portugal real estate market report - savills · 2019-08-20 · portugal foresee a real gdp growth...

Portugal Real Estate Market Report

1st Semester 2019

The gradual decline in the unemployment rate, which by 2020 is estimated to reach 5.7%, together with a low population growth, will have a decisive influence on the productivity levels achieved, which are fundamental to maintaining the competitiveness of the Portuguese economy.

At the beginning of 2019, the Portuguese economy experienced a slight acceleration in its expansion trajectory, registering a growth of 0.5% in the first quarter of 2019.

The projections advanced by the Bank of Portugal foresee a real GDP growth of 1.7% in 2019, with the evolution of Portuguese economic activity based on the growth of private consumption, the dynamism of Gross Fixed Capital Formation and the increase in exports, despite the downward revision of external demand.

Also, financing conditions should remain favorable for all sectors of the economy and external demand should grow on average below 3%.

In 2019, the increase in private consumption will be linked to the favorable evolution of disposable income of households, justified by the favorable evolution of employment and nominal wages.

In May 2019, the unemployment rate stood at 6.6%.

It should be noted that the Portuguese economy, despite successfully passing through a period of recession and now enjoying a more favorable international context, continues to present some structural challenges that influence its growth potential.

Economy

Macroeconomic projections 2018 2019

(f)2020

(f)2021 (f)

GDP 2.1% 1.7% 1.6% 1.6%

Inflation 1.2% 0.9% 1.2% 1.3%

Private Consumption 2.5% 2.6% 2.0% 1.7%

Public Consumption 0.8% 0.5% 0.5% 0.5%

Exports 3.6% 4.5% 3.1% 3.4%

Imports 4.9% 8.0% 4.3% 4.4%

Employment 2.3% 1.3% 0.8% 0.4%

Unemployment rate 7.0% 6.3% 5.7% 5.3%

Source Bank of Portugal(f) forecast

Throughout the year 2019, Portugal will maintain its expansion trajectory, albeit to a lower rhyme compared to the last years

Source INE* (Seasonally adjusted -%) of the active population aged 15-74 years by age group; Monthly

Unemployment Rate20

18

16

14

12

10

8

6

4

2

0

May

20

12

Aug

ust

2012

Nov

emb

er 2

012

Feb

ruar

y 20

13

May

20

13

Aug

ust

2013

Nov

emb

er 2

013

Feb

ruar

y 20

14

May

20

14

Aug

ust

2014

Nov

emb

er 2

014

Feb

ruar

y 20

15

May

20

15

Aug

ust

2015

Nov

emb

er 2

015

Feb

ruar

y 20

16

May

20

16

Aug

ust

2016

Nov

emb

er 2

016

Feb

ruar

y 20

17

May

20

17

Aug

ust

2017

Nov

emb

er 2

017

Feb

ruar

y 20

18

May

20

18

Aug

ust

2018

Nov

emb

er 2

018

Feb

ruar

y 20

19

May

20

19

%

15.4 16

.2 17 17.3 17

16

15.4

14.8

14.4

13.6

13.5

13.4

12.1

9.8

7.6

12.3

10.9

8.8

7

6.5

12.4

11.3

9.2

7.1

12.3

10.5

8.1

6.7

6.6


3

OfficesAt the end of the first half of 2019, the Lisbon

office market totaled 110,100 sq.m of take-up, corresponding to 97 operations. This result, which represents an increase of 27% compared to the first half of 2018, allows us to foresee a more exciting year-end compared to forecasts drawn at the beginning of the year, which should exceed 170,000 sq.m, but should not surpass the 200,000 sq.m. mark.

24% of the operations registered in the first six months of the year concerned areas above 1,000 sq.m, mostly centered on the Parque das Nações, Prime Zone and Emerging Office Zone areas.

It should be noted that the Parque das Nações zone and the Prime Zone were the best performing market zones with 26,840 sq.m and 24,937 sq.m respectively. It is important to note that for the performance balance of the Parque das Nações area, the purchase of a 17,400 sq.m turnkey office project by the AGEAS Portugal Group accounted for 65% of the total. GLA occupied in this market area.

