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Portugal real estate investment activity at all-time high

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Cushman & Wakefield presented an update on the real estate investment environment in Portugal, confirming the recovery initiated in the second half of 2014. Investment activity in Portugal during the first five months of this year has exceeded the total transaction activity throughout 2014.


From January to May 2015, approximately €800 million were transacted in commercial real estate, including over 20 assets and a foreign investment of over €600 million.

This is an all-time high in Portuguese real estate activity; in over 15 years of real estate investment transaction statistics this level has never been reached in the first-half of the year , not even in 2006 and 2007, which where record years in terms of transactions

Average first semester transaction volumes over the past 17 years stands at around €300 million, less than half of the transaction volume during just the first five months of 2015.

Foreign investors were heavily weighted in line with last year, accounting for more than €600 million in transaction volume and nearly 80% of the total deals.

US investment was the most significant, injecting over €400 million into the local commercial real estate market and setting a record of US real estate investment inflows into Portugal, which in 2014 stood at €350 million.

Spanish investment activity ranked second, accounting for 22% of total investment volume. Ranking in third were Thai investors, accounted entirely by Minor International Group, which bought a portfolio of four Tivoli hotels from Gespatrimonio Rendimento during the first quarter for approximately €120 million.

Average per-deal volume of around €58 million, well above the previous ten-year average of €17 million, confirms the commercial sector is now more dynamic. The increase in average per-transaction volume was not entirely due to a shift in the classes of assets involved.

The retail sector, after several years of depressed institutional investment, reclaimed its dominant share of invested capital this year, accounting for 67% of total transacted volume.

Notable deals in this sector included the acquisition of an Iberian portfolio of three shopping centers by US-based Blackstone from Commerzreal – including Almada Forum, as the core asset, and Fórum Montijo – for a price estimated by Real Capital Analytics to be over €370 million.

The second most significant sector in terms of capital investment volume was hospitality, accounted for entirely by the Tivoli hotel deal described above.

Breaking a trend observed over the past few years, the office sector accounted for only 9% of total commercial real estate investment in Portugal from January to May, involving a total of 4 deals and more than €70 million.

The deal involving the 28 Entrecampos building in the Central Business District of Lisbon, which was occupied entirely by a Portugal Telecom group company, was the most significant in transaction value. The building was sold during the first quarter by investment manager Aberdeen to investment fund manager Norfin, in a deal backed by US capital.

Market values, of course, reflect the strong growth in investment activity, and downward pressure on yields has clearly increased since the beginning of the year.


The substantial commercial real estate transaction volume in Portugal since mid-2014 has resulted in a recovery in asset value and hardening of reference yields. Over a period of 18 months, yields have softened 150 to 225 basis points, with industrial properties showing the most significant recovery in absolute terms.

1Q15 prime yields were approximately level with pre-crisis values at respectively 6% for offices and shopping centers, 5.75% for high-street retail and 7.50% for industrial property. 

Marta Esteves Costa, Head of Research & Consultancy at C&W, said: “With the current market outlook and the volume of ongoing deals, we expect total transaction growth to remain strong and increasingly likely to reach a new all-time high in terms of investment volume in the Portuguese market.”


This should also have the effect of hardening prime yields, although the most significant change is expected in average yields, therefore decreasing the risk premium paid on non-prime products, as a result of the shorter supply of high-quality assets.



Filipa Mota Carmo

Filipa Carmo

Marketing Manager

Lisbon, Portugal

Phone +351 213 219 548

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