Commercial real estate investment exceeds €1.1Bn
Commercial real estate investment in Portugal, most of it from overseas, exceeded €1.1Bn for the year by the end of August.
From January to June, investment in Commercial Real Estate exceeded €780 million, a like-for-like variation of 45%.
With four recent significant transactions, which totalled €360 million, the aggregate total stood at €1.1Bn by the end of August according to data from ‘Market Mid-Year 2022’, a twice-yearly publication from Worx Consultants which analyses recent transactions in the real estate market in Portugal and forecasts and trends for the near and mid-term future.
Sílvia Dragomir, Head of Research at Worx Real Estate Consultants, emphasises that “in this study on the microeconomic context, the relevance and impact of the macroeconomic situation with its pressures on financial conditions, increases in benchmark interest rates (with the expected and visible impact on the capital markets), the increase in the costs of loans to companies, high inflation, the depreciation of the euro against the dollar, and the fall in real disposable income of families were taken into consideration”.
“We also studied the aspect of sustainability across the various sector of the real estate market”, she said.
The study also highlighted the main investment transactions in Commercial Real Estate (CRE): Connect portfolios sold by Novobanco to Blackstone for €208 million; Smart Studios student residences sold to Round Hill Capital for €200 million; and an industrial and logistics asset also acquired by Blackstone from M7 real estate for €125 million.
The Industrial and Logistics sector (I&L) was a leader in investment volume with 37% of allocated capital, marked by two of the largest transactions of the year. In general, prime yields in Portugal saw a reduction over the past year, with a compression of 22 base point.
Despite over 210,000m2 take-up in the first half of 2022, I&L activity in Portugal did suffer a like-for-like fall of 40% – after strong demand in 2021 thanks to the growth in on-line commerce and consumer demand overall.
Rents in Lisbon were the highest (€5.50/m2/month, followed by the Loures-Amadora Axis and West Corridor with the second and third highest rents given how close they are to urban centres, €5.50/m2/month and €5.0/m2/month, respectively.
In greater Lisbon, the office market transacted 168,300 square metres of space in the first half of 2022 spread over 105 operations. To this was added 36 operations which put the take-up rate at 207,200m2 by the end of August.
Worx reveals that demand has almost tripled like-for-like, already exceeding the amount registered at the end of 2021 of 161,600m2, with the trend for growth expected to continue in the coming years.
There are now currently around 12 projects that will bring around 240,600m2 of new quality office space to the market: 78% is already in a pre-rental phase. Prime rents in the office market enjoyed modest increases throughout the year of up to 5%.
According to a sample collected by the consultant, 200 new openings were recorded in the first half – street shop units represented 70%, while food and beverage were the most active with 57% and 12% respectively. Prime rents in the last quarter registered €127.5/m2/month in street commerce, and €67.5/m2/month in Porto.
As to prime rents charged in shopping centres, these have not totally recovered compared to 2019, standing at €95,0/m2/month, while rents at retail parks increased to €11.0/m2/month.
Lisbon and Algarve continue to be the most sought after areas of Portugal in terms of overnight stays at hotel and guest house accommodation to July 2022, with a total of 10 million each and a weighting of 26% and 28% respectively.