In the Prime Zone, the market had the leasing operations of the newly built Torre da Cidade located at Fontes Pereira de Melo Avenue 41, by the multinational consultant KPMG (9,950 sq.m) and the Law Firm PLMJ (8,306 sq.m) that occupied all the office space in this emblematic project.

WESTERNCORRIDOR

IC16

IC19

N117

CRIL

CRIL

IP7

2ª CIRCULAR

A12

A5

A2

EIXO

NO

RTE-

SUL

AMOREIRAS

PARQUE DAS

NAÇÕES

CHELAS

CAMPOLIDE

BENFICA

MONSANTO

BAIXACHIADO

ESTRELA

ALCÂNTARARESTELO

AIRPORT

VASCO DA GAMABRIDGE

25 DE ABRILBRIDGE

SANTAAPOLÓNIASTATION

BELÉM TOWER

SETE RIOSSTATION

CAIS DOSODRÉ

CAIS DO SODRÉSTATION

GARE DOORIENTE

ENTRECAMPOSSTATION

Prime CBD

CBD

Emerging Office Zone

Secondary Office Zone

"Parque das Nações"

Western Corridor

Zone 7

Best performing Activity Sectors

CoNSultANtS ANd lAwyErS:

24,664sq.m

BuSINESS SErvICES:

28,259sq.m

FINANCIAl SErvICES:

24,606sq.m

Vacancy rate by market zone

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%

Source Savills research

1º half 2015 1º half 2016 1º half 2017 1º half 2018 1º half 2019

0.35%1.41%3.83%3.27%

12.08%

Prime Zone CBd Zone Emerging office Zone

Secondary Zone Parque das Nações

western Corridor

Pipeline 2019 – 2021


sq.m

.

2019 2020 2021

120,000

100,000

80,000

60,000

40,000

20,000

0

21,920

31,300

106,170

Although the vacancy rate is currently below 6%, the market shows that it will be able to stay above the average take-up of the last five years (158,000 sq.m).

The Secondary Zone, which comprises the riverside and historical area of Lisbon, delimited by the Av. Infante Santo and Av. 24 de Julho axes, as well as the Parque das Nações area, are the areas with a practically zero vacancy rate, resulting from the lack of entry of new speculative projects.

During the first half of 2019, 48 operations were due to relocations, accounting for a total of 72,659 sq.m, and another 31 operations related to area expansion decisions, totaling 27,157 sq.m.

By the end of the year 2019, approximately 22,000 sq.m should be completed spread over 5 office building projects located in the Prime, CBD and Western Corridor Zones.

Between 2020-2021 will reach approximately 153,000 sq.m heavily concentrated in the Parque das Nações area, marked by innovation and modernity that will contribute to underline the technological nature of this market area, such as the EXEO and K-Tower projects.

Regarding office lease prices and forecasts for the next 6 months, prime rent closed the semester at € 22 / sq.m / month, with relative price stability observing.

Until the end of 2019, rents are expected to remain stable, but there is room for general market increases of around 5%, justified by the vacancy rates at minimum values and high demand. This upward pressure will be justified not only by the lack of available space, but also by the entry of new planned projects that will raise the price range.

Vacancy RateLisbon Office Market

5.23%

Market Zone Take-Up 5 Years Evolution

40

20

0


sq.m

. (th

ous

and

s)

1st Semester 2015 1st Semester 2016 1st Semester 2017

1st Semester 2018 1st Semester 2019

5,6

92

15,6

1015

,39

814

,28

524

,937

8,7

65

16,0

328

,76

6 13,6

82

14,8

40

2,4

3623

,229

12,8

3418

,753 21,3

38

4,2

46

0 0

14,8

554

,275

13,8

08

2,4

46

2,30

912

,577

26,8

40

15,9

269

,867

22,18

518

,78

517

,616

4,14

8 7,16

31,7

34 4,4

62

4,4

98

Prime Zone

CBd Zone

Emerging office Zone

Secondary Zone

Parque das Nações

western Corridor

other zones

MARKET TOTAL1St SEMEStEr 2018

86,819sq.m.

MARKET TOTAL 1St SEMEStEr 2019

110,069sq.m.

