Commercial real estate hits €240 million to March
In the first quarter of 2023 Portugal’a real estate market saw €240 million transacted in commercial real estate, according to the report Outlook Q1 2023 from Worx Real Estate Consultants.
In an analysis of the investment market in commercial real estate and Lisbon’s offices market, the consultant estimates that growth in the Portuguese economy over the next three years will be 1.9%, citing forecasts from the Bank of Portugal, and in line with the average of the past five years.
The main negative risks for the sector include the impact of a return to normal for EU monetary policy, an increase in friction in the financial markets, and the continued war in Ukraine.
The transaction of a portfolio of supermarkets for €150 million (Project Amália) between January and March stands out as one of the main big ticket deals.
The US private equity company LCN Capital Partners bought a portfolio of 50 supermarket premises covering a total area of €68,196m2, the majority of which are in the Greater Lisbon Area in Q1.
According to Worx, there is a “wait and see” approach from investors, with decisions on raising capital being put on the back burner, with a consequent impact on the volume of investment expected for the end of the year.
The consultant adds that the market is “moving gradually towards a more buyer-focused market”, as investors try to define their expectations on returns so as to reach agreements with the sellers over the “ceiling” for prices, as well as diversifying their financing options so that deals can be concluded.
Some 19,900 square metres of office space was transacted in Greater Lisbon to March. In 2023 office take up is expected to slow after the historic maximum peak in transactions seen in 2022. Nevertheless, “a healthy rate of demand above the average seen over the past five years” will maintain as new companies enter the market, as well as continued expansion in flex offices”, forecasts Worx.
Macroeconomic forces are also expected to have an impact on the offices market, but with a time delay lag with a reduced impact on the market compared to other sectors.
Pedro Rutkowski, CEO of Worx said: “The start of 2023 has allowed us to look to the future with optimism despite the challenging time we are going through. The office market continues to show some resilience, and at an investment market level we can see some good opportunities in alternative sectors like healthcare and living, which include assets such as hospitals, senior residences and student residences”.
Worx also points to “Data Centres from among the alternative assets sectors. This is among the segments that is currently consolidating in the national market which is showing quite good potential for growth in 2023, since they are assets that have long-term contracts and stable returns”.