According to Cushman & Wakefield, 2013 witnessed a recovery in commercial real estate investment. 2013 saw a tentative return of investor confidence in the real estate investment sector, reversing the negative trend in place since 2008.
The provisional end-of-year estimates for the volume of investment in commercial real estate assets in Portugal (excluding any transactions by National Investment funds in December) suggest a total of €289 million, nearly three times more than the volume recorded in 2012, and 60% more than the €167 million transacted in 2011. Nevertheless, these volumes are lower than the average for the last ten years, which stands at nearly €600 million.
These figures concur with C&W's forecasts at the end of the first half of the year, which suggested greater demand for real estate assets by investors. Luís Rocha Antunes, partner and head of the Capital Markets department said “the confidence in the government bond sector, better economic indicators and Portugal's sound progress in the adjustment programme contributed greatly to the market's recovery, which will continue through 2014 and pick up further. However, investor confidence is still limited in terms of earnings sustainability and the requirement for rates of return, which should still offset the risk that is above the European average, and problems still being experienced in the credit sector."
Although foreign investment has held steady in light of disappointing volumes in the past, accounting for 29% of the overall investment, the year registered a downturn in investment by German real estate investment funds, which are traditionally risk averse. In terms of domestic investors, Portuguese investment funds accounted for the highest number of transactions, i.e. 27% of the total invested. The average volume per commercial investment confirms the sector is now more dynamic, and stood at around €15 million, in line with the average for the past ten years.
The largest transaction in 2013 was the acquisition of the remaining 50% of the CascaiShopping shopping centre by Sonae Sierra from the UK's Rockspring, which drove the retail sector in 2013, accounting for 58% of total commercial investment. The offices sector came second, and also experienced the following largest transactions of the year - the sale by Mota-Engil of the Báltico Office Center to the German real estate fund Deka for €43 million; and the acquisition by Swiss investor AFIAA of the Espace and Explorer office centres in Parque das Nações for around €30 million. C&W represented the seller in this latest transaction, TMW Pramerica Property Investment GmbH, a subsidiary of Pramerica Real Estate Investors.