Alternative sectors attracting more investors to Portugal

Alternative sectors present new opportunities for investors, delegates heard at Real Asset Media’s Portugal Investment Summit, organised with Iberian Property, which took place recently on the REALX.Global platform.

“Healthcare is an example of a fast-growing sector,” said Francisco Costa e Horta, managing director Portugal, CBRE. “There are a number of European and US operators that have shown interest and are entering the market.”

Investment volumes were €135 million in 2020, but CBRE predicts a 50% increase this year to well over €200 million.

Demand for healthcare is growing in Portugal as it is in other European countries, but the country has quite a specific situation, Costa e Horta said: “Most stock is owned by the healthcare operators and 53% of hospitals are in the private sector.”

Another sector that is seeing rapid growth across Europe is data centres, but Portugal has a lot of catching up to do.

“There’s no doubt that data is the new oil, but in Portugal there is not much infrastructure,” he said. “We only have one 8MW centre at present”.

Projects underway will increase data centre capacity

The market is preparing for growth. There is one project underway to create five data centres with a capacity of 90MW each, bringing total capacity to 450MW, which is above the forecast 370MW demand.

“There are many reasons to invest in data centres in Portugal,” said Costa e Horta. “It’s a critical location between Europe, Africa and America and with easy access to undersea cables. There’s a state-of-the-art optical platform on the transatlantic route, and the Equiano subsea cable linking Portugal to South Africa is fully funded by Google.”

Shifting from the most high-tech sector to the most traditional, agribusiness is also attracting international investors’ attention. The Alqueva Dam, which has created the largest reservoir in Europe, has multiplied the number of hectares of irrigated land to 150,000ha, soon to increase to 170,000ha.

“The conditions are perfect, especially for olive and almond production,” said Costa e Horta. “There’s been a big inflow of US investors and land transactions have increased. A record 12,000 hectares have been transacted already in 2021.”

One of the benefits of investing in agribusiness in Portugal is that produce is ready before the rest of Europe and can command higher prices, he said. Another advantage is that the price of land is still cheap compared to other European countries.

There is a lot of investor interest in alternative and niche sectors in Portugal, Costa e Horta said, but there are two problems: “The market needs faster licensing and more agile and entrepreneurial financing. These are the main issues holding Portugal back.”