The Portuguese corporate real estate market showed signs of moving from the initial opportunistic investment phase to one that favors long-term investment and returns based on higher-yielding assets. The office market, in particular, saw some asset managers continuing a process of unloading their previous investments, while others took the opportunity to increase their exposure to the real estate market in Portugal.
At the same time, residential property prices continued to increase. Residential valuations for mortgage assessments rose for the 34th month in a row to a new high. According to the National Statistics Institute (INE), the average value per square meter of homes throughout the country reached 1,330 euros in January. Property values rose by 0.7% between December and January, with a yearly rise of 8.5%, equivalent to 104 euros. The new high of €1,330 represents a peak since the statistical agency began tracking the data in 2008. In line with this, according to the Portuguese Property Investment Survey, a cumbersome municipal licensing process and increased construction costs are helping to limit the supply of new residential construction projects, thus placing further pressure on the supply side. The increase was sufficient enough to lead the European Commission (EC) to issue a warning stating that the lack of affordable housing is already a pressing social problem in the country.
The EC explained that “the rise in housing prices is intensifying financial pressures on the most vulnerable.” At the same time, it noted that the Portuguese government has been implementing measures to make housing more accessible… Such measures have included tax incentives for long-term rentals, strengthening the supply of housing through the financing of municipal projects, and the allocation of public buildings and land for private residences in conjunction with private investors.
AXA Investment Managers acquired a portfolio of residential properties in Portugal from Apollo for approximately 200 million euros. The firm finalized the deal for the assets in December and has plans to renovate the properties. Furthermore, most of the assets are located in Lisbon. Apollo initially acquired the 271 properties from Fidelidade, which is controlled by Chinese firm Fosun, in June 2018. The assets sold as part of a larger, €425-million portfolio in what became a highly controversial real estate deal as the tenants were offered a pre-emptive option to acquire their flats.
Crédito Agrícola’s CA Património Crescente real estate investment fund acquired the Forum Castelo Branco shopping center. Square Asset Management, which reportedly paid 20.35 million euros for the asset on behalf of CA Património. The real estate consultancy JLL and the law firm pbbr advised the seller, Patrizia, on the transaction. Forum Castelo Branco opened in 2007 after an initial investment of 54 million euros. The shopping mall has 75 stores and a gross leasable area (GLA) of 18,300 square meters, along with 950 parking spaces. Tenants include Sport Zone, Pingo Doce, Worten, H&M, and Zara.
In its second deal of the month, Square Asset Management (Square AM) acquired four properties in Lisbon from Explorer Investments, paying 47.2 million euros. The fund manager again reportedly acquired the assets on behalf of the CA Património Crescente fund. The assets, which had been on sale since early last year, include the Visconde de Alvalade (18 million euros) and CUF Alvalade Clínica (€3.7 million), both of which were previously owned by the Portuguese football team Sporting. The other two properties were Building E, at Alfrapark in Alfragide (13.5 million euros), and the Smart Building, in Parque das Nações (€12 million). Square AM agreed to pay for the portfolio over three years, without interest. The deal gave a higher than average yield of 7.5%. The Incus Capital Advisors fund has acquired the Arquiparque II building from Profile S.G.F.I.I. for an undisclosed amount. Incus is based in Madrid, with offices in Lisbon, Paris, and Milan. CBRE and Altamira Asset Management represented Profile in the transaction. The property is located just outside of central Lisbon, in the Miraflores business district, on Avenida Cáceres Monteiro. Arquiparque II is the most modern office building in the area, with a total area of 5,300m², along with 170 parking spaces. The building’s tenants include the firm Software Solutions, Primavera, Multi, and Grant Thornton.
The textile group Endutex bought the Minerva building in central Porto from the investment fund Profile S.G.F.I.I. for an undisclosed amount. The property has 6,800 square meters of gross leasable area, including stores and offices. The asset, which also has 140 parking spaces, is located at Rua Dr. Alfredo Magalhães, a few blocks away from the Praça da Trindade and Avenida dos Aliados.
Also in a second deal for the month, and its third this year, Profile S.G.F.I.I. sold the Arquiparque II building to Incus Capital Advisors for an undisclosed amount. Incus is based in Madrid, with offices in Lisbon, Paris, and Milan. The property is located just outside of central Lisbon, in the Miraflores business district, on Avenida Cáceres Monteiro. Arquiparque II is the most modern office building in the area, with a total area of 5,300m², along with 170 parking spaces. The building’s tenants include the firm Software Solutions, Primavera, Multi, and Grant Thornton. CBRE and Altamira Asset Management represented Profile in the transaction.