From January to June, commercial real estate investment in Portugal totaled 640 million, of which 68% were realized in the 2nd quarter, in concrete terms, 436 million euros. The half-yearly volume is thus 15% below the same period last year.
The accounts are from JLL, which shares the figures in its latest Market Pulse. Hotel and industrial and logistics transactions boosted commercial real estate investment, and together, both segments accounted for 66% of the amount transacted in the semester, which amounted to 640 million euros, corresponding to 84% of investment in the quarter in question (436 million euros).
For Pedro Lancastre, CEO of JLL Portugal, the focus of investors in these two segments is due to the «strong recovery of hotel indicators and the intensification of absorption and industrial & logistics rents».
The most recent Market Pulse also highlights the performance of the occupational markets, led by the offices, where the occupation in Lisbon until June has already surpassed the activity of the whole of last year, reaching 168,000 square meters. In Porto it has more than 30,000 square meters. It should also be noted that the 2nd quarter generated more than 60% of the annual take-up in Lisbon and 80% in Porto.
Hospitality performance indicators gradually approach pre-covid values: the average daily rate in Lisbon in the 2nd quarter of 2022 is €139, exceeding the 2019 value by €15. In Porto this indicator is 115 €, very close to the €120 registered in 2019.
In industrial & logistics, occupancy reached 160,000 square meters up to June, with a good performance in terms of rent growth. The only yield compression observed was that of Industrial & Logistics, which stood at 4.75%.
High street retail, with new openings in Lisbon and Porto, has registered good levels of demand. There is an increase in the flow of visitors in shopping centers, and retailers continue to resume their expansion plans, wanting to be present in prime locations, however there is a shortage of supply: «one of the main challenges of the Portuguese real estate market continues to be the limitations of the supply side, transversal to all segments. It turns out that there is a strong increase in construction costs and it is natural that the new planned products undergo adjustments, further affecting the flow of available supply», underlines Pedro Lancastre.
In terms of housing, the strong level of sales activity and robust price levels are evident, with a growing dynamic of domestic buyers. International investors also generate solid demand, led by the United States, United Kingdom and Germany. In terms of origin, 73% of the capital allocation came from foreign investors, who continue to be protagonists of larger businesses. The CEO of JLL Portugal thus reinforces that «there continues to be a strong appetite for the real estate market, whether as a user, buyer, occupier or investor, whether national or foreign».
For the rest of the year, Pedro Lancastre states that «the outlook remains positive with the focus on the segments that have had the greatest demand in terms of volume. We believe that 2022 will exceed the amount transacted last year. There are currently many portfolios already in the process of being sold and others in the negotiation phase».
He also adds that “Portugal has a good geographical position, security and good quality of life, good market fundamentals, including yields. Initially, we had foreseen a new compression of yields, but in this scenario of rising inflation and interest rates, they should remain stable and Portugal continues to have a very appealing differential compared to other markets. We have, in general, more attractive returns, in a perceived low risk market».
