Investment in Portuguese commercial real estate is forecast to surpass the €2 bn mark for the first time ever, according to C&W's head of Portugal Eric van Leuven.
'The market has already seen some €800 mln worth of real estate transactions this year and, with a number of major deals currently in the works, we expect 2016 investment to be at least as big as last year, which was already an exceptionally busy period.'
Investment peaked in 2015 reaching an all-time high of €1.9 bn, double the amount of 2014 and above the peak level in the pre-crisis years, when transactions hit €1.3 bn in 2007, he added.
Commenting on the sources of capital, Van Leuven said the market has become increasingly diversified over the past few months. 'There is an enormous variety of risk-profiles and nationalities active in the market, contrary to the recent past when everyone was just looking for core assets.'
Opportunistic investors from the US have been on the prowl, as well as new Asian buyers largely from Singapore, China and Indonesia. In fact, international investors were behind around 90% of transactions in 2015 and are expected to remain dominant this year.
So far in 2016, the largest transaction was the acquisition by M&G of a hypermarket portfolio let to Portugal's food store operator, Sonae for €164 mln. ‘As a result of strong demand, the market has experienced strong yield compression, with prime shopping centre yields currently at 5.50% and prime offices at about 5.25%. But yields are also hardening in the non-prime sectors, as opportunistic players are splashing large sums of money on less prime real estate where they see an angle for asset management,' noted Van Leuven.
