Lisbon Jumps from 10th to 1st Place for Real Estate Investments in Europe

8 November 2018

The annual report, published jointly by the Urban Land Institute (ULI) and PwC, revealed that the city of Lisbon jumped from 10th to 1st place in terms of real estate investment in Europe in 2019.

The report, Emerging Trends in Real Estate Europe 2019, bases the ranking on the opinions of more than 800 real estate professionals in Europe, including investors, developers, financiers and consultants.

Respondents to the survey praised the quality of life and political leadership of the city, as Lisbon jumped from tenth to first place in the annual ranking of emerging trends in European real estate.

German cities dominate the ranking’s top ten, with Berlin taking second place, followed by Frankfurt, Hamburg and Munich. However, some believe that the continuing popularity of these cities is starting to negatively affect many respondents, considering the high cost of investments in these places.

The rest of the ranking, which assesses real estate fundamentals and also the quality of life, connectivity, innovation and attractiveness for talent, includes other cities like Madrid, Amsterdam, Vienna and Dublin.

While investment volumes and demand for offices have stayed high in London, Brexit continued to haunt London’s short-term outlook, with 70% of Europe’s senior professionals believing that the UK’s ability to attract international talent will fall after the March 2019 deadline.

About 28% of respondents believe that the amount of capital available for new investments will increase, compared to 50% last year. However, confidence last year was particularly high, and there are currently few concerns about liquidity, except for the retail sector, and the majority (54%) of respondents stated that they believe that the availability of capital will be maintained.

One of the main barriers to investment remains the availability of adequate assets as capital continues to flow to Europe, with strong increases expected from Asia. This is putting pressure on the core of the market, with 70% of respondents agreeing that core assets are above price.

The study also shows that residential area is still in focus, with seven of the top ten preferred sectors for investment and development including a residential aspect, ranging from student residences, to social housing and assisted living and regular residential housing.

In addition to the residential sector, logistics and niche sectors, such as data centres and flexible offices (co-working), ranked in the top ten. Logistics continues to benefit the growth of e-commerce. Traditional formats such as urban and suburban central offices and retail continued at the lower end of the ranking.

The report also examined the growing influence of social capital alongside financial returns for real estate investment. Almost 60% of respondents believe the industry is adopting a broader range of non-financial measures to assess the value of real estate and real estate deals. 59% agree that non-financial metrics are increasingly important in measuring returns.

The current result of this trend is a greater focus on the combination of uses such as collaborative, logistics, retail and mixed-use spaces, and focuses on affordable housing projects, community centres, public spaces and day care centres.

Original Story: Diário Imobiliário

Translation: Richard Turner