GRIPortugal values - Any sense in the market reaching maturity?
At the inaugural Portugal GRI 2019, opportunities across real estate were discussed by both global & local investors.
May 28, 2019Real Estate
The inaugural Portugal GRI gathered senior real estate executives for two days of closed door discussions in order to evaluate international investment appetite for each asset class in Portugal, compared to more mature European markets and its place in the cycle. Highlights included...
Finding value in Secondary Cities
Liquidity was highlighted as the main concern when it comes to secondary cities. However, some participants suggested there are still promising yields to be made within this niche.. One participant mentioned he was investing in Oeiras, Algarve and Comporta and the yields he was receiving were much higher than in Lisbon. The session concluded with establishing that Portugal is not only about Lisbon and Porto, but also secondary cities should be considered important emerging trend for opportunistic investors to follow.
Promising yields for alternative residential
Portugal's residential sector has seen growth boosted by easier access to bank loans for domestic buyers and the government programs to attract foreign investment such as the Non-Habitual Resident permit and the Golden Visa program. It also emerged that prices were becoming more stabilising, and this might favour further global capital into the assets. There was lively debate as whether how much the market could grow due to the supply/demand and price balance.
Regarding Student housing, Portugal is further attracting global and European students, pushing demand for investment in a positive direction. Co-living received attention as the next step to realise scale and consolidation of alternative student housing in the region. However, whilst yields are very good at the moment for alternatives, the range of products are currently underwhelming, providing great development and global JV opportunities but there is a long way to go!
Mixed-use viewed as key to success in office market
Prices among London, Madrid and Lisbon were compared by global investors; it was evidential that rental prices in Lisbon are increasing, offering new development opportunities to tackle the lack of supply.
Many felt that the best bet would be on mixed use schemes; compromising the best yields for residential and commercial and create special urban areas in the cities to ‘live, work and play’. However, what expertise is needed to build such models? What would be the right mix and what about co-working in the still traditional core commercial sectors? Afterall, Portugal’s fundamentals for traditional core office space remains strong.
Lisbon - Europe’s new safe Haven?
A running theme discussed amongst the market is Europe’s uncertainty in the late cycle as well as global macro-economic factors that could cause shockwaves in the economy. Is the Portugal real estate market simply enjoying a gold rush of activity from nervous global investors looking for some security before the music stops? Either way, how can the domestic market maintain sustainable investment? After all, the Portugal market has been able to consolidate and bounce back from 2008, but “Europe’s new safe haven” might be too strong. Portugal is a very attractive place with good fundamentals for investors, but safe havens do not exist, just a sweet spot, and investors need to enjoy them while they last.
Portugal’s real estate market and its place in Europe’s broader landscape will be discussed further at Europe GRI 2019, a dedicated event being held on 11-12 September in Paris, France.
Finding value in Secondary Cities
Liquidity was highlighted as the main concern when it comes to secondary cities. However, some participants suggested there are still promising yields to be made within this niche.. One participant mentioned he was investing in Oeiras, Algarve and Comporta and the yields he was receiving were much higher than in Lisbon. The session concluded with establishing that Portugal is not only about Lisbon and Porto, but also secondary cities should be considered important emerging trend for opportunistic investors to follow.
Promising yields for alternative residential
Portugal's residential sector has seen growth boosted by easier access to bank loans for domestic buyers and the government programs to attract foreign investment such as the Non-Habitual Resident permit and the Golden Visa program. It also emerged that prices were becoming more stabilising, and this might favour further global capital into the assets. There was lively debate as whether how much the market could grow due to the supply/demand and price balance.
Regarding Student housing, Portugal is further attracting global and European students, pushing demand for investment in a positive direction. Co-living received attention as the next step to realise scale and consolidation of alternative student housing in the region. However, whilst yields are very good at the moment for alternatives, the range of products are currently underwhelming, providing great development and global JV opportunities but there is a long way to go!
Mixed-use viewed as key to success in office market
Prices among London, Madrid and Lisbon were compared by global investors; it was evidential that rental prices in Lisbon are increasing, offering new development opportunities to tackle the lack of supply.
Many felt that the best bet would be on mixed use schemes; compromising the best yields for residential and commercial and create special urban areas in the cities to ‘live, work and play’. However, what expertise is needed to build such models? What would be the right mix and what about co-working in the still traditional core commercial sectors? Afterall, Portugal’s fundamentals for traditional core office space remains strong.
Lisbon - Europe’s new safe Haven?
A running theme discussed amongst the market is Europe’s uncertainty in the late cycle as well as global macro-economic factors that could cause shockwaves in the economy. Is the Portugal real estate market simply enjoying a gold rush of activity from nervous global investors looking for some security before the music stops? Either way, how can the domestic market maintain sustainable investment? After all, the Portugal market has been able to consolidate and bounce back from 2008, but “Europe’s new safe haven” might be too strong. Portugal is a very attractive place with good fundamentals for investors, but safe havens do not exist, just a sweet spot, and investors need to enjoy them while they last.
Portugal’s real estate market and its place in Europe’s broader landscape will be discussed further at Europe GRI 2019, a dedicated event being held on 11-12 September in Paris, France.
