According to Athena Advisers, 1 in every 18 real estate consultancy clients is an investor in commercial properties, “a proportion that acquires more significant weight if we take into account that Athena Advisers is mainly recognised for its operations in the residential market, although in recent years it has reinforced commercial activity” explains David Moura-George, director of Athena Advisers Portugal.

Even though the end of programs to encourage foreign investment via the acquisition of properties in the national market or even the changes registered in the Local Accommodation rules may have led many investors in residential properties to take refuge in another asset class, according to David Moura-George, “these limitations do not in themselves explain this turnaround, especially because the trend is global”, he maintains. “These clients can be either individual investors who invest 2 million euros in the purchase of plots of land for the construction of schools in Greater Lisbon or consortiums that invest 100 million euros in hotels in the French Alps”.

In Athena Advisers' opinion, investors or regular owners of residential properties are gaining confidence in the commercial market as they become more familiar with its specificities and complexity. “For a commercial real estate investor, residential is just one part of their portfolio. But for the common investor in residential properties, the world of commercial properties is often placed in another dimension where people speak a different language”, notes the general director of the consultancy. “However, once these investors get to know the local market and the players in the commercial sector in depth, they very quickly move from investing in assets of 2-3 million euros to assets of 6-8 million euros, or more. This is what we call going from “resi-normal” to “commercial-climber”, he explains.

For this new type of investor in commercial real estate, there are also new asset classes that are more accessible to their investment and/or debt capacity. The more traditional segments of large office buildings or shopping centers may not be within the reach of these investors, but there is a diverse set of properties that are better suited to their portfolio and are seeing increasing demand. This is the case of street stores and supermarkets, warehouses, technology parks, small hotels and tourist residences with services, schools and student housing, as well as investments in real estate development, often using crowdsourcing.

Higher returns and security in investments - as long as the stability of tenants, good rents and long-term contracts are ensured - and the lack of concern with the day-to-day management that residential properties normally require, are among the main motivations for this turnaround. According to David Moura-George “residential properties often attract those looking for a more emotional connection with their investments, typically seeking to obtain returns that can vary between 3% and 4%. In commercial assets, the focus is 100% financial with returns that can vary from 5% to 10% in the domestic market, in addition to leases of 10 to 20 years reducing management headaches.”

In recent years, the Portuguese commercial property market has registered record levels of investment, with annual volumes ranging between 2 billion euros and 3.4 billion euros (2018-2022), and despite the challenges of the current national and international situation have negatively impacted these values ​​in 2023, with good prospects for recovery already this year, the truth is that Portugal continues to be seen as a stable market and one of the most interesting in terms of the risk/return relationship in the European panorama”, assures the managing director of Athena Advisers.

In addition to the acquisition of income assets, real estate development is also attracting many investors who usually looked to the residential sector and crowdsourcing is emerging with a financing model that allows these entrepreneurs to make investments at values ​​that would otherwise be practically unattainable.

“Crowdsourcing is a great example of how these investors can join forces and have the opportunity to co-invest in a real estate project as shareholders,” explains Moura-George. Currently, Athena Advisers is involved in several projects in the Portuguese market whose development results from crowdsourcing, “among them a hotel in Costa da Caparica, to be announced soon, and a residential tourism project in the municipality of Aljezur”, he concludes.