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Real Estate Investment in Portugal Surpasses Total for 2016

25 October 2017

Between January and October 2017, close to 1.5 billion euros poured into commercial real estate in Portugal, with almost 40 investments, and foreign capital accounting for more than 80%.  It is the second highest total on record for the country.

According to the latest report by Cushman & Wakefield (C&W), commercial real estate investment in Portugal in the first ten months of this year has already surpassed the total for 2016. Investments in the Portuguese real estate market have primarily been propelled by international investors, whose interest in the local market solidified and increased throughout 2017.

“The increasing flow of capital allocated to the real estate sector on a global scale, which has been bolstering the market with record levels of liquidity, coupled with the excellent quality/price ratio of assets in Portugal are some of the factors that are motivating investment in our country. Positive and healthy trends in the economy and labour markets are boosting the attractiveness of Portuguese real estate assets,” the statement said.

The data from C&W showed that total investment for the year is already 15% higher than the volume traded in 2016, which was roughly 1.3 billion euros, the second highest amount on record. The study also pointed to the fact that the distribution of capital by real estate sector was primarily influenced by the most significant deal of the year, CIC’s (China) acquisition of Blackstone’s logistics portfolio, which allocated more than 20% of the total investment in the industrial sector. The rest of the capital was principally invested in retail (40%) and office (37%) assets, and investments in the hotel sector were limited in comparison, around 2%.

The nature of investments has changed significantly since activity in the market resumed in 2014; the origin of capital is currently much more diversified in geographical terms and by investor type, and there are more deals involving portfolios of assets.

This trend is shown clearly in the types of operations that have been conducted in 2017. This year the volume of capital originating in China and South Africa accounted for more than 30% of the total, while in the past investors from these countries had little to no footprint in the domestic market.

The types of deals have also evolved recently, with portfolios of assets changing hands more frequently, accounting for the two most significant investments in the year to date. First, the previously mentioned acquisition of Logicor’s assets by the Chinese CIC for about 260 million euros; and second, CBRE GI’s sale of the Forum Coimbra and Forum Viseu shopping centres to the South African GreenBay for 220 million euros.

2017 will very possibly be a record year for real estate investment in Portugal. Taking deals currently in an advanced stage of negotiations into account, Cushman & Wakefield’s estimate for the investment volume for the year exceeds 2 billion euros, representing an increase of more than 60% over 2016. Looking at a longer time horizon, and assessing the volume of investment implicit in a very significant sample of investment assets currently on the market, the current pipeline is worth over 3 billion euros.

Original Story: Diário Imobiliário

Translation: Richard Turner