Summary:
€1.6 billion awarded for the LAV concession, plus €480 million potential funding.
20% increase in real estate investment expected to exceed €2 billion by end of 2024.
67% of investment comes from the international market, predominantly in offices and retail.
3% YoY increase in retail sales, boosted by a 5% growth in tourism in early 2024.
Attractive yields: 5% in Porto, 4.5% in Lisbon's High Street.
Major Investment in Portuguese Real Estate
The Portuguese government has awarded the first concession of the LAV (Lisbon to Porto High-Speed Rail) for €1.6 billion, with an additional potential €480 million to be paid to the future concessionaire. This funding aims to cover costs related to project development, expropriations, and works approved under the Connecting Europe Facility for Transport 2 program.
Real Estate Investment Trends
A recent meeting hosted by Gesvalt and aRetail highlighted significant trends in the Portuguese real estate market. Currently, there’s an over 20% increase in investment, expected to surpass €2 billion by the end of 2024. The international market plays a crucial role, accounting for about 67% of investments, mainly in the office segment (37%) and retail (35%). The hotel sector contributed 24%, while industrial and logistics sectors made up around 3%.
Retail Sector Growth
Retail has garnered much attention, reflecting a 3% YoY increase in sales, alongside a 1.4% rise in consumer spending compared to the previous year. Notably, tourism is on the rise, with passenger movement reaching record highs in the first half of 2024, marking a 5% growth over the same period in 2023. This surge is boosting revenues and, consequently, investments in the sector.
Attractive Yields and Market Competition
Yields in major Portuguese cities remain attractive, with 5% in Porto and 4.5% in Lisbon's High Street, while shopping centers hover around 7%. The event featured discussions led by Jorge Rodríguez and António Braz, focusing on the competitive landscape in prime locations, which has resulted in escalating rental prices. In exclusive areas of Lisbon, rents average €130-140/m², compared to €80/m² in Porto.
A Solid Investment Option
António Braz emphasized that the Portuguese real estate market is experiencing a moment of affirmation, with prices having surpassed pre-pandemic levels in sectors like offices and retail, driven by exceptional tourism performance. Jorge Rodríguez noted that Portugal is now a solid investment option for private investors and funds, fueled by increased tourist spending, notably in exclusive regions like Lisbon and Porto, with significant interest also in the Algarve and Madeira.
The competition among retail brands for prime locations is intensifying, leading to stabilized rental prices. Yields in prime retail markets are projected between 4.25% and 4.75% in Lisbon, and 4.75% and 5.25% in Porto.
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