Portugal Real Estate Market Report Portugal Real Estate Market Report

54

Prime rents by market zone

€25.00

€20.00

€15.00

€10.00

€5.00

€0.00


€/s

q.m

/mo

nth

2017 2018 Q1 2019 Q2 2019

€17

.00

€16

.00

€15

.47

€17

.00€

20.5

0

€13

.50

€17

.00

€14

.00

€16

.00

€17

.00

€21

.00

€13

.50

€18

.00

€16

.00

€16

.00

€18

.00

€22

.00

€14

.50

€22

.00

€18

.00

€18

.00

€16

.00

€18

.00

€14

.50

Prime Zone CBd Zone Emerging office Zone Secondary Zone Parque das Nações western Corridor

Trends:

■■ The second half of the year will continue to be marked by the renegotiation of rents as well as the commitment by some owners to remodeling more outdated and obsolete spaces, taking advantage of the high demand;

■■ This year will be distinguished by the rethinking of occupancy strategies and the analysis of the new offer that will start to enter the market in the next two years;

■■ Increased demand for coworking spaces as a result of the growing number of startups, but also an increase in new forms of organization and workplace experience that foster a growing sense of sharing and community;

■■ Companies' growing commitment to improving their office space as an essential and integral tool for their talent attraction and retention strategies.

Main projects under development

HUB Criativo do Beato

› Others Zones› Estimated date of completion: 2020› GLA: 11,000 sq.m

MoNUMeNtaL

› CBD Zone› Estimated date of completion: 2020› GLA: 18,000 sq.m

eXeo – Stage 1

› Parque das Nações› Estimated date of completion: 2021› GLA: 30,000 sq.m

3rd CoLoMBo’S toWer

› Emerging Zone› Estimated date of completion: 2021› GLA: 30,000 sq.m

Oporto Offices Market

In the first half of 2019, Oporto office market accounted for a total of 22,552 sq.m of take-up, which represents a sharp decrease of 45% over the same period of 2018.

The ZEP zone concentrated the largest contracted GLA in a total of 8,550 sq.m and was elected by a renowned financial services company to implement its new premises in the Greater Porto market, totaling 4,000 sq.m.

In total, Oporto office market registered a total of 28 operations, of which 53% was directed to operations below 300 sq.m.

Oporto continues to assert itself as a city of business destination, integrating the list of preferred locations of multinationals wishing to expand their activity in Portugal.

Given the demand that the market has registered, the promotion of new office building projects is today a reality that promises not to slow down and is urgently needed to maintain the attractiveness and competitiveness of Oporto compared to other European capitals.

For the next years it is foreseen the development of more than 150,000 sq.m. At the end of the first half of 2019, the Urbo Business Center buildings (16,100 sq.m), the Boavista Office Center (8,000 sq.m) and the Sonae Headquarters building integrated into the 7,000 sq.m Maia Business Center were completed.

By the end of the year, the 31,000 sq.m Porto Office Park (POP) project and the 16,800 sq.m Palácio dos Correios project for offices are expected to be completed.

CIRCUNVALAÇÃOROAD

CIRCUNVALAÇÃO ROAD

VCI

A1

A28

A28

VIARÁPIDA

A20

VIANORTE

A41

N107N107

A3

N13

A4

A44 N108

N209

N12

N105

A4

MARGINAL

MATOSINHOSZEP

ASPRELA

MAIAPERAFITA

ANTAS

AVIZ

PINHEIROMANSO

DOWNTOWNRIBEIRA

GAIA

CAMPANHÃBOAVISTA

CONSTITUIÇÃO

FRANCISCO SÁ CARNEIROINTERNATIONAL AIRPORT

CITY'S PARK

ARRÁBIDABRIDGE

LUÍS I BRIDGE FREIXOBRIDGE

MARSHOPPING

PORTO DE LEIXÕESCRUISE TERMINAL

EXPONOR

DEVESASSTATION

S. BENTOSTATION

CAMPANHÃINTERMODAL TERMINAL

NORTESHOPPING

INTERFACE CASADA MÚSICA

PAVILHÃOROSA MOTA

CAMPO 24 DE AGOSTO BUS

TERMINAL

Boavista – Prime CBD

Downtown Area

Eastern Zone

ZEP

Matosinhos

Maia

Vila Nova de Gaia

Take-up distribution by market zone


28%Boavista - Prime CBd

3%Eastern Zone

7%downtown

1%Maia

23%Matosinhos

38%ZEP


76

Rents in the Oporto office market continue their upward trend justified by the high demand, the improvement in the quality of new projects promoted but also by the lack of current supply available in the face of high demand dynamism.

