Portugal is forecast to attract a record €2.6 bn of property investment this year, up nearly 20% from €2.2 bn in 2017, according to Francisco Horta e Costa, managing director of CBRE Portugal.
Foreign investors, including new players from the UK/Europe, China, South Africa and the US, are expected to dominate investment activity. They were behind 78% of investment in 2017, or roughly €1.7 bn of deals.
‘I think nobody expected that the market would catch up this fast, given where we were only five years ago,’ CBRE’s Horta e Costa told PropertyEU. ‘The market has captured foreign investors’ attention and now there is capital pouring in from virtually everywhere.’
Some of Portugal’s largest retail assets have changed hands since the start of the year. While this burst of activity in Europe’s periphery is unprecedented, it reflects investors’ confidence in the country’s positive macro-economic prospects and is also an indication that good yields are hard to find in Europe’s core markets.
The largest confirmed transaction so far in 2018 is undoubtedly AXA Investment Managers - Real Assets (AXA IMRA)’s acquisition of the Dolce Vita Tejo shopping and leisure centre in Lisbon’s Amadora suburb for €230 mln.
The mall – Portugal’s second largest with 80,000 m2 of retail space – was bought on behalf of AXA’s clients from a joint venture of US private equity firm Baupost and UK shopping centre specialist Eurofund.
Given the recent flurry of deals in the retail space, and a lack of office investment product, retail is forecast to account for around half the total, while offices are expected to make up for around 25% and other sectors for the balance.
Activity is expected to reach record highs across all segments, according to market experts. Offices for instance are in strong demand, but a lack of supply is putting a rein on deal flows while driving a surge in rents. ‘We have started to see investors, also foreign players, buy land to build new offices on a speculative basis,’ commented Francisco Horta e Costa. ‘The fundamentals of the office market are healthy, and they are confident that they will be able to (pre)-lease the assets.’
