What is CBRE’s footprint in Portugal, and which sectors primarily attract your activity?

CBRE Portugal comprises approximately 280 employees and covers all sectors except the residential B2C market. We operate offices in Porto and Lisbon and have teams spread nationwide managing diverse assets. In recent years, our diversification extended across sectors, encompassing tourism, healthcare, and establishing an agribusiness line across Portugal, Spain, and Italy. Notably, our Capital Advisors branch, focused on real estate investment and banking, is unique to Portugal, setting us apart.

Last year, CBRE established a new unit targeting small and medium investments in Portugal. What motivated this shift?

Our “Small and Medium Caps” unit within the investment properties department focuses on deals ranging from EUR 500,000 to 10 million, catering specifically to high-net-worth individuals, family offices, and institutional investors preferring smaller assets. While CBRE is recognized for larger transactions, our aim was diversification, mirroring the successful model present in Brazil and the UK.

Considering diverse market segments, which sectors are most dynamic for CBRE presently?

Offices and logistics stand as primary drivers, along with robust performance in retail, both in property management and leasing. Hotels and residential sectors have also been profitable, exemplified by our 2021 sale of a portfolio of 4,400 apartments to a French investor – the largest deal in Portugal to date.

Retail has suffered due to the pandemic. Has it impacted CBRE’s portfolio performance?

Despite challenges, our Iberian Property Management platform, established across Spain and Portugal, supported our resilience during the pandemic. Initially focused on retail (hence ongoing success), we expanded to offices and logistics. In Portugal, managing 16 retail assets (shopping centers and parks), soon to be 18, involved property management, design, rent collection, marketing, and leasing. Though 2020 saw challenges and negotiations with tenants, by 2021, we observed positive trends.

What key trends define the current Portuguese market?

Portugal, initially a small market, opened up to foreign investment in 2014, primarily in the residential sector. Now, companies choose Portuguese cities for offices due to workforce quality, business costs, and overall quality of life. Surprisingly, the logistics sector is growing, driven by e-commerce, despite Portugal not traditionally being a logistics hub.

Are there specific challenges impacting the real estate market beyond permitting?

Affordable housing scarcity is notable, with a thriving high-end market but limited options for middle and lower-income groups due to rising housing prices. Challenges include construction costs and lengthy licensing processes, prompting the need for local municipalities to expedite licensing and provide land for new developments. Encouragingly, the government introduced a reduced 6% VAT rate for affordable housing projects.

Besides permitting, what other challenges should investors consider?

Financing remains a challenge; Portuguese banks are conservative and less attuned to real estate specifics. Overcoming this requires communication and educating local banks about market nuances, as they tend to be risk-averse.

What are CBRE’s priorities in the next few years?

Our aim is leadership through service diversification, emphasizing ESG integration across projects. Strategic advisory success and strengthening collaboration with Spain under our “Iberian approach” are priorities. Consolidating our presence in Porto and the Northern region of Portugal is also a key focus.