Wall Street Journal indicates Portugal as a good destination for investment
The well-known US newspaper Wall Street Journal indicates Portugal as a good destination for investment. They have also revealed that commercial real estate investors are looking with much interest to countries like Portugal and Spain.
In an article published on October 23th, the newspaper points out that the European real estate market is changing. Europe’s hottest cities are now cooling down and other places are now attracting these investors interests. London has always been one of the favourite destinations for investors, along with Paris and Germany´s biggest cities. But after years of great demand lifting property values in these cities, returns are dwindling and investors are turning back. “Most of Europe’s major markets are remarkably high priced and the return on investment is not easy” says. Walter Boettcher, research director at Colliers International.
€ 43.7 billion of investment of this year´s first nine months
In general, European commercial real estate investment was 43.7 billion euros in the first nine months of this year. There is also a decrease of 30% over the same period of 2015, according with a research by Real Capital Analytics. The UK led the decline, this because of caution among investors before and after Britain voted to leave the EU. Germany and France have also seen investment decline significantly.
However, investment in some countries, including Spain, Poland, the Netherlands and Sweden, was higher than last year. Investment in commercial real estate fell 47% in the United Kingdom, 35% in Germany and 32% in France. On the other hand, it increased 20% in Poland, 9% in the Netherlands and Sweden and 6% in Spain.
Marcus Lemli, head of European investment at Savills PLC, a firm specialised in real estate consulting also points out that large properties and real estate portfolios “are still coming to the market” in smaller economies. This also includes Austria and Ireland. These opportunities have become rarer in the UK, Germany, and France.
Many investors are looking for other locations, including other cities in the UK such as Birmingham or Manchester. They are also looking to other countries that have been slower in recovering from the 2008 financial crisis. This also due to the subsequent euro crisis, he says.
There are more solid opportunities in Madrid, Barcelona and Lisbon
For example, Spain and Portugal are amongst the countries that suffered most during the euro crisis, Gwilliam says. But now, with incomes rising and their economies improving, there are stronger opportunities in Madrid, Barcelona and Lisbon. “There is an element of recovery in these markets.”
There are still concerns across Europe as Brexit is part of a politically volatile environment across the continent. The Wall Street Journal also reports that European economic growth remains slow. This also has some investors worried that a strong exit from low interest rates could lead to bubbles in Real estate markets.
“Low interest rates continue to attract investors to European real estate.” Explains Neil Blake head of research for Europe, Middle East and Africa at real estate consultancy CBRE. As the European Central Bank is expected to keep interest rates low, “there is a demand for income and investors are willing to look further,” he points out.