IP03

44 // iberian.propery / 2017

dossier// ISSUE: TOP IBERIAN cities

Portugal has come a longway since the successful exit of the

Financial Assistance Programme in 2014: the public finances

have improved substantially, with the 2016 budget deficit no

more than 2.0%; economic growth has resumed and forecasts

for 2017 year-end have been reviewed upwards to 2.5%;

unemployment has reduced dramatically from nearly 18%

in 2012 to just under 10% today; and in recognition of all this,

rating agency Fitch has finally changed its Outlook to

“Positive”.

Structural reforms enacted in the labour, judicial and, impor-

tantly, property sectors are making the country’s economy

more competitive.With a depressed domesticmarket during

the crisis, Portuguese companies successfully turned to

overseas markets and exports today represent well over 40%

of GDP – compared to 27% in 2009. Portugal is also one of the

net beneficiaries of the turbulence in theMediterranean Basin,

with tourismgrowing at double digits over the past fewyears.

All these factors have contributed to a boost in both private

and business confidence, and buoyant occupier markets.

Office take-up is back to pre-crisis levels of ca. 150,000 m²

per year, andwith very fewprojects in the pipeline, a shortage

of space is imminent, resulting in upward pressure on rents.

With consumer spending rising, retailers have started to

expand again, evidenced by lowvacancy rates in the major

shopping centres and, even more so, by an extraordinarily

vibrant high street retail scene in Lisbon and Porto.

The investment market is aware of the much improved

Portuguese market and transaction volumes have broken

successive records. While US investors are predominant, the

origin and risk profile of capital is more diverse than ever,

ranging from European institutions and Asian family offices

acquiring core assets at sub-5% yields, to private equity

players buying large and heterogeneous portfolios in the

value-add and opportunistic space.

Availability of product has increased with the ask-bid gap

closing, vendors (banks in particular) becoming more realis-

tic, and some of the recently acquired stock already coming

back in the market from recent buyers with a generally

shorter-term vision than before.

In summary: the fundamentals of the Portuguese economy

and propertymarkets, coupledwith the generally high qual-

ity of the real estate at attractive returns when compared

to other Euro-zone markets, make Portugal a compelling

investment destination!

Eric van Leuven

Cushman &

Wakefield

Managing-Partner

Portugal

In the past four years, the profile for real estate income in-

vestments has been shifting, startingwith amore speculative

profile, evolving into a value added profile and now tending

towards a more patrimonial profile. Market stabilisation will

eventually diminish real estate investmentswith amore spec-

ulative profile, reducing investment optionswith high returns,

where the realisation of capital gains took place above all over

time, thereby enabling confidence in the country to grow, and/

or portfolios to be split and their assets sold individually or

in smaller portfolios. By reducing opportunities with a more

speculative profile, the opportunities for patrimonial investors

can only grow through the offer of assetswith the right profile,

which not been possible to achieve.

It is within this reality that Lisbon, and the country, should

position itself to create vehicles that are better suited to the

investment profile we aim to attract, more productive than

merely transactional, within a framework of fiscal stability

and with a growth model that is not based primarily on the

residential segment.

Paulo Silva

Aguirre

Newman

Portugal

Managing Director

«Portugal should

position itself to

create vehicles that

are better suited to

the investment profile

we aim to attract»