The volume of investment expected by the end of the year is likely to be below the volume recorded in 2022, according to Worx Real Estate Consultants.
Between January and September, 991 million euros were invested in commercial real estate, with the Dom Pedro Hotels portfolio standing out at 250 million euros. This is what Worx Real Estate Consultants’ Outlook T3 2023 reports show about the commercial real estate investment market in Portugal.
The “wait and see” approach has been confirmed by investors, with an impact on the volume of investment expected by the end of the year, which should be below the volume recorded in 2022, the consultancy points out. The short-term adjustment of buyers’ and sellers’ return expectations is expected, which could contribute to an increase in the level of transactions.
Office sector expected to see lower take-up than in 2022
From this analysis by Worx, there are conclusions and trends that should mark commercial real estate in the near future. The main risks to activity include the impact of the normalization of monetary policy, increased friction in the financial markets and the escalation of the conflict in Ukraine.
As expected, the macro-financial context has also had an effect on the office sector, which is expected to see lower take-up at the end of the year than the previous year. However, offices remain an attractive asset class for investors due to the security of contracts and stability of income.
“We may see the start of a new cycle in the near future”
Pedro Rutkowski, CEO of Worx, says that “despite the challenging times we are going through, which are transversal to all European markets, we believe that we can see the start of a new cycle in the near future, indicated by the fall in inflation and the pause in the increase in interest rates. In this context of uncertainty, the record figures for the hotel sector in Portugal, with a higher volume of investment than in the same period last year, confirm its resilience and attractiveness. In the office market, the lack of supply should lead to an increase in rents in prime areas, contributing to the attractiveness of this segment.”
The head of the consultancy stresses that “it is also important to highlight the opportunities that are emerging in alternative sectors, such as healthcare and living, which include assets such as senior residences or student residences. These are segments that are showing a progressive trend of consolidation in the national market and which have clear growth potential, as they are associated with assets with long maturities and stable profitability.”
Published in Vida Imobiliária on November 20, 2023.
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