International investors confirmed their appetite for the Portuguese real estate market during the Portugal Real Estate Summit, the largest Iberian investment meeting, which took place this week in Estoril, on the 29th and 30th of September. They are confident in the economic recovery, and are active in the market.
The event was attended by 250 representatives of the Portuguese and foreign real estate industry, including investors and developers from Portugal and Spain, Belgium, United Kingdom, Germany, Netherlands, Switzerland, France, Italy and Turkey. The United States, Canada and Brazil were other nationalities present at this meeting whose main objective was to establish a map for the economic recovery of Iberia, assuring a careful look at the most diverse sectors of real estate.
Iberian Property estimates that real estate investment in Portugal, in the first 8 months of 2021, has reached an amount of 1,205 million euros, of which 47% (561 million euros) refer to deals carried out in the last two months.
More than 80% of investors attending this meeting intend to invest in real estate in Portugal next year, and 71% believe that this will be a year of rising prices in the sector. These were just some of the conclusions of the interactive questionnaires made in real time during the work of these conferences.
Alternative segments are gaining increasing attention from investors at a time when it has become clear that the investment paradigm is changing. Dominique Moerenhout, CEO of EPRA, explained that “ there is a more thematic approach to investors, who look more and more segment by segment”. The head of the European association of REITs stressed that real estate continues to attract investors, having been an especially resilient sector during the pandemic. He also highlighted that this crisis was very different from 2008, and that Europe «was much better prepared. It was a liquidity crisis, not insolvency».
For this reason, he sees «reasons for us to be positive and optimistic today. The sector has returned to the pre-pandemic point five times faster than in the last crisis». And he left the challenge of seeing the pandemic "not as a crisis, but as a transformation”.
70% of those present believe that 2022 will place economic growth at pre-Covid (2019) levels and another 24% even defend that it will be a year in which economic activity will surpass this level, as concluded in another of the questions raised during the event. The sentiment is shared by the two economists invited to comment on the prospects for the evolution of the activity, Ana Paula Serra, Bank of Portugal Director , and José Brandão de Brito, Chief Economist of Millennium bcp.
Lack of available product hinders the investment
According to experts from the various real estate consultants participating in the conference (Cushman & Wakefield, CBRE and Savills), Portugal does not escape this trend of investment diversification, with a greater balance in the allocation of capital to different segments. While offices, retail and, increasingly, logistics remain on investors' radar, emerging segments in the residential area, such as newly built rental, student residences and senior residences, have enormous potential for attract investment, having been held back so far by the lack of available offer to invest. The health and wellness real estate segment, in addition to data centers and agricultural assets are also pointed out as new sources of attracting real estate investment in Portugal.
Investors present at the event also defended that, given the current low supply available in both traditional and emerging segments, one of the investment options will increasingly involve investing in promotion, which may happen both in new construction projects and in renovation projects. David Brush, CIO of Merlin Properties, one of the largest foreign real estate investors active in Portugal, stressed that “in addition to analyzing the sectors of capital allocation, the big question today is to decide whether to buy for yield or to build”. In his perspective, “acquisitions are increasingly difficult to achieve, especially when the vision is long-term. Therefore, investing in the asset promotion phase can be a very attractive opportunity».
One of the main difficulties pointed out by investors is bureaucracy, namely the uncertainty of licensing times, which is reflected in the project costs, or legal instability, of which the suspension of payment of fixed rents in shopping centers is an example, a measure imposed in the last year. Above all, they ask for legal stability.
Portugal asserts its brand in the tourist market
With the presence of the President of Tourism of Portugal, Luís Araújo, the theme of tourism was also debated, although in this field optimism is much more moderate.
Among those present, 53% believe that tourism activity is recovering and will be in 2022 close to pre-Covid levels, but another 40% defended that it will remain clearly below 2019. investors, who are divided between investing with certainty in this sector in the next two years (50%) and considering investing, but with prudence, (another 50%).
In the 2021 edition, the event was supported by Abreu Advogados, CBRE, Cushman & Wakefield, Explorer Investments, Morais Leitão, Savills and Square Asset Management. The SIL Group, Neoturis, Nhood, Merlin, Reify, GNB Real Estate and Engexpor are also associated with the Portugal Real Estate Summit, supporting the various moments of the event. Among the institutional sponsors are ACAI, APAF, APFIPP, APPII, ASPRIMA, EPRA, REFINITIV and RICS.