European real estate fund manager Avignon Capital has entered the Portguese market, acquiring an office building in Lisbon with US hedge fund manager York Capital Management.

The 72,40sqm property on Avenida Miguel Bombarda was bought for €22.3m and will refurbished.

The two-storey building was previously occupied by Santander Bank which is occupying two floors until March of this year.

The investors will open the terraces for tenant use, upgrade technical equipment and modernise the lobby, ground floor and communal areas.

Bianca Tristao, investment manager at Avignon Capital, said: “Portugal is a market we have been following for some time and this acquisition presented an exciting value-add opportunity to acquire an office building in the centre of Lisbon with substantial upside potential.

“The Lisbon office market is benefitting from strong occupier demand driven by the city’s increasing appeal to international companies, who seek to benefit from competitive rental levels relative to other key European cities and still have access to an educated labour force and the European single market.

“We will utilise our asset management expertise to carry out a comprehensive capex programme to reposition the asset and deliver a highly desirable modern workspace.”

Avignon said the acquisition was in line with its city-centric investment strategy, focused on key European cities underpinned by strong fundamentals.