C&W analyses first half of 2014 for the real estate investment sector in Portugal

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The recovery in the commercial investment sector was noticeable in the first half of 2014.

Between January and June, more than a dozen transactions took place in commercial real estate in Portugal with yields exceeding €110 million.

This upturn was primarily driven by international investors who accounted for more than 70% of the total investment volume, which exceeded the average for the past 10 years of approximately 50%.

Driven by the greater presence of private investors, partly motivated by the Golden Visas, the average volume per commercial investment transaction was around €10 million, lower than the average for the previous years.

The largest investment to date was the sale of the portfolio occupied by EDP in the Marquês de Pombal zone by EDP Group to US investors GA Capital, for approximately €56 million.

This sale drove the offices sector in the first half of the year, and accounted for more than 60% of the total commercial investment.

In terms of market values, the yields on leading prime products in all commercial real estate sectors dropped over the previous year.

The yields of the office sector, clearly the most sought-after by institutional investors, witnessed the first decrease since 2007 and the largest accumulated decrease in the last six months.

In June prime yields stood at 6.50% for offices, 7.00% for shopping centres, 6.25% for high street stores and 8.75% for industrial facilities.

Of even greater importance and proof of the change in the market are several material transactions for the sale of assets, real estate portfolios and real estate asset debt portfolios, which could result in a good year for investment activity in 2014.

As regards commercial real estate investment for yield purposes, institutional investors are expected to return and the interest from private investors or family offices is expected to be maintained, including both foreign and national entities.

The greatest interest in the offices and street commerce sectors will continue to be in prime locations, the latter of which has seen greater demand from private investors.

Institutional investors are expected to resume business in shopping centres and retail parks for the first time in years.

Contact

Filipa Mota Carmo

Filipa Carmo

Marketing Manager

Lisbon, Portugal

Phone +351 21 3219548

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