Commercial real estate investment falls - down 46%

In the first nine months of the year, commercial real estate investment in Portugal amounted to €1.05 billion, corresponding to a 46% decrease compared to the same period in 2022. This data was presented in the latest Market Pulse report from JLL. The decline is attributed to "a more cautious attitude of investors" and "the delay of many transactions due to the growing uncertainty due to the macroeconomic and geopolitical environment," the consultancy said. This is, incidentally, "a global trend that also affects Portugal".

According to Pedro Lancastre, CEO of JLL Portugal, "the third quarter results are not surprising" as "economic cycles affect real estate, and the end of the first''half year has already shown a slowdown in rental and investment transactions'.

".

"Although inflationary pressures are easing and the ECB did not raise interest rates at its last meeting, there is still a lot of uncertainty about macroeconomic developments and how real estate buyers, whether companies or families, and banks are adapting to this," explains Pedro Lancastra.

He also notes that the environment in the real estate sector "prevails not only in Portugal, but worldwide." "As a consequence of our journey in recent years, we have become an international market and are not immune to trends affecting capital allocation strategies. It is not a matter of losing attractiveness or weakness in our performance," explains''he.

According to Joana Fonseca, head of strategic advisory and research at JLL, especially in office and residential real estate, "the main impact of this more challenging situation is evident in the decline in transaction volume compared to previous years." "Value indicators, i.e.

prices and rents, remain stable or are only increasing in certain segments and locations of more secondary importance," she comments.

The JLL report indicates that in the third quarter of this year, residential sale prices in Lisbon remained stable at 4,580 euros per square meter. In Porto, the price was 3,020 euros per square meter, down 2% from a year ago, the consultancy said.

According to Pedro'. 'Lancastra, the country is still facing a serious supply shortage problem, which is supporting cost increases at a time of reduced activity. However, he said, "the most worrying thing is that we do not see incentives to stimulate supply growth in the near to medium term, especially in housing, where the shortage of real estate is driving up market prices and restricting access to a large number of buyers." "The creation of new supply must be done by individuals, but the conditions must be created to ensure that these investments are realized," he notes.