Spec development has been happening in Portugal for the first time in ten years, a sign of the positive outlook for the market, delegates heard at the Iberian Investment Briefing, which was organised by Iberian Property and Real Asset Media and took place in London recently.
‘Portugal used to be on the periphery of Europe, but that is no longer the case,’ said Pedro Coelho, Chairman, Square Asset Management. It is much smaller country and can never achieve the scale of the Spanish market, but it has the advantage of being ‘less volatile, with a reliable Government, political stability and positive GDP growth’.
A new law in January will introduce REITS to Portugal, following in Spain’s footsteps. This is a positive development that will have far-reaching consequences, he said: ‘It is crucial to have an internationally recognised vehicle and listed companies will have liquidity. It is a very important step for Portugal’.
After ten years of virtually no construction except in the residential sector, ‘now finally we see speculative development in both resi and offices,’ Coelho said. ‘I expect that with the new supply prices will stabilise’.
Prices have been rising and are high in the main cities of Lisbon and Porto, but ‘prices in secondary cities are still lower than they were before the financial crisis, so there are still opportunities to be found’, he said. He singled out retail in particular as a sector that has great momentum.
Logistics has attracted investment and alternative sectors like student housing have also been doing very well, as demand grows due to the influx of international students from Portuguese-speaking countries like Brazil.
‘We are involved in student housing in Lisbon and Porto and the market is promising,’ said Javier Martin, Senior Portfolio Manager, Nuveen Real Estate. ‘The only problem is that we have a €50 mln threshold so it can be difficult to invest in smaller markets’.
The Portuguese student housing market is very strong, said Brian Welsh, CEO, The Nido Student: ‘We have assets in Lisbon and Porto but we are looking to increase and strengthen our presence in the country’.
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