Market Zones rent/sq.m/month

Boavista - Prime CBD 18.00€

Downtown’s Zone 17.00€

Eastern Zone 13.00€

ZEP 14.00€

Matosinhos 14.00€

Maia 13.00€

Vila Nova de Gaia 13.00€


RetailThe Portuguese retail market continued

to show strong dynamics demonstrating the maintenance of good performance in the sector.

In terms of the evolution of economic indicators, the CPI registered in June 2019, a year-on-year change of 0.4% and identical to the previous month. The underlying inflation indicator (total index excluding unprocessed food and energy) increased by 0.6% year-on-year, representing a 0.1% increase over May.

The national retail market remains quite dynamic due to the high street retail, with a very significant expression in the central axes of the city of Lisbon. In the first six months of the year, Savills accounted for a sample of 150 new stores in the heart of Lisbon, with the highest concentration in the parishes of Misericórdia, Avenidas Novas, Santo António and Campo de Ourique.

The Food & Beverages sector accounted for 79% of new openings, followed by the Fashion sector with 8%.

In the Food & Beverages sector, we highlight the opening of JNcQuoi Asia restaurant at Avenida da Liberdade nº 144, in an area of 900 sq.m and with a concept focused on Asian cuisine.

Also noteworthy is the opening of the project King of China and Chef Avillez’s House of Delights in Chiado. Among other openings,

we also have the restaurants Meat Me, Up to Sushi, Stanislav Café, 100 Ways, Sa Morais Sushi and Therapist.

Every corner of the city of Lisbon receives increasingly diverse concepts that bring life to a totally cosmopolitan, modern and open to the world, trying to keep its historical and cultural character intact.

In the face of rising demand, the available supply remains scarce and continues to put pressure on the income values practiced. Since the beginning of the year 2019, the prime rent applied to the Chiado area has risen by 14% to stand at the end of the second quarter of 2019 at 160 € / sq.m / month.

Consumer price and underlying inflation indices1.6

1.4

1.2

1

0.8

0.6

0.4

0.2

0

Source INE

%

Jan 2018

Fev 2018

Mar 2018

Abr 2018

Mai 2018

Jun 2018

Jul 2018

Ago 2018

Set 2018

out 2018

Nov 2018

dez 2018

Jan 2019

Fev 2019

Mar 2019

Abr 2019

Mai 2019

Jun 2019

CPI (year on year rate) CPI (rate variation of the last 12 months)

underlying inflation indicator

Throughout 2019, Portuguese consumers have been more confident about their economic situation, paving the way for changes in their consumption patterns and also allowing them to be more willing to spend on products and activities that bring benefits, that promote happiness.

The Food & Beverages sector has been the main driver of the high street retail in Lisbon


98

Market Values

Also in the city of Oporto, the high street retail maintains its expansion trajectory and affirmation of successful format. In the first six years of 2019, there were several brands that opened stores, of which we can highlight the Spanish brand Hawkers that opened a store in Santa Catarina Street and Elements Contemporary Jewelery in Rua das Flores.

Greater Oporto will also be the address chosen for the opening of the first Primark XXL store that will be located in Norte Shopping, resulting from the expansion of this shopping centre. The new store will considerably increase the space already occupied by Primark to about 6,300 sq.m.

There are also growing openings of convenience-framed formats that are totally targeted at city consumers who know the products they like very well and who don’t like to waste a lot of time. Fast product experience and access is the key to success for these types of formats.

High Street, and as we have been witnessing in Lisbon, has been growing significantly and in parallel with an increase in the flow of tourists visiting the city of Porto.

