• Portugal FY21: Annual Review – Offices & Alternatives (Part I)

    June, 2022

The Real Estate Market in Portugal registered a total investment volume of €2.2 Bn in 2021. The office segment had the largest market share, accounting for c.40% of total property investment, followed by alternative assets, residential and hospitality. As expected, the retail sector suffered the most from the effects of the pandemic, accounting for an 8%.


The impact of lockdowns and social distancing measures translated into many companies adopting teleworking as their regular means of work. The peak of remote in Portugal was recorded right at the beginning of Covid-19 (Q2 2020), when more than 1 million workers were working from home (23.1% of the total employed population). However, by Q4 of 2021, this value had already dropped to 9.3%, which shows companies will keep pursuing office space, by perhaps resorting to the hybrid option.

Prime rents in the Lisbon office market stand at 25 €/sq. m/month and they are forecast to rise as more and more international companies enter the market. Average yearly take-up for the period 2016-2021 was 174,000 sq. m, with FY21 closing 7% below that average (as a result of lockdown). Given the recovery in demand levels, the pipeline planned for 2022-2024, totalling 242,000 sq. m, with more than 30% of GLA already pre-let, should be insufficient and quickly absorbed.

Alternative segment:

The alternative segment made its way to the top in FY21, especially with the help of a major portfolio transaction in the Healthcare segment. Icade Santé made its debut in the Portuguese market with the acquisition of four hospitals for €213 million. The assets, located in Lisbon, Porto, Albufeira and Lagos amount to a total GLA of 90,000 sq.m. and around 500 beds/ hospital.

Investment in Senior Living also began to peak through with the help of French fund Pierval Santé and the purchase of Expo Living (which integrates Montepio Parque das Nações Residence) by Square Asset Management. The entry and expansion of several operators should boost investment in this asset class in the coming years, namely through forward-purchase and forward finance contracts.

Throughout FY21, deals for properties in prime central locations, with lease contracts and strong covenant operators, showed net prime yields of 5% in hospitals and 5.5% in senior living.