According to Cushman & Wakefield, the real estate investment activity in the commercial sector in Portugal in October 2015 reached a record high in terms of volume of capital. During the first 10 months of the year, € 1.36 billion were transacted in commercial real estate assets in Portugal, this is a record value never before achieved in 25 years.
Previously the maximum volume of transactions was recorded in 2007, the peak of the property market in Portugal, when € 1,190 million was reached (throughout the year). In 2015, from January to October, the investment turnover currently exceeds by 14% the figures reported in 2007 also representing growth in comparison to the whole of 2014 of almost 100%.
According to Luís Rocha Antunes, partner and Head of Capital Markets at Cushman & Wakefield Lisbon, "the recovery of the real estate market and the economy naturally had a major contribution to this growth in investment, allied to the positive image which is associated to Portugal and the increasing allocation of capital to real estate, were decisive factors in the enormous appeal that the Portuguese real estate has to the world".
Foreign investors played an important role in this recovery, accounting for approximately 90% of invested capital and 75% of the number of transactions. US capital was the most significant directing approximately €600 million into national commercial real estate, renewing another record high for US investment in our country. Spanish investment began timidly at the beginning of the year, however, today is the 2nd market that allocates more capital to national assets, representing circa 20% of the total foreign capital invested, over € 200 million.
The average volume per transaction of commercial investment confirms the enthusiasm in the market, standing at € 35 million, doubling the average of the last ten years, close to € 15 million. This indicator also reflects the increasingly pronounced trend for portfolio transactions, representing in value over 40% of the volume negotiated in 2015.
The retail sector, after a few years with lower attractiveness to investors, resumed its dominance in terms of invested capital volume; representing 56% of the total. Offices, had a shy start to the year, however, now account for circa 25% of the total volume invested.
The largest deal of the year was the acquisition of a shopping centre portfolio by US investors Blackstone to German fund, CG Malls, this operation represents €330 million and thereby constituting the largest deal ever in Portugal.
The large appeal to the Portuguese commercial real estate, is highly motivated by the quality versus price, together with the availability of capital allocated to real estate investment; which will be an important contribution to maintain and even increase this market activity. Expectations for the year end point to the achievement of the €2,000 million of transaction volume.
Luís Rocha Antunes states that "The continued interest and renewed confidence in the domestic market by foreign investors is naturally very dependent on the evolution of the current political situation, whatever the government. Essential issues such as maintaining guarantees of a tight control of public finances, and a reformist posture of the government in legislation matters - such as labor law, lease and taxation - are crucial to confidence in the economy, an essential factor to creator capital inflow of wealth and employment".