Prime Rents Evolution180

160

140

120

100

80

60

40

20

0


2015 2016 2017 2018 Q2 2019

High Street – lisbon High Street – oporto

Shopping Centers

405050

70 70

85

10095 100 100

100

120110

140

160

€/s

q.m

./m

ont

h

Out with the old… In with the new!

After decades of successful openings, the shopping center market in Portugal is now undergoing a period of renewal of its shopping center stock.

In the first six months of 2019 we had the Alameda Shop & Spot requalification and the start of the expansion of Glicínias Plaza located in Aveiro and scheduled for completion in the year 2021.

Also noteworthy was the opening of Montijo Retail Park, which added 18,000 sq.m to the existing commercial offer on the south bank of the Tagus.

Currently, and with no plans to open new shopping centers in Portugal, the focus remains on the requalification, expansion and modernization of a set of shopping centers, such as Norte Shopping, Colombo Shopping Center, Oeiras Park and Vila do Conde Porto Fashion Outlet.

A very successful format for Portuguese consumers and winners of several international awards, shopping centers in Portugal are experiencing a reinvention

Making the shopping experience unique, complete and differentiating now motivates investors and developers to expand and renovate their shopping centers.

phase, resulting not only from changes in consumer profile, for sustainability and energy efficiency reasons, but above all. driven by the digital world.

The rapid access to all the information launched by different brands in different purchase channels, with special relevance to the digital channel, now poses a real challenge for physical commercial spaces.

StoCk SHoPPINg CENtErS:

3.7million sq.m

grEAtEr lISBoN oFFEr:

1.1million sq.m

grEAt Porto oFFEr:

584thousand sq.m


1110

A2

N119

A8

A21

CREL

A1

A5

IC19

IC30

IC16

CRIL

A10

N10

N118

IC32

IC20

A12

LISBOA

ALMADA

SEIXAL

BARREIRO

MOITA

MONTIJO

ALCOCHETE

PALMELA

SESIMBRA

SETÚBAL

OEIRASCASCAIS

SINTRA

AMADORA

ODIVELAS

LOURES

VILA FRANCADE XIRA

AZAMBUJA

CARREGADO

ALENQUER

TORRES VEDRAS

MAFRA

ALVERCA

AEROPORTOLISBOA

Logistics and Industrial

The industrial and logistics sector saw the take-up of the first half 32% lower than the 1st semester of 2018. This decrease is again related to the common denominator of the other real estate segments: lack of supply that meets the criteria currently demanded by logistics operators.

In the case of logistics and industrial platforms, the supply of spaces with more than 10,000 sq.m is particularly scarce. This led, especially during the second quarter, to price rises in the area of the Western Corridor (3.5 € / sq.m for 4 € / sq.m) and Matinha - Prior Velho (4.5 € / sq.m for 5 € / sq.m).

Other secondary zones such as the Montijo - Alcochete and Palmela - Setúbal axis also registered increases in rents practiced, proof of the affirmation of these zones as viable alterations and consolidated to the prime axis.

The warehouse Azambuja 2 with 38,482 sq.m., the Abóboda Business Center (7,146 sq.m) and the Aleluia Factory in Aveiro (5,000 sq.m) are the top 3 of the largest transactions in the industrial and logistics segment in the first half of this year, representing a concentration of 90% of the total takeup in only 3 transactions.

Logistic and Industrial Take Up


sq.m

.

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

55,783

49,739

28,588

61,777

46,191

7,152

The current challenges imposed by the requisition and immediate delivery of the most varied products, driven by e-commerce, have had a particular impact in the search of spaces that combine the proximity to the centers of the cities with the infrastructures that make possible and guarantee the effectiveness of the cycle logistic operations.

Therefore, it becomes increasingly imperative that future logistics spaces be versatile and respond to important guidelines such as sustainability, energy efficiency, decarbonization, interconnection with other platforms and means of transport, the ability to install state-of-the-art technology, among others.

In this sense, it is worth noting the expected arrival in the market in 2019 of the newly infrastructed logistics platform of the latest generation in Castanheira do Ribatejo, property of Merlin Properties with an area between 250,000 sq.m and 300,000 sq.m, as a result of an investment of 150 M€ .

