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Investments in Commercial Real Estate in 2017 Grew 50% to €1.9 Billion
3 January 2018
Investments in commercial real estate in Portugal grew by 50% in 2017 compared to the previous year, to 1.9 billion euros, the consulting firm JLL reported, based on calculations gleaned from preliminary data.
The retail markets accounted for 37% of the investment, while the offices had a 33% weight and the industrial / logistics sector took up 17%, with the latter benefiting from the “biggest deal of the year: the purchase of the Logicor portfolio for a value between 250 to 270 million euros.”
In retail, the highlights were the purchase of Forum Coimbra, and Forum Viseu (200-230 million euros) and Vila do Conde Outlet (130-140 million euros). 84 new street stores were opened in Lisbon, while two new shopping centres were inaugurated in Portugal (Évora Shopping and MAR Shopping Algarve).
In the prime area of Lisbon (Chiado), rents increased by 8% to 130 euros/sqm/month; in the Baixa, rents increased 17% to 105 euros/sqm/month. On the Avenida da Liberdade, the cost of rent fell about 5% to 85 euros/sqm/month, while in Porto, costs on Santa Catarina street plateaued at 60 euros/sqm/month.
In the office market, the most significant deals of the year included the sale of the Silcoge portfolio (140-150 million euros) and the Entreposto building (65 million euros).
The annual take-up should reach a volume of 165,000 to 170,000 sqm or between 15% and 20% more than the 141,000 sqm taken in 2016 and reaching the highest point of the last nine years. The consultancy also highlighted the 40 operations with areas having more than 1,000 sqm.
“Rents, which had remained unchanged in recent years, grew by around 5%, with the prime value now being standing at 20 euros/sqm/month. Over the next two years, roughly 105,000 sqm of new offices are planned in Lisbon, in a market where the demand for large areas and coworking spaces tends to increase,” the statement added.
With an average growth of around 20% in the number of homes sold and an average price increase of approximately 11%, the premium residential market remains one of the most dynamic. It has, on average, experienced price increases of 10% to 20% in the main areas of Lisbon, with some regions showing increases of over 30%.”
The average sales price in the premium segment is hovering around €630,000 in Lisbon. JLL’s sample of transactions also indicates that “Portuguese and foreign national are equally represented in the transactions (50% each), although there is a clear diversification of the buyers, with about 50 nationalities buying houses in Lisbon throughout 2017.”
In the hotel sector, only 11 new units were opened in Lisbon, while the volume of investment in assets in the country exceeded €100 million.
“The investment in new hotels remains very active, with planned openings that include 18 new units in Lisbon (1,700 rooms) and 19 in Porto (1,300 rooms) in 2018,” the consultancy reported.
Pedro Lancastre, JLL Portugal’s general director, noted that 2017 was a “spectacular year”, for growth.
“Regarding investment and the activity in the sales and leasing of offices, housing and hotels, we achieved business volumes and growth in prices that exceeded all previous highs for the market. It is sustained and sustainable growth, as the sources of demand are much more diversified and Portugal’s position in attracting international capital is not cyclical,” he added in a statement.
As it celebrated 20 years of operations in Portugal, JLL announced that it was having “its best year ever in the country, as turnover grew by 60% over the previous year.”
Thus, this “exceptional year” “also reflects the favourable and surprisingly positive economic scenario.” “The combination of these factors has boosted economic growth, international confidence, financing and investment,” he added.
Speaking about the perspectives for the new year, Mr Lancastre said that “at least, it will keep in line with 2017”, since the “high levels” of international interest should continue as “at the same time, the Portuguese are becoming more active.”
Demand will be broader in scope, extending beyond Lisbon, Porto and Algarve and a “greater ease of financing will also help to strengthen the markets in both investment and occupation.”
“The big challenge will be to boost the development of both new housing and offices, since the quantity of available, high-quality stock that can address the needs of the various types of demand is beginning to dry up, limiting the market’s growth,” he said.
Original Story: Diário de Notícias / Lusa
Translation: Richard Turner