'Portugal's immobiliare market: investments down 8% in H1'

The Portuguese commercial real estate investment market closed the first half of the year with a total investment of 765 million euros. This is a decrease of 8% compared to the same period in 2022, according to consultancy Savills.

"The key market factors that have driven the first 6 months of the year are set to continue through to the end of 2023, with higher interest rates continuing to put a lot of pressure on investors' return expectations, causing a delay in the decision-making process. Despite this, the market continues to have high liquidity for real estate investments," explains Paulo Silva, head of Savills Portugal.

According to the person in charge, "office and industrial and logistics assets''remain interesting classes for investors, but a lack of quality products and seller expectations are limiting deal closings in these markets.' On the other hand, "value-added and development assets - the latter dedicated to the development of residential, alternative and hospitality projects - remain very attractive to investors. "

The consulting company provides market analysis by real estate investment segment in its report:

Offices

Lisbon

In the first half of 2023, Lisbon's office market registered a total occupation of around 38,321 sqm, a significant 77% decrease compared to the first half of 2022. "This decline was more significant due to the underlying''Compared to 2022, when historic results were achieved as major pre-letting and owner-user transactions took place,' the Savills report said.

From 2024 to 2025, around 200,000 sqm of new space is already planned, of which more than 60,000 sqm is already earmarked for owner-occupier use.

"Despite the significant decline in the office segment, the end of Q2 2023 shows its resilience in the face of market challenges. In fact, there is a shortage of quality office space available for use, which, combined with strong demand from companies prioritizing Environmental, Social and Governance (ESG) criteria, is putting great pressure on the''this market,' says Frederico Leitano de Sousa, head of offices at Savills Portugal.

Porto

In the first half of the year, Porto's office market summarized occupied space totaling 25,184 sqm. Despite a 17% decrease in occupied space compared to the same period last year, this is 9% more than the average amount of occupied space over the last four years.

At the end of 2023, approximately 35,700 sqm of new office space is expected to be completed, with approximately 19,000 sqm earmarked for occupancy in the "Out of Town" zone. In the first half of 2023, 5 projects totaling slightly over 25,000 sqm were completed.

"Construction of new office space'catering, especially in Lisbon and Porto,' emphasizes José Galvão, Portugal.

Housing

The number of residential real estate transactions decreased by 19% in the first half of 2023 compared to the first half of 2022, from 82,752 properties sold in Continental Portugal to a closed 66,624 transactions so far.

By the end of the first half of 2023, the Portuguese capital was the top performer in transactions, with 4,387 residential properties sold, a difference of 27% compared to the first half of 2022 (5,963).

"These figures are not surprising as the market is still in a period of a more cautious and measured approach from potential buyers. In addition, the steady rise in interest rates, more''Strict bank financing rules, housing affordability and demographic changes are significantly affecting decision-making. However, premium and high-end markets are performing well and showing steady growth,' explains Miguel Lacerda, director of housing in Lisbon.

Porto, for its part, registered 2,969 transactions and closed the first half of the year with a 19% decrease compared to the same period in 2022.

"These figures recorded in the first half of the year were expected. However, the Porto market continues to show great resilience and is one of the preferred places to live and work for people and companies from other regions who choose the city. Thanks to the great development''urban environment the outlook for the regional market is very optimistic,' says João Leite de Castro, commercial director of Savills Porto Division.

In the first half of the year, average prices for new residential properties in Lisbon, Porto and the Algarve amounted to €5,847/sqm, €4,127/sqm and €4,879/sqm respectively.

Tourism

More than 34 million accommodation nights have been registered in Portugal until June 2023, an increase of around 11% and a record for the number of accommodation nights accumulated in the first half of the year compared to the same period in 2019 (30.8 million). Foreigners account for 71% of total stays so far, while domestic tourism accounts for the remaining 29%.

In the first half of the year, Portugal received a total''a total of 13.6 million visitors. Regarding the development of tourism in the country, an increase of 10% in the accumulated number of travelers was registered when comparing between the figures of the first half of 2023 and the first half of 2019 (12.2 million).

In the first half of the year, 59 new hotels opened, totaling 2,800 rooms, with 80% of these new rentals located in the Region of Great Lisbon, Alentejo, Porto and the Northern Region.