Prime Rents Industrial and Logistical Axes

€6.00

€5.00

€4.00

€3.00

€2.00

€1.00

€0.00


€/s

q.m

/mo

nth

Carregado – Azambuja

Póvoa de Santa Iria –

Alverca

loures – vialonga

Corredor oeste

lisboa (Matinha –

Prior velho)

Montijo – Alcochete

Palmela – Setúbal

Q4 2018 Q1 2019 Q2 2019

€4

.00

€4

.00

€3

.75

€3

.50

€3

.00

€4

.00

€5.

00

The highest rents of the logistics and industrial segment in Portugal, achieved in the Lisbon region, at €5, is a reflection of the aforementioned inability to supply quality logistics and industrial spaces to meet the existing demand. In turn the axis between Sacavém and Alverca continues to be considered prime and the most desirable for the installation of platforms.

Market Values


Quarter Building Location occupier area (sq.m.)

2 Azambuja 2 Azambuja Auchan 38,482

1 Centro Empresarial da Abóboda Abóboda vision Box 7,146

2 Aleluia Factory Aveiro uber 5,000

1 logispark Montijo Montijo lFP 3,700

1 warehouse CacémNunes & guisantes

Investimentos Imobiliários ld

3,668

Top 5 Transactions

Sacavém – Alverca

Carregado – Azambuja

Loures – Vialonga

Montijo – Alcochete

Palmela – Setúbal

Alfragide – Carnaxide

Sintra – Cascais – Oeiras

Prime Rents Q1 2019


€/sq.m/month

0 2 4 6 8 10 12 14 16 18

Bucharest

Milan - Bologna - rome

Paris (Ile-de-France)

Prague

lisbon

warsow

Madrid

vienna

Munich

the Neetherlands

dublin

london €16.50

€8.75

€7.71

€7.10

€6.50

€5.50

€5.35

€5.00

€4.70

€4.33

€4.33

€4.00


1312

InvestmentDuring the first half of 2019, the Portuguese

real estate investment market showed a less dynamic activity. Compared to the same period of 2018, there was a decrease of 27%.

The hotel sector was the most active during the semester, having recorded the largest investment operation in the sale of Portfolio Minor International to US investment manager Invesco for 312 million euros.

The attractiveness of the hotel sector was also confirmed by the closing of 4 more operations, including the sale of the DoubleTree by Hilton Lisbon Hotel - Fontana Park Lisbon to Commerz Real AG in the amount of 37.5 million euros.

The retail segment accounted for the second largest share of investment (30%). In total 8 operations were closed, including the purchase of Leiria Shopping for 128 million euros by DWS from Sierra Portugal Fund.

In the office market, accounting for 23%, 9 transactions were recorded, led by the sale of Credit Suisse's Art's Business Center and Fernão Magalhães Buildings to Merlin Properties for 112 million euros.

Commercial Real Estate Investment Volume900

800

700

600

500

400

300

200

100

0


Mill

ions

€

offices retail Industrial & logistics

Mixed use

Hotels others use

1st Semester 2017

1st Semester 2018

1st Semester 2019

517

393

293

244

316

295

18

10

56

16

55 47

32

28

810

393

37%US

14%POrtUGAL

23%GErMANy

13%SPAIN

Investment by country of origin

In total 30 operations were recorded, with a total investment of approximately 1,100 million euros.

Top Transactions

MInOR HOTEL PORTfOLIO

■■ Hotels■■ Seller: Minor International■■ Buyer: Invesco■■ 312 Million €

ART'S BUSInESS CEnTERFErNão MAgAlHãES towEr

■■ offices■■ Seller: Credit Suisse■■ Buyer: Merlin Properties■■ 112 Million €

fIDELIDADE BUILDIngAlExANdrE HErCulANo 53

■■ Seller: Apollo global Management

■■ Buyer: M&g real Estate■■ 46 Million €

LEIRIA SHOPPIng

■■ retail■■ Seller: Sierra Portugal Fund■■ Buyer: dwS■■ 128 Million €

KLéPIERRE gALLERIES

■■ retail■■ Seller: klepierre■■ Buyer: Square Asset Management■■ 102 Million €

IMOgEST PORTfOLIO

■■ offices, logistics, retail Parks

■■ Seller: Imogest■■ Buyer: M7 real Estate■■ 55 Million €


14


15

The development sector is also very active with the acquisition of projects mainly directed to the residential and hotel segments. An example of this was the acquisition of the Block that integrates the historic Grand Hotel Central in Cais do Sodré by Patrizia Immobilien for 25 million euros.

Continuing to benefit from a favorable economic environment and the maintenance of confidence from national and international players, the Portuguese real estate investment market has been able to maintain its attractiveness to investors now with a more core and value-add profile.

Note also the recent approval of the SIGIs (Portuguese REITs), which proposes to promote real estate investment, in particular the lease market and to boost the growth of the national real estate sector.

After a period of compression with yield declines in all segments, prime yields are expected to begin a path of further stabilization.

Taking into account pipeline transactions, year-end forecasts point to a slight decrease from 2018, with an estimated total investment volume of between EUR 2,500 - 3,000 million euros.

Prime Yield Evolution12.00

10.00

8.00

6.00

4.00

2.00

0.00

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


offices (gross) High street (gross)

Shopping Centers (Net)

Industrial & logistics (gross)

retail Parks (Net)

%

Residential

2019 has continued to see widespread increases in house prices in Portugal, estimated at around 16%. In the two main cities of the country, Lisbon and Porto, prices continued to rise at a more moderate pace compared to the 4th quarter of 2019.

Lisbon registered in the first three months of the year a generalized increase of prices around 11% and the city of Porto saw the closed values in the sale of houses by almost 29%.

In the first three months of 2019, Lisbon continued to be the county of the country with the highest average value per sq.m, 3,561 € / sq.m, 70% above the pre-crisis period (around 2,095 € / sq.m).

At the same time that prices per sq.m have been rising in all municipalities, the large dispersion of absorption times in the past in the cheapest municipalities has considerably approached the Lisbon absorption time (six months), from a range of ten months in the first quarter of 2017, to only three / four months in Odivelas and seven in Setúbal and Palmela, in the first quarter of 2019.

The trend for the rest of the year for Lisbon and Porto is for a continuous increase in values per sq.m, at a slower pace but still above 10% in Lisbon and 25% in Porto.

The Invicta city will also tend to have high growth rates of closed values; Porto currently practices the same values as Lisbon in 2007, still only 60% of the average value of Lisbon, falling to 2,124 € / sq.m.

Portugal was in the first quarter the third country in the European Union where house prices rose most, just behind the Czech Republic and Hungary.

Absorption times in the periphery approach Lisbon

Average Values of Bank Valuation

2 000€

1 500€

1 000€

500€

0€

Source INE

€/s

q.m

.

Jun 2018

Jul 2018

Aug 2018

Sep 2018

oct 2018

Nov 2018

dec 2018

Jan 2019

Feb 2019

Mar 2019

Apr 2019

May 2019

North lisbon’s MA Algarve

The city of Porto had as main highlight the Cedofeita Union of Parishes, Sto. Ildefonso, Sé, Miragaia, S. Nicolau and Vitoria, with an average closing value of 2,682 € / sq.m.

Examples are large projects such as LX Living in Amoreiras (151 homes), Infinity Tower in Campolide (195 homes) or the Matinha residential project that, together with Prata Riverside Village, will bring that new life to life. zone where the creation of more than 2,700 new homes is projected in what will be one of the largest residential projects in the country.

Incentives to lease will also mark the coming times, notably the affordable rent program

Savills alone in Lisbon has a pipeline between 2019 and 2022 of more than 6,500 new homes that will enter the market, most of them focused in medium-high and high classes.

that “(…) grants exemption from collective and individual taxes to rents of contracts entered into within its scope (…) at least 20% below a value of calculated based on various factors, such as the area of housing, the median price released by INE, the typology and other specific characteristics of housing (…) ”- Housing Platform, for a minimum of 5 years or 9 months in case of student housing.

All this has led promoters to consider betting on apartments aimed at the middle class, tending farther from the city center, but still enjoying accessibility that make the area a real alternative. Take the case of Alta de Lisboa, for example, where around 500 housing units will be built in 10 different buildings, for an investment of around 200 M €.

Prime Yields – European Cities Offices CBD

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00


% 3.6

0

2.9

0

4.0

0

2.9

0 3.7

5

3.0

0

4.0

0

4.2

5

4.0

0

4.2

5

4.5

0

7.0

0

3.0

0

3.2

5

3.5

0

3.5

0

3.5

0

Ber

lin

Fran

kfur

t

Ham

bur

g

Paris

Mad

rid

Am

ster

dam

Mila

n

Stoc

khol

m

Bru

ssel

s

osl

o

dub

lin

luxe

mb

ourg

Pra

gue

lisb

on

lond

on

war

saw

Ath

ens


1716

■■ Focus on the upper-middle and upper classes should be dispersed to the middle class, particularly with promotion projects in areas further away from Lisbon’s city center.

■■ Rehabilitation projects at the center will continue to attract investors, the future trend resulting in a mix of rehabilitation and promotion;

■■ Leasing will continue to be a strong option for a large proportion of people, and the affordable tenancy program should contribute, albeit slightly, to this trend.

■■ Co-living and serviced apartments projects should start to have more impact in the city of Lisbon, as a result of the mainly foreign demand for these more complete typologies in terms of services provided and the constant need for mobility that makes these targeted housing models unfeasible. for students, freelancers, young professionals, among others.

Trends

600

500

400

300

200

100

0

Source SIr

Dwellings Licensed in new Constructions for family Housing

Jun 2018

Jul 2018

Aug 2018

Sep 2018

oct 2018

Nov 2018

dec 2018

Jan 2019

Feb 2019

Mar 2019

Apr 2019

May 2019

oporto's MA lisbon’s MA Algarve

Uni

ts

nº of Dwellings Sold4 500

4 000

3 500

3 000

2 500

2 000

1 500

1 000

500

0

Source SIr

lisbon’s MA oporto’s MA North Center Alentejo Algarve

Q1 2017 Q1 2018 Q1 2019

Uni

ts

Q1 2017 Q1 2018 Q1 2019 Absorption time Q1 2017

Absorption time Q1 2018 Absorption time Q1 2019

Sales Amounts and Absorption Time at Lisbon's MA Councils

4 000€

3 500€

3 000€

2 500€

2 000€

1 500€

1 000€

500€

0€

18

16

14

12

10

8

6

4

2

0

Source SIr

€/s

q.m

.

Mo

nths

lisb

on

Alc

och

ete

Mo

ntijo

od

ivel

as

Maf

ra

Bar

reiro

Cas

cais

Alm

ada

Set

úbal

lour

es

vila

Fra

nca

de

xira

Mo

ita

oei

ras

Ses

imb

ra

Pal

mel

a

Am

ado

ra

Sei

xal

Sin

tra

TourismThe behavior of the various indicators of national tourism showed a very positive performance

between January and May 2019:

Overall, even though there was a slight decline in occupancy per room from the beginning of the year until the end of May (around 0.5 pp YoY), the significant increase in both RevPar (income per room) to € 37.70, as the ADR (income per room occupied) to € 64.89, shows that tourists are increasingly spending more in our country even if they stay here less time.

+ 4.1%Overnight Stays

+ 6.6%Guests

+ 6.7%total Income

+ 5.9%tourism revenues

Source travelBI

RevPar January to May

70

60

50

40

30

20

10

0

15.00%

10.00%

5.00%

0.00%

-5.00%

-10.00%

MA lisbon

Ar Madeira

Total North Algarve Ar Azores

Alentejo Center

2018 2019 Δ19/18

€/s

q.m

.


1918

Lisbon was the region that attracted the most tourists in the period analyzed, with growth of 4.1% over the same period of 2018, followed by the Northern region and later the Algarve, which was the region that recorded the largest increase of guests, in a total of 9.63%.

Source travelBI

Nationals (Nationals + Foreigners = 100%)

Foreigners (= 100