portuguese real estate investment survey 4th …...for more information, contact deloitte...

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


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?"


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.


5© 2019. For more information, contact Deloitte Consultores, S.A.

Introduction

Portuguese Real Estate Investment Survey – 4th Edition 2018


IntroductionReal Estate strategy for 2019

Type of organization that participants represent

Divestment

Portfolio management

Investment

6

None of the above


23%

77%

38%

15%

8% 8% 8% 8%

15%

Real EstateAsset

ManagementCompany

CorporateCompany

Bank Real EstateFund

VentureCapital/ Private

Equity

InsuranceCompany

Other


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



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


46%

46%

0%

15%

70%

15%


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


31%

23%

23%

23%

54%

15%

8%

23%


Investment strategy



(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


23%

23%

23%

31%

38%

31%

31%


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


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%


Source of funding for next year

Main funders for next year

Legend: Each icon represents 10%

Investment strategy



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


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


Very

difficult

Neutral

Easy

Difficult

38%

31%

23%

8%


Divestment strategy



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



31%

23%

31%

31%Core

Opportunistic

deals

Value added

Not applicable

31%

31%

38%


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



Residential Hotels RetailOfficesIndustrial/ Logistics

Not applicableOthers

38%

31%

23%

8% 8%

31% 31%


Source of financing for next year

Main real estate investors for next year

Divestment strategy


18

Legend: Each icon represents 10%


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


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


23%

46%

23%

8%

Difficult

92%From 3 to 6

months


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


8%

23%

31%

8%

31%

46%

38%

8%

38%

38%62%

15%

38%

16%


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.


22

Decrease Slightly decrease Similar Slightly increase Increase

HotelRetail / ServicesResidential Industrial


38%

54%

8%

23%

69%

8%

15%

70%

15%

38%

54%

8%


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



38%

46% 38%70%

24%23%

15%31%

15%

38%

46%

15%

85%

46%

54%

54%

16%

38%

8%


The Deloitte CFO Survey: Autumn 2018

Portuguese Real Estate Investment Survey – 4th Edition 2018 24


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%


Source: The Deloitte CFO Survey: Autumn 2018


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


56%High uncertainty

42%Normal

2%Low uncertainty

Source: The Deloitte CFO Survey: Autumn 2018


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

© 2019. For more information, contact Deloitte Consultores, S.A. 27Portuguese Real Estate Investment Survey – 4th Edition 2018

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

[email protected]

Inês de Cintra Costa

Senior Manager

Real Estate – Financial AdvisoryTlm. +(351) 962 103 923

[email protected]

Ricardo Reis

Partner

Real Estate - TaxTlm. +(351) 964 736 261

[email protected]

Diogo Pires

Senior Manager

Real Estate – TaxTlm. +(351) 964 837 258

[email protected]

mailto:[email protected]




© 2019. For more information, contact Deloitte Consultores, S.A.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

Deloitte provides audit, consulting, financial advisory, risk advisory, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500® companies through a globally connected network of member firms in more than 150 countries bringing, world-class capabilities, insights, and high-quality service to address clients' most complex business challenges. To learn more about how Deloitte's approximately 245,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn or Twitter.

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte network shall be responsible for any loss whatsoever sustained by any person who relies on this communication.

portuguese real estate investment survey 4th …...for more information, contact deloitte...

Documents