JLL anticipates that in 2021 real estate transactions in Portugal will have exceeded 33 billion euros, of which 30 billion euros result from the purchase of housing and 1,900 million from commercial real estate businesses, in addition to more than 1,000 million euros in real estate development operations .
This is an overall increase of around 10% compared to 2020. The growth was 15% in the case of the residential segment, and the commercial segment recorded a 30% decrease compared to the previous year. According to JLL, this drop is explained by "the delays in completing large-scale operations due to the context of restrictions that prevailed throughout the year, and, on the other hand, due to the scarcity of investment products in certain market segments" .
Pedro Lancastre, CEO of JLL Portugal, points out that «in this final stretch of the year, despite the adverse context of the pandemic that has already impacted the sector for almost two years, it is confirmed that real estate has been fundamental for the economy's recovery». And he adds: “this is especially visible in housing, where more than a sector to resist, we see a sector with increased vitality and levels of demand that are at historic highs. But it is also evident in commercial real estate investment, which continues to attract foreign capital and has not been more dynamic because of supply-side constraints and also the difficulties that still persist in terms of pandemic restrictions, which have delayed the completion of many operations. There is no lack of strength or demand in the domestic market, as evidenced by the “debut” of some international investors, who carried out some of the main transactions of the year, even in a context of greater uncertainty».
For Pedro Lancastre, «this acceleration of activity in the second half of the year opens up good prospects for 2022. The market has all the conditions to gain strength throughout the year, as there is real demand for offices and housing, and in what respects As for investment, Portugal continues to be very well positioned to compete for the high liquidity available on the international scene. Our market has not lost its attractiveness to foreign demand, whether for the purchase of a final product or for purchase as an investment, and at the same time there is a growing dynamic in the domestic market for the occupation of offices and the sale of housing, as well as for investment" .
Sustainability will be one of the highlights in 2022
JLL believes that the theme of sustainability will be one of the main trends in the real estate market in 2022. Joana Fonseca, Head of Strategic Consultancy & Research at JLL, highlights that «the real estate and construction sectors are responsible for around 40% of emissions and if, even before the pandemic, the sector was already moving to reduce its environmental footprint, with the pandemic crisis this issue became a decisive factor for companies».
With sustainability on the agenda, «we want more energy-efficient projects and better quality constructions – and in some cases these requirements are no longer just a necessity, but a condition for the business, as investors who integrate the social and environmental challenges in its business models (ESG) are also more likely to sustain its activity in the long term».
In 2022, the specialist also foresees several changes in the office or logistics segments: “workspaces are being reorganized due to the pandemic. It is true that telecommuting is here to stay, but companies have already realized that physical space is crucial for communication and productivity, assuming also as a tool to attract and retain talent. There is a greater focus on social, leisure and collaborative areas in order to transform the work space into a more attractive place than the comfort of the home office».
In logistics, «it is important to refer to the growing number of operations and interest in a sector whose supply is relatively small and which has been growing through built-to-suit projects to respond to the growing demand for final occupants».
Housing, on the other hand, can expect new occupation formats: «the rental market is evolving and may bring good investment opportunities, in addition to expanding the offer, with the development of the residential product built for rental (multifamily) as there are several programs and projects to be developed. Furthermore, the shortage of beds in the senior home segment, which JLL estimates at 17,000 beds by 2025, creates an effective opportunity in this segment."
Gonçalo Santos, Head of Capital Markets at JLL, emphasizes that “offices and logistics will remain the main focus of investors. In offices, where the importance of adopting sustainability policies is increasingly present and demanded by investors, Portugal has the advantage of practicing very competitive rents compared to other European markets for a high quality offer, while in logistics there is an exponential demand in a market with a very scarcity of qualified supply, which has attracted investors, who, in most cases, enter the phase of the development of the projects”.
According to the official, “alongside these two segments, there is a growing interest in food retail and in assets in alternative segments, especially living, which covers operations in buildings intended for residential rental, student residences and senior residences. In the process of creating and consolidating these concepts, which presently present a marked shortage of supply, the activity of real estate development, whether through new construction or through the rehabilitation of existing buildings, will continue to play a fundamental role. Thus, we anticipate that the focus of property developers in 2022 will remain in the residential sector, but with more diversification towards projects in the alternative segment».