This is one of the main conclusions from an analysis of the Iberian Property Data database, which identified 33 commercial real estate investment operations concluded in Portugal between January and the end of June 2023, totalling €712 million. Confirming the forecasts presented in the last edition, this figure represents an 8% decrease compared with the €775 million reported in the first half of 2022.
Although this year started off more modestly, with €259 million invested in the 1st quarter and a y-o-y drop of 22% from €331 million in 2022, between April and June investment soared 75% compared with the previous quarter, totalling €452 million and surpassing by 19% the performance recorded in the same period last year (€380 million).
Algarve leads the way in attracting capital
In a market characterised by its small size, the Lisbon region is traditionally the major focus for attracting capital. However, in the first half of 2023 the scenario was different, with the Algarve mobilising the greatest share (29%) of the country’s transaction volume, a total of €210 million, outperforming Lisbon, which attracted just €185 million during this period, representing 26% of the national total. We also highlight the islands, which this year attracted 13% of the semester’s investment, approximately €90 million. On the other hand, Portugal’s second largest city was left out of the ranking, with the Iberian Property analysis identifying only €3 million in operations in the Porto region. The remaining 31%, around €224 million, was distributed across the rest of the Portuguese territory.
Hotels attract the largest share of investment
Between January and June 2023, €293 million were invested to purchase hotels in the Portuguese market. In other words, 41% of the total amount invested in the country was allocated to this asset class, taking it straight to first position on podium. However, this result was strongly influenced by the conclusion of the sale by DomPedro Hotels of a portfolio of six hotels located in the Algarve and the Autonomous Region of Madeira, with Arrow Global spending €250 million and performing the largest deal completed in Portugal in the semester. Furthermore, another four operations were identified involving the transaction of hotel and tourism assets, among which, due to its scale, we also note the sale by Kronos Homes of the Amendoeira Golf Resort in the Algarve, which Iberian Property Data estimates was closed for more than €35 million.
Retail comes in second position, mobilising €209 million in the first six months of the year, earning this sector a share of 29%. Once again, the sale of a portfolio by the Tengelmann Group to LCN Capital Partners – Project Amália, comprising 50 supermarkets distributed across the country – was the major driver of the strong performance by this asset class, with €150 million traded in a single operation. This was the largest of the five transactions involving retail assets monitored by Iberian Property Data, among which we also note the purchase by Savills IM of another portfolio of four Continente supermarkets, for €39 million, and the sale to Square AM of the In Guarda retail park, for €12 million. In the meantime, Square AM is back to purchasing in this segment, concluding in July the acquisition of a shopping centre in Funchal (La Vie) and a portfolio of two supermarkets and shops in continental Portugal, although the figures involved are still unknown.
Completing the podium, offices take up the third position, with a share of 15% and a total of €110 million invested, distributed across nine operations in Lisbon. Due to its scale, among these we note the sale of the Castilho 20 building for €26.5 million, although the names of the entities involved in this transaction are unknown, followed by the purchase of Malhoa 13 by Mapfre for €20 million, and the purchase of the Dan Cake head office by Square AM for €16.3 million.