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Portuguese Real Estate Investment Survey – 4th Edition 2018Keep on doing great
Portuguese Real Estate Investment Survey – 4th Edition 2018© 2019. For more information, contact Deloitte Consultores, S.A. 2
We close 2018, with the confidence that, the success of the Portuguese Real Estate Investment Survey, depends and will continue to depend on the opinion and knowledge of the players that act daily in the real estate market.
In this fourth edition, keep tracking the main trends of the business and also access the evolution of the sector through our Outlook 2018.
We would like to thank, once again, to the Selected Panel for their continued support and involvement over the past editions.
We are at your entire disposal to discuss any relevant question.
Carefully,
Jorge Marrão
Jorge Sousa Marrão
Partner
Real Estate Leader
Preface
2Portuguese Real Estate Investment Survey – 4th Edition 2018
Portuguese Real Estate Investment Survey – 4th Edition 2018© 2019. For more information, contact Deloitte Consultores, S.A. 3
Hot topicInvestment
The fourth quarter of 2018 continued with the Panels’ forecasts.
Investment will thus remain to be a priority for real estate in Portugal, with 77% of respondents betting on this strategy. In the last 12 months, the average amount of the acquisitions exceeded the 50 million euros, which raised the levels compared to previous quarters.
The 2018 year ends with a sentiment of high confidence from the investors and also with high expectations for the new real estate year that begins here.
The questions are: "How will the real estate industry in Portugal develop next year?; "Will there be more space for growth?"
Portuguese Real Estate Investment Survey – 4th Edition 2018© 2019. For more information, contact Deloitte Consultores, S.A. 4
Real Estate Strategy
Globally, the investment
strategy (77%) continues
to be the primary choice of
players in real estate
sector.
Main conclusions
Investment Strategy
Value added investments
(31%) are perceived as
the preferred investment
strategy. Major players
(38%) foresee to increase
their portfolio by more
than 10%.
Business Feeders
Banks (62%) continue to be
the main business feeders
of real estate acquisitions.
Capital sources arise mainly
from Europe (85%).
Divestment Strategy
Core and opportunistic
deals (31%, each) will be
the main target of further
divestment. 31% of
respondents aim to
reduce their portfolio by
more than 10%.
Investors
Pension Funds (62%) are
identified as the main real
estate purchasers.
Capital sources arise
mainly from Europe
(92%).
Real Estate Market
Noteworthy is the greater
stability in volume and
transaction prices in
retail/ services and hotel
sectors as well as a
greater stability in
profitability rates in the
four sectors under
analysis.
In the last 12 months,
46% of the respondents
made acquisitions up to
€25M and other 46%
more than 50M€, mainly
in the Portuguese market.
4Portuguese Real Estate Investment Survey – 4th Edition 2018
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Introduction
Portuguese Real Estate Investment Survey – 4th Edition 2018
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IntroductionReal Estate strategy for 2019
Type of organization that participants represent
Divestment
Portfolio management
Investment
6
None of the above
Portuguese Real Estate Investment Survey – 4th Edition 2018
23%
77%
38%
15%
8% 8% 8% 8%
15%
Real EstateAsset
ManagementCompany
CorporateCompany
Bank Real EstateFund
VentureCapital/ Private
Equity
InsuranceCompany
Other
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Frequency of real estate portfolio strategy review
For most players of the sector, real estate portfolio should be continuously reviewed.38%
Continuous
review process
Introduction
7
23%Twice a year
23%Annually
16%When opportunities/changes in
market dynamics
Portuguese Real Estate Investment Survey – 4th Edition 2018
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Investment strategy over the last 12 months per market
Value of purchases made in the last 12 months
More than 50M€
From 25M€ to 50M€
Up to 25M€
No acquisitions were made in the last 12 months
Portuguese market
European market
Introduction
8
8%
Not applicable
Regional market
Portuguese Real Estate Investment Survey – 4th Edition 2018
46%
46%
0%
15%
70%
15%
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Divestment strategy over the last 12 months per market
Value of disposals made in the last 12 months
More than 50M€
From 25M€ to 50M€
Up to 25M€
No disposals were made in the last 12 months
Portuguese market
European market
Introduction
9
Not applicable
Regional market
Portuguese Real Estate Investment Survey – 4th Edition 2018
31%
23%
23%
23%
54%
15%
8%
23%
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Investment strategy
Portuguese Real Estate Investment Survey – 4th Edition 2018
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(1)Multiple choice question
Investment forecast for the next 12 months
Investment strategy
Increase portfolio by more than 10%
Increase portfolio by more than 5%
Not applicable
Investment strategy for the next 12 months
11
Not applicable
Core
Value added
Opportunistic
deals
Portuguese Real Estate Investment Survey – 4th Edition 2018
23%
23%
23%
31%
38%
31%
31%
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Preferred investment sectors for the next 12 months
(1) Multiple choice question
Investment strategy
12
CMVM – Investment by type of use
Comparative analysis
Note: Investment for Real Estate Investment Funds, Real Estate Special
Investment Funds and Real Estate Management Funds – 30.09.2018
(Values at end of month) vs 30.06.2018 (Values at end of month)
Source: CMVM – Long time series
Services
Retail
Residential
Industrial
Hotels
Logistics
Others
Portuguese Real Estate Investment Survey – 4th Edition 2018
Not applicableOtherResidentialIndustrial/ Logistics
RetailOfficesHotels
62%
54%
31%
23%
15% 15%
23%
39%
24%
13%
3%
3%
3%
15%
40%
24%
13%
3%
3%
3%
14%
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Source of funding for next year
Main funders for next year
Legend: Each icon represents 10%
Investment strategy
(1) Multiple choice question
13Portuguese Real Estate Investment Survey – 4th Edition 2018
Banks (%)
Pension Funds (%)
Insurance Companies
(%)
Funds of Funds (%)
Sovereign Funds (%)
62%
38%
0%
Others (%) 23%
54%
46%
85%EUROPA
62%NORTH AMERICA
15%MIDDLE EAST
8%SOUTH AMERICA
38%ASIA
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Length of the real estate asset’s acquisition process
Easiness of fund raising for the next 12 months
100%From 3 to 6
months
Investment strategy
14Portuguese Real Estate Investment Survey – 4th Edition 2018
Very
difficult
Neutral
Easy
Difficult
38%
31%
23%
8%
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Divestment strategy
Portuguese Real Estate Investment Survey – 4th Edition 2018
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Divestment forecast for the next 12 months
Divestment strategy
Reduce portfolio by more than 10%
Reduce portfolio by more than 5%
Not applicable
Divestment strategy for the next 12 months
(1) Multiple choice question
16Portuguese Real Estate Investment Survey – 4th Edition 2018
31%
23%
31%
31%Core
Opportunistic
deals
Value added
Not applicable
31%
31%
38%
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Offices is the preferred divestment sector for players that operate in the real estate market in Portugal
Preferred divestment sectors for the next 12 months
Divestment strategy
(1) Multiple choice question
17Portuguese Real Estate Investment Survey – 4th Edition 2018
Residential Hotels RetailOfficesIndustrial/ Logistics
Not applicableOthers
38%
31%
23%
8% 8%
31% 31%
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Source of financing for next year
Main real estate investors for next year
Divestment strategy
(1) Multiple choice question
18
Legend: Each icon represents 10%
Portuguese Real Estate Investment Survey – 4th Edition 2018
Pension Funds (%)
Funds of Funds (%)
Insurance Companies
(%)
Sovereign Funds (%)
Banks (%)
62%
46%
15%
Others (%) 46%
38%
8%
92%EUROPA
46%NORTH AMERICA
46%ASIA
31%MIDDLE EAST
8%SOUTH AMERICA
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Length of the real estate asset’s disposal process
Easiness of investors gathering for the next 12 months 8%
Up to 3 months
Very
difficult
Neutral
Easy
Divestment strategy
19Portuguese Real Estate Investment Survey – 4th Edition 2018
23%
46%
23%
8%
Difficult
92%From 3 to 6
months
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Real estate market in Portugal
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Real estate market in Portugal
For the next 3 months, it is expected an increase in the volume and sales price for the industrial sector and a greater stability for the retail/ services and hotel sectors.
Volume and sales price for the next 3 months
21
Decrease Slightly decrease Similar Slightly increase Increase
HotelRetail / ServicesResidential Industrial
Portuguese Real Estate Investment Survey – 4th Edition 2018
8%
23%
31%
8%
31%
46%
38%
8%
38%
38%62%
15%
38%
16%
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Profitability rates for the next 3 months For the next 3 months, it is expected a greater stability for the four sectors under analysis. Residential and industrial sectors may register a slightly decrease in profitability rates.
Real estate market in Portugal
22
Decrease Slightly decrease Similar Slightly increase Increase
HotelRetail / ServicesResidential Industrial
Portuguese Real Estate Investment Survey – 4th Edition 2018
38%
54%
8%
23%
69%
8%
15%
70%
15%
38%
54%
8%
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For the next 3 months, foreign investment and new players entrancestand out as the variables that will have the greatest positive impact in the real estate sector.
Bureaucracy and fiscal policy will negatively impact the sector.
Impact of several variables in the real estate sector
New players
entranceBureaucracy Fiscal Policy Political
situation
Demand Supply Foreign
investment
PositiveNegative Neutral
Real estate market in Portugal
23Portuguese Real Estate Investment Survey – 4th Edition 2018
38%
46% 38%70%
24%23%
15%31%
15%
38%
46%
15%
85%
46%
54%
54%
16%
38%
8%
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The Deloitte CFO Survey: Autumn 2018
Portuguese Real Estate Investment Survey – 4th Edition 2018 24
Portuguese Real Estate Investment Survey – 4th Edition 2018© 2019. For more information, contact Deloitte Consultores, S.A. 25
80% 22%
3%
52% 95% 90% 70%
2%
60% 71% 15%
1% 1% 9%
78%
-37%
-68%
37%
93% 89%
61%
Q3_15 Q1_16 Q3_16 Q1_17 Q3_17 Q1_18 Q3_18
Positive
Evolution of CFOs expectations about Portuguese economic outlook over the next 12 months
Economic outlook and financing
25
Portuguese CFOs views on their businesses strategies priority
Attractive
Neither attractive nor unattractive
Unattractive
Corporate debt
Equity Internal
financing
NegativeNeither positive nor negative Net balance
Bank borrowing
64%
28%
8%
52%
36%
12%
30%
46%
24%
55%
43%
2%
Portuguese Real Estate Investment Survey – 4th Edition 2018
Source: The Deloitte CFO Survey: Autumn 2018
Portuguese Real Estate Investment Survey – 4th Edition 2018© 2019. For more information, contact Deloitte Consultores, S.A. 26
62%
61%
56%
54%
49%
46%
42%41%
36%
34%
28%
24%
23%
Domestic public policies
Rising labour costs
Rising input costs
Political or economic
instability in foreign markets
Stress in the financial system
Cyber risk
Rising cost of capitalCurrency fluctuations
Weaker domestic demand
Deterioration of cash flow
Rising barriers to
trade/protectionism
Limited access to capital
Weaker foreign demand
Likelihood of risk impact on businesses over the next 12 months
(% of likelihood)
Uncertainty and risk
26
CFOs expectation on external financial and economic uncertainty impact
Portuguese Real Estate Investment Survey – 4th Edition 2018
56%High uncertainty
42%Normal
2%Low uncertainty
Source: The Deloitte CFO Survey: Autumn 2018
Portuguese Real Estate Investment Survey – 4th Edition 2018© 2019. For more information, contact Deloitte Consultores, S.A. 27
The Portuguese Real Estate Investment Survey’s main goal is to assess:
• The perception of the real estate market evolution by the involved parties; and
• Understand which is the current and future strategy of the organizations.
The survey was sent to a Selected Panel of Participants on 29th November, the answers were obtain on 18th January, and were subject to analysis.
In case of doubt, some additional information or any clarification, please contact:
Jorge Sousa MarrãoPartnerTlm.: +(351) 963 902 674Tel.: +(351) 210 422 [email protected]
Inês Cintra CostaSenior ManagerTlm.: +(351) 962 103 923Tel.: +(351) 210 427 [email protected]
Technical Note
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28Portuguese Real Estate Investment Survey – 4th Edition 2018© 2019. For more information, contact Deloitte Consultores, S.A.
Contacts
Jorge Sousa Marrão
Partner
Real Estate LeaderTlm. +(351) 963 902 674
Inês de Cintra Costa
Senior Manager
Real Estate – Financial AdvisoryTlm. +(351) 962 103 923
Ricardo Reis
Partner
Real Estate - TaxTlm. +(351) 964 736 261
Diogo Pires
Senior Manager
Real Estate – TaxTlm. +(351) 964 837 258
© 2019. For more information, contact Deloitte Consultores, S.A.
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