the market.
The event featured 250 representatives from the Portuguese and foreign real estate industry, including investors from Portugal and Spain, Belgium, the United Kingdom, Germany, Netherlands, Switzerland, France, Italy, Turkey, the United States, Canada and Brazil. The event’s main goal was to establish a roadmap for the recovery of the Iberian economy, with a focus on the real estate segments.
Iberian Property estimates that real estate investment in Portugal has reached, since the beginning of the year, 1.205 billion euro, of which 47% (561 million euro) concern deals concluded within the last two months.
More than 80% of the investors present at the summit, intend to invest in Portuguese real estate next year and 71% consider this will be a year with price increases within the sector. These were only a few of the conclusions drawn from the interactive surveys carried out in real time during the event.
The alternative segments are attracting increasingly more interest from investors, at a time when it became clear the investment paradigm is changing. Globally, we now see «a more fractured approach from investors, who analyse segment by segment», defended Dominique Moerenhout, EPRA’s CEO. The leader of European REIT association remarked that real estate continues to attract investors, having been a particularly resilient sector during the pandemic. He also stated that this crisis was very different from the 2008 crisis, and that Europe «was much better prepared. It was a liquidity, not an insolvency crisis».
That is why he sees «reasons to be positive and optimistic right now. The sector went back to pre-pandemic levels five times faster than the last crisis». And he challenged us to see the pandemic «not as a crisis, but as a transformation».
70% of those present believed that in 2022 the growth of the economy will return to pre-Covid (2019) levels and 24% even stated the economic activity in 2022 will surpass the pre-Covid levels, according to the interactive survey.
The sentiment is shared by the two economists invited to comment the prospects in terms of activity, Ana Paula Serra, Administrator at Banco de Portugal, and José Brandão de Brito, Chief Economist at Millennium bcp, during a debate led by Miguel Ferré, Chairman Iberian Property Editorial Council.
«The second half of the year showed positive signs for Portugal. Private consumption evolved very positively», commented Ana Paula Serra. Banks also share the sentiment of the regulatory body. «We have been more optimistic since May last year, when we realised the pandemic would not have the impact, we had initially thought it would», said José Brandão de Brito, remarking that «this crisis is very different from other crises, namely for the change of paradigm in terms of the monetary policies used as a response».
Lack of available product holds investment
According to experts from several real estate consultants present at the summit (Cushman & Wakefield, CBRE and Savills), Portugal does not escape the trend to diversify investment, showing a greater balance in allocating capital to the different segments. Despite offices, retail and increasingly more, logistics remaining under the investors’ radar, the emerging housing segments, such as build to rent, student and senior residences, have an enormous potential to attract investment, having been held by the lack of available product to invest in. The healthcare and well-being segments, along with data centres and agricultural assets are also pointed out as new sources of real estate investment in Portugal.
Paulo Silva, Head of Country Portugal at Savills, showed himself optimistic: «the market is improving every quarter». And contrary to what was expected «2021 will be the 4th best year in terms of commercial investment in Portugal». According to Eric van Leuven, Head of Portugal, at Cushman & Wakefield, the star of real estate is still the housing segment. And it is his opinion that the multifamily market «still emerging in Portugal» will soon be one of the main targets for investment.
Amongst the other segments, Francisco Horta e Costa, Managing Director Portugal at CBRE, also highlighted the healthcare segment «which went from 125 million euro in 2020 to 200 million euro this year in Portugal».
Real estate investors are diversifying their portfolios and paying more attention to alternative sectors such as Build to Rent, student housing, senior residences or healthcare
The investors present at the meeting also defended that, considering the current low offer available both in the traditional and the emerging segments, one investment option will be to invest more and more in development both for new construction and renewal projects. David Brush, CIO at Merlin Properties, one of the biggest foreign real estate investors present in Portugal at the moment, remarked that «besides analysing the segments to which allocate capital, the big question today is to decide whether to buy or to build». According to his view, «acquisitions are increasingly harder to conclude, especially when the vision is for the long-term. Thus, investing in the development stage might be a very attractive opportunity».
One of the main obstacles pointed out by investors is bureaucracy, namely not knowing how long licensing will take, which is reflected on project costs, or legal instability, which is exemplified by the suspension of fixed rents payments in shopping centres, a measure imposed last year. The round table moderated by Roger Cooke, MBE FRICS, and Conference Chairman, featured David Brush, CIO at Merlin Properties; Marta Cladera, Head of Real Estate Iberia, Nuveen; Andrew Angeli, Head of European Real Assets Research at CBRE Global Investors; Pedro Coelho, Chairman at Square Asset Management; and Volkert Reig Schmidt, Novo Banco’s CEO. All in agreement, the panel of investors demanded, for legal stability.
Portugal asserts its brand in the tourism market
With the presence of the Turismo de Portugal’s president, Luís Araújo, the subject of tourism was also debated, although here, the optimism was much more moderated.
53% of those present believe tourism activity is recovering and will be near pre-Covid levels in 2022, but 40% defended it will remain clearly below the levels of 2019. Nevertheless, the sector remained on the investors’ map, who were divided between those who were certain they would invest in this segment in the next two years (50%) and those who consider investing, but with more care (50%).
70% of those present believed that in 2022 the growth of the economy will return to pre-Covid
Opening the tourism debate, Luís Araújo stated that «Portugal is considered one of the most competitive countries in terms of tourism». He added he is commited in «reinforcing our brand, friendly, kind, sociable, fun, original, cool, glamorous, distinctive».
The debate on the future of tourism continued with a round table moderated by António Gil Machado, Director at Iberian Property and featuring Cristina García-Peri, Member of the Board at Azora; Pedro Seabra, Senior Partner Real Estate at Explorer Investments; Franscisco Sottomayor, Norfin’s CEO; Cristina Siza Vieira, Executive Diretor at AHP; and Margarida Caldeira, Chair of the EMEA Board at Broadway Malyan.
Cristina Siza Vieira admitted «it is too soon to know which measures will remain. But we know the new hotels built from scratch will be different, with a great focus on sustainability, energy, water, digitisation. These trends are not new, but they will be intensified».
Generally speaking, the experts panel agreed the sector will recoverl, but that it will be different. In the words of Cristina Siza Vieira «people seek authenticity and experiences».
«The consumer is increasingly more demanding», said Cristina García-Peri, adding that «there are new very interesting concepts which are also appearing in Portugal».
In its 2021 edition, the Portugal Real Estate Summit had the support of Abreu Advogados, CBRE, Cushman & Wakefield, Explorer Investments, Morais Leitão, Savills and Square Asset Management. Grupo SIL, Neoturis, Nhood, Merlin, Reify, GNB Real Estate and Engexpor were also associated with the Portugal Real Estate Summit, supporting several moments during the event. Amongst the institutional sponsors were: ACAI, APAF, APFIPP, APPII, ASPRIMA, EPRA, REFINITIV and RICS.
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