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Portugal Real Estate Market Overview

In Portugal, the new year started with relatively elevated activity in the local real estate market, primarily focused on the retail and office sectors. Statistical data regarding the market also came in on the upside just about across the board. Housing prices rose by 10.3% in Portugal in the third quarter of 2019, compared to the same period in 2018, one of the biggest increases in the European Union, according to the European agency Eurostat. In comparison, prices rose by 4.1% both in the Eurozone and the European Union during the same period. A study by Confidencial Imobiliário demonstrated that the strongest price pressures have migrated from central Lisbon to the city’s outlying municipalities. In the third quarter of last year, Montijo, Barreiro, Alcochete and Mafra saw some of the highest price growth in the country, all above 25%.

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At the same time, Portugal’s banks continued their efforts to reduce their exposure to non-performing loans in 2019, as the overall NPL ratio fell to 7.7% at the end of the third quarter. According to a report by the Bank of Portugal, however, those same banks still have €21.736 billion in NPLs on their balance sheets. During the first nine months of the year, the country’s banks lowered their non-performing loan exposure (NPE) by a total of €4.12 billion, decreasing the overall NPL ratio by 1.7%. The NPL ratio for debts contracted by individuals, however, stood at 4% at the end of September, compared to 15.7% in the corporate sector.

Hotels

Acacia Point Capital facilitated the acquisition of Iberostar’s new 5-star resort hotel in Lagos, for a. The HNW European Family Office hotel comprises 220 rooms, indoor and outdoor pools, a jacuzzi, sauna, gymnasium, spa and underground parking. The hotel has an ocean-view, overlooking Meia Praia, one of the Algarve’s finest stretches of sandy coastline. There are several golf courses nearby, including the highly regarded 27-hole Palmares Golf, ranked as one of Europe’s top 50 courses. The property was formerly operated as the Sensimar Lagos Hotel by Yellow, closing in Q4 2018. It was then refurbished to meet the needs of Iberostar’s ‘Selection Hotel’ resort concept, reopening in May 2019. The asset is Iberostar’s second hotel in Portugal, the first being in central Lisbon. Iberostar Hotels & Resorts is a Spanish-headquartered hotel chain with more than 120 four and five-star hotels, located in Europe, Africa and the USA.

The Spanish investment firm Hotel Investment Partners (HIP) acquired The Lake Spa Resort in Vilamoura from Oxy Capital for an undisclosed amount. HIP will now remodel the facility, which currently has an artificial lake, three restaurants and two bars. The firm subsequently intends to change the brand, inviting a new operator to take over management of the luxury resort. The five-star hotel was previously managed by Blue & Green. The Spanish firm, which is controlled by the US investment giant Blackstone, began its international expansion a few months ago with its acquisition of five hotels in Greece.

Retail

The US investment group Harbert Management acquired a portfolio of shopping centres from Sonae Sierra for 170 million euros. The deal represents the US firm’s first acquisition in Portugal. The two firms finalised the sale at the end of 2019. The portfolio includes LoureShopping, a 42,000 m² shopping centre on the outskirts of Lisbon and the 44,000 m2 Rio Sul, in Seixal, both of which Sonae Sierra controlled together with the German fund Deka. Sonae also sold the 8th Avenue shopping centre, in São João da Madeira. The mall has a total of 20,000 m2 of surface area, including 125 stores.

Portugal’s Caixa Geral de Depósitos (CGD) sold the Nova Arcada shopping centre in Braga to the Israeli fund MDSR for approximately 45 million euros. The deal represents MDSR’s first acquisition in Portugal. MDSR already has a portfolio with over 30 assets in Spain. The shopping centre, which began operating under its current name and management in March 2017, has more than 71,000 square meters of surface area. The 108-store mall has an IKEA and a healthcare unit,  Trofa Saúde. Sonae Sierra will continue to manage the asset.

The Belgium-based Mitiska REIM, one of the largest investors in shopping malls in Europe, acquired four shopping centres in Portugal from Blackstone in a deal reportedly worth approximately 40 million euros. The assets include the Alverca Retail Park, Santarém Retail Park, Aveiro Retail Park and the Lima Retail Park (Viana do Castelo). Mitiska REIM acquired the properties on behalf of the First Retail International 2 fund. The firm had already bought the Parque Mondego Retail Park, in Coimbra, and the Focus Park Canidelo in Vila Nova de Gaia two years ago. The four shopping centres have a total gross leasable area (GLA) of approximately 78,500 square meters, increasing the firm’s total GLA in Portugal to 116,100 square meters.

The Porto Editora group bought a street-front store in the neighbourhood of Chiado, in Lisbon, for 7.2 million euros. The 400-m2 property set a record for sales of street-front stores, with a price of 18,000 euros/m2. The firm also controls the publisher Livraria Bertrand, whose bookshop in Chiado is known as the oldest bookshop in the world.

Offices

Ageas Portugal acquired three office buildings in Lisbon, two of which it bought from Anchorage Capital Europe and Lace Investment Partners. The firm declined to reveal further details of the transactions. The first property, at Rua Castilho, has 2,900 square meters of above-ground surface area on seven floors and four floors of underground parking. The Entrecampos building, whose main tenants are Sky and AICEP, has 11,000 square meters of above-ground surface area, with twelve floors of offices, along with four floors of underground parking. The third asset, in the area of ​​Estrada de Benfica, has 5,000 square meters of above-ground surface area on seven floors and one floor for underground parking.

Santander Totta sold off its former offices at Avenida Miguel Bombarda in Lisbon to Avignon Capital and the US investment firm York Capital Management for 22.3 million euros. The bank has already transferred it services its new Portuguese headquarters next to the Plaza de España. The building sold, located at Avenida Miguel Bombarda 4, near to Avenida da República, has a surface area of 7,240 square meters on ten above-ground floors, along with five below-ground floors for parking.

FS Capital snapped up the Edifício Malhoa 14 in Lisbon from Profile SGFI for an undisclosed amount. The building, located on Avenida José Malhoa 14, close to Praça de Espanha and Sete Rios, has more than 4,300 square meters of office space, along with 97 parking spots. The buyer intends to renovate and upgrade the asset to make it more attractive to Portuguese and international firms looking for space in Portugal’s capital.

Mixed-use Assets

Fidelidade reached an agreement to sell a portfolio of five properties to the US fund Cerberus for nearly 125 million euros. The Portuguese insurer put the assets up for sale about four months ago. The portfolio of assets, called ARYA, includes Terminal K in Santa Apolónia (6,630 square meters), the Marechal Saldanha building (2,334 square meters), the Malhoa 13 building (5,924 square meters in Spain) and the Paris Gallery in Porto (12,882 square meters). The most valuable asset in the portfolio, however, is the insurer’s headquarters at Largo do Calhariz 30, in Chiado. The office building has 19,835 square meters of above-ground surface area and accounted for more than half of the sales price. Fidelidade, along with the Caixa Geral de Depósitos, will remain as tenants, in a sale & leaseback operation.

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