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Porto is increasingly the first choice for investors

Porto is increasingly the first choice for investors
Vida Imobiliária · 25 Nov 2020
Proof of this is the volume accumulated until September in the Northern region of Portugal, which reached 400 million euros, about double the amount added in the same period last year. The data are from the latest Market 360º Porto 2020 study by JLL.

For Fernando Ferreira Head of Capital Markets at JLL, these results show that "Porto and the North region are beginning to gain their own expression in investment plans, becoming increasingly the first option for investors as an Iberian city to invest, instead to be only the second city in Portugal", reads in the document presented in the 8th Porto Urban Rehabilitation Week.

Pedro Lancastre, general director of JLL, also has no doubts that "Porto has positioned itself over the last year as the first option of many companies and investors, not being seen as an alternative market due to the scarcity of opportunities in Lisbon. This also explains the favorable performance both in terms of investment and occupation of offices", he says in a statement, noting that Porto is "increasingly a city of choice in the European market".

The truth is that, according to Pedro Lancastre, "the Porto market reached a pandemic due to a robust growth cycle and with enormous potential yet to be implemented, which explains why it is not only resisting but even evolving positively, even in this adverse context". In this scenario, the municipality has played an important role. "Porto City Council has a very fast response capacity, as in the case of licensing processes, which allows for greater investment fluidity", stresses Pedro Lancastre.

Investment in commercial real estate in the northern region of the country has thus been following the dynamics of the national market, representing about 20% of the total accumulated up to September - about 2.2 billion euros, according to JLL's accounts.

This "strong growth" compared to the approximately 200 million euros accumulated up to September of last year is also explained by the transaction of assets inserted in multi-location portfolios. The highlight is the sale of 50% of Norte-Shopping, integrated in the portfolio of shopping centers of Sonae Sierra, and office buildings included in the PREOF portfolio In addition to these, the sale of the Trindade Domus building for more than 40 million euros also had special weight.

In the first 9 months of 2020, retail represented the majority of investment in the North of the country, in particular 68% of the total. In this segment, the weight of supermarkets and shopping centers is highlighted. Only 10% of the capital was allocated to the office market in this region and about 3% was invested in the industrial and logistics segment. The remaining 22% was invested in other segments, according to the study.

The activity should "slow down", but investors remain alert

Presently, the market remains "attractive" and JLL realizes that there are several investors "with high levels of liquidity, who continue to actively seek products to invest in the region".

One of them are family offices. These investors are "especially active in search of opportunities, and the industrial and logistics segment is currently regarded as one of the most desirable, given the strong industrial appetite in the region, as well as the scarcity of proximity logistics", explains the consultant.

Investors are also looking at the office segment, "although they are a scarce product due to the lack of speculative construction", the document reads.

The retail and hospitality segments, on the other hand, continue to make investors cautious, assuming a "wait and see" position when and where the economy evolves. with regard to the payment of rents in this type of complex", in the hotel industry investors remain" expectant and believers" in the evolution of the sector, not least because there is a record of the recent entry of two hotel/tour operators in the city of Porto.

As a result of the second wave of Covid-19, the market should slow down in the final stretch of the year, predicts the consultant. However, JLL guarantees that investors remain interested in the region and follow the performance of all segments "very carefully".