According to the Global Capital Diversification (GCD) report, on the global real estate stage, the European market offers the most amount of diversity and opportunity and attractive pricing, especially on a global risk-adjusted basis.
In comparison to the weakness of markets and confidence in H2 2018, the return of a relatively solid economic expansion across Europe in Q1 2019 provides welcome relief. Real estate is well placed compared to other sectors and interest rates remain significantly lower than before, with supply holding up in a majority of cities. From the end of 2018, Helsinki and Lisbon were topping the charts relative to their five-year trading average, relative to other European locations. With Europe’s four largest economies recording expansion, European Union (EU) member states, grew by 0.5% in the first quarter.
Given the reception of the late market cycle, it is no surprise that structure-led sectors are currently favoured by investors. The European housing sector, including student accommodation, hotels and healthcare, are sought by investors who are keen to access the continent. The office sector has been unsettled by flexible office providers with its increasing focus on the user’s preference and changing family dynamics. Similarly, it seems likely that the residential sector will have to step up to provide solutions for the challenges in cost, needs for a community, and the dynamics of the workforce of the future.
However, all over Europe, residential property pricing is at different levels of sophistication, maturity, and demand. The residential sector is thriving due to its niche sectors such as micro-apartments, co-living, senior living and student housing. Retail on the other hand is becoming increasingly unpopular due to the rise of e-commerce.

Globally, Europe has become a continent of great interest for international investors. The Knight Frank World Wealth Report 2018 reports the world’s super-wealthy spend over USD 2.4bn on second citizenship each year, with most demand coming from China, the Middle East, and Russia. On average 32% of ultra-high net-worth individuals plan to purchase a new property outside their country of residency in the next two years, reports the Knight Frank World Wealth Report 2017. The UK, US, France, Switzerland, and Spain are the five most popular locations for second homes, while lifestyle is the most important factor while deciding on a location to reside in. However, Portugal real estate is currently the talk of the town, with Lisbon seen as the best performing city globally over the last three years.

Portugal has established itself as a unique and increasingly lucrative destination, much sought after by investors from around the world. Several factors were responsible for putting Portugal firmly on the map including favourable economic, security, steady real estate market growth, increase in tourism and better returns. Political and governmental stability has made it easier for Portugal to comply with its international commitments improving the country’s credibility, which has led to a boost in the economy. Economic growth, deficit decrease and increased employment in Portugal place the country on a path to ever-growing success.

Sofia Rodrigues Nunes, Head of Real Estate and Planning at Gómez-Acebo & Pombo Abogados Portugal agrees that foreign demand, which she according to her estimate makes up one-quarter of property transactions, is not showing any signs of decreasing. “Buyers from the Middle East and Scandinavian countries have also become very interested and active. More recently, we have increasingly seen wealthy Brazilian, Turkish and South African investors coming to Portugal to buy the house of their dreams to live in with their family, seduced by the peaceful and safe environment and the European lifestyle,” adds Nunes. “These investors prefer Sintra’s charming villas and old palaces, the sea view in Estoril or the exclusive “golf and sea” at Quinta da Marinha, in Cascais, also popular with British investors. We have also been dealing with a sizeable British demand for properties in the Alentejo West Coast around Comporta and Melides.”

Investment numbers remain at record highs year after year since 2014, surpassing the 3.35 billion euros barrier in 2018; a feat never achieved before. Real estate investment is also more varied, with more options to invest in the hotel sector and demand for alternative subdivisions such as senior and student residences, hospitals, clinics and private rented schemes (multifamily schemes).