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Retail and Office Sectors Power Real Estate Investment

21 March 2019 – Richard D. K. Turner

A study of the Portuguese commercial real estate market, WMARKET’19, conducted by the real estate consultancy Worx, revealed that 68% of total commercial real estate investment in Portugal went to the retail and office sectors. Worx carried out the study in conjunction with João Cristina, Merlin Properties’ head in Portugal, Luís Araújo, the president of the Tourism Association of Portugal, and Jorge Salvador Gonçalves, a partner at the law firm Garrigues.

Total investment reached €3.2 billion in 2018 and €1.4 billion in investments went to the retail sector alone, compared to €742 million in 2017. This was largely due to a series of major transactions involving shopping malls and retail parks.

Pressure in the office real estate market is also likely to lead to short to medium-term increases in rents, according to the WMARKET’19, as reported by Dinheiro Vivo on Wednesday. A lack of quality projects in the central business district and expo areas [Avenida da Liberdade, Marquês de Pombal, Avenida Fontes Pereira de Melo and Saldanha] coupled with an inefficient, obsolete stock of offices and a limited pipeline of new developments is expected to exert significant upward pressure on rents shortly.  Demand for office space is therefore also likely to begin expanding to other nearby areas.

Upgrades to shopping centres

WMARKET’19 studied the retail investment market, including the spate of sales last year and current plans to modernise facilities, including expanding food halls and options for leisure and culture to better compete with rising e-commerce sales.  Merlin Properties also announced that it would expand its presence in the Portuguese shopping centre market.

The hospitality sector to see continued dynamism

Twenty-two three, four and five-star hotels opened in Portugal in 2018 and the Portuguese Hospitality Association predicts that another 65 will open this year. Luís Araújo, the president of the association, revealed figures stating that tourism now accounts for 13.7% of Portugal GDP and 50.1% of its exports of services.

Original Story: Dinheiro Vivo – Sara Fernandes

Photo: D.R.