A year almost entirely under the effect of the pandemic, which followed a 2019 that set a record high for real estate investment in Portugal, would imply, at the outset, a severe brake on this activity. However, in the last year, approximately €2,900 million were invested in the purchase of income-earning real estate assets in Portuguese territory, making 2020 one of the best years ever in real estate investment.
The data are collected from Iberian Property Data, Iberian Property's information system that monitors the dynamics of investment in high-yield property in Iberia.
Although the number of transactions in the Portuguese market increased in 2020 (83) compared to the 68 deals registered in 2019, the total amount invested ended up decreasing in annual terms (-16%), compared to the €3,430 million invested in 2019, which was the best year ever for investment in Portugal. As a result, the average size of the deals significantly compressed between the two years, from €50.5 million in 2019 to €34.7 million in 2020, which reflects a 31% drop in allocated tickets.
Despite this downward correction, mainly motivated by the pandemic and the resulting postponement and/or suspension of transactions, the truth is that the balance of the year was quite positive given the adverse context of the pandemic, with the Portuguese market managing to maintain one of the levels of highest activity since registration, 3rd best ever; a clear proof that it is already a very present destination in investors' strategies. As for the 1st quarter of 2021, data that are still preliminary reveal an investment of at least €300 million.
The 2020 result attests the greater contribution of the Lisbon region to the investment transacted in Portugal, compared to the 55% share it held in 2019. After all, the Lisbon region turned over almost €2,000 million in 2020, practically the same as the more than €1,900 million transacted last year. In all, 50 investment operations were registered with a seat in Lisbon, resulting in an average value per deal of €39.6 million.
On the contrary, in the rest of the country, the amount invested fell by more than 40%, from €1,552 million in 2019 to €901.0 million in 2020. In the rest of the country, there are 33 operations, which represents an average value of investment in the order of €27.3 million. The Porto region generated almost half of this investment, accounting for 17 deals worth €432.6 million. The Algarve is also worth mentioning, where €241.2 million were invested in five operations.
The strong activity observed in relation to portfolio transactions, which accounted for 55% of the amount transacted in the country, through 21 transactions totalling €1,571 million, contributed greatly to the behaviour of the market. It should also be noted that of the remaining 45%, out of a total of €1,310 million that added transactions involving single assets, an important slice of more than a third (€421 million) was invested in a single operation, which marked a new record in the purchase of offices in Lisbon.
This business made, in fact, an important contribution to the prominent position of the offices as the second most dynamic asset class in the investment activity in Lisbon in 2020, capturing a share of 36%, guaranteed by 34 operations totalling €1,040 million.
The ranking is led by retail, with a share of 40%, having handled close to €1,166 million in 17 operations. Once again, the “portfolio effect” was also notorious here, since almost 70% of this amount corresponds to the transaction of shopping centres integrated in portfolios. In fact, one of these operations was the largest investment transaction ever carried out on national soil and one of the largest also on the Iberian level.
This strong shift in portfolios is perhaps the main explanation for the increased concentration of investment in these two asset classes. Likewise, it was also the driver of investment in hotels nationwide, with this asset class transacting more than €417 million, of which more than 70% relate to assets integrated in portfolios. This asset class generated 10 operations, which gave it a 14% share, the third highest.
In fourth place, with a share of 4%, comes Industrial & Logistics, an asset class that, despite growing levels of investor demand, registered 14 operations – once again, most of which were integrated in multi-portfolios. location – which totalled just over €110 million.
For the rest, mixed-use assets were involved in 3 operations which gave it a 2% share in the Lisbon market, equivalent to €66 million; and the “alternative asset” classes contributed 3% to the investment in the country in 2020, through 5 operations totalling €81.8 million.
Mirroring the Iberian trend, in Portugal the predominance of foreign capital remains evident, which led 77% of the total amount allocated to real estate investment. In other words, a total of €2,205 million arrived in the country internationally, spread over 46 operations. This activity translates into an average investment ticket per operation of €47.9 million, while investors of national origin invested, on average, €18.3 million per business, i.e., -62%.
However, domestic investment gained a share in total activity, aggregating in 2020, 23% of the amount invested, while in 2019 its weight was 18%. Last year, Portuguese investors invested €676.3 million in real estate in the country.