Stability and a positive evolution
A study from Cushman & Wakefield reveals that the Portuguese economy is giving confidence to investors, from its stability and positive evolution. The growth for 2019 is around 2% and predicted to continue this upward trajectory in the next two years. This derives mainly from private investment, with a growth expectation of 6.4% and consumption, which is expected to reach 2% in 2019.
Commercial property is reaching high demand
Companies are occupying office spaces in the Portuguese capital city and this type of property has seen its availability drop over the last couple of years. With 149,000 sq m of office space leased under 130 deals, there was a new record high of average deal size.
Between January and September 2019, the office vacancy rate in the Greater Lisbon area has dropped to 3.9%, counting 130 deals of 1.150 sq m in average size. Although the number of deals may not impress, the average area per deal is twice the average size of the past 10 years and tells us that these deals were done with large companies occupying plenty of space.
This low occupancy rate hints at a growing demand caused by the positive market environment and leads to an increase in the value per square meter of this type of property. As a consequence, construction is increasing because right now it only represents 82% of the total area forecasted for the next 3 years.
Tourism is driving retail transactions
Lease transactions in retail registered a growth of 50% year-on-year until the third quarter of 2019, with 620 deals. High street locations represent 67% of the transactions with a sum of 410 deals, followed by shopping centres at a distance (18%).
The restaurants sector is the most active in retail, with 55% of leases registered in this period, followed by Fashion and Leisure & Culture. The non-food sector must be highlighted because it grew 6.4% against the 4.2% growth in the food sector.
Portuguese exports are driving new industrial and logistics projects
The estimated growth in Exports for the eurozone in 2019 is 2.1%. However, Portuguese evolution predicts a growth of 3.9% over the same period.
The scarcity of modern quality facilities is soon to be overcome with the imminent development of new projects in the Greater Lisbon area, providing a new dynamic in the Industrial & Logistics sector. Increased activity in e-commerce and retail are driving the imminent development of new projects including two logistics platforms that make a total of 340.000 sq m area.
Investment in Commercial Property
Over the course of 2019, investment activity registered a total of 1,700€ million in 45 Commercial Real Estate deals. With around 1,300€ million of transactions currently in various stages of negotiations, it is estimated the the total investment volume could reach a new record high above last year’s results, at around 3,000€ million invested.
With Prime Yields remaining stable for Offices and High Street Retail, at 4%, and for Shopping Centres at 4.75%, the most sought-out investments reflected this. The Office sector registered 34% of investments, followed by Retail at 32% and Hotels with 26%. The Industry sector registered only 6% of the investment, with yields decreasing to 6%.
Source: Cushman & Wakefield
