According to Cushman & Wakefield, real estate investment activity in the commercial sector in Portugal reached a record high in October 2015 in terms of capital volume. During the first 10 months of the year, €1.36bn were transacted in commercial real estate assets in Portugal, a record value never before achieved in 25 years.
The previous maximum volume of transactions was recorded in 2007, the peak of the property market in Portugal, with €1.19bn (throughout the year). In 2015, from January to October, the investment turnover currently exceeds the figures reported in 2007 by 14%, representing a growth of almost 100% in comparison to the whole of 2014.
Commercial property investment in Portugal
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 €600m into Portuguese commercial real estate, renewing another record high for US investment in Portugal. Spanish investment began timidly at the beginning of the year, however, now makes up the second market that allocates more capital to national assets, representing approximately 20% of total foreign capital invested, over €200m.
Foreign commercial property investment in Portugal - Jan-Oct 2015
The average volume per transaction of commercial investment confirms the enthusiasm in the market, standing at €35m, doubling the average of the last 10 years, close to €15m. This indicator also reflects the increasingly pronounced trend for portfolio transactions, representing over 40% of the volume in value 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 approximately 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 transaction represents €330m and thereby constitutes the largest deal ever in Portugal.
Luís Rocha Antunes stated: "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".
