Commercial property investment €600M in H1

  • ECO News
  • 25 August 2022

Logistics and hotels were the segments responsible for the largest shares of the results achieved, with around €200 million of investment each.

Investment in commercial property in Portugal totalled €600 million in the first half of the year, representing a 19% increase compared to the same period last year, Consultancy Savills said on Thursday. Logistics and hotels were the segments responsible for the biggest slices of the results achieved, with around €200 million of investment each.

The first six months of the year were “marked by a two-speed evolution,” said the consultancy, in a statement sent out Thursday. In the first quarter there was an “increase in post-pandemic consumption”, but the scenario changed in the second quarter due to the war in Ukraine. “The rise in inflation, leveraged by external factors, changed the rules of the game, leading the ECB to raise interest rates.”

Thus, the second quarter reached the €391 million plateau, 62% above the same period of 2021, and recovering from the 21% drop recorded in the first quarter. The Logistics and Hotels segments handled 65% of the investment volume in the first semester.

In the logistics segment, nine transactions were registered, totalling approximately €200 million. Here, the highlight goes to the logistics fund launched by Aquila Capital at the beginning of the year, with an investment volume of €1.5 billion and the purchase of two assets by Bedrock Capital and Europi Property Group (EPG).

In the Hotels segment, eight transactions were closed, for a total amount of €197 million, says Savills. The consultancy highlights the sale of the Pestana Blue Alvor Hotel to Azora as the largest transaction in the hotel sector, worth €75 million.

The “e-commerce and the growing interest in modernising the national logistics park have positively impacted the logistics segment”, which has registered a “consistent performance of increasing absorption volumes and pipeline projects”, one reads. The hotel sector, meanwhile, has been leveraged by the good performance of tourism as of Q4 2021, attracting mainly international and domestic investors.

Savills’ data shows that foreign investment remains dominant in the domestic market, with 77% market share, with capital from countries such as Spain, Germany, Switzerland and China being allocated to the largest transactions.

The office market “has already overcome the pandemic period, seeing the importance of office spaces increasingly reinforced”. Companies are investing in the relocation or expansion of facilities as integrated actions in their ESG strategies. International occupiers relocating or expanding their activity into the national market have recognised solid market fundamentals in Portugal.

The retail sector “observed distinct behaviours” in the first semester. In the first quarter, the “operators’ expansion plans remained stable, after a period of restraint caused by the pandemic”. However, the war in Ukraine, rising inflation and disruptions in supply chains “brought a new reality, leading to the adoption of more conservative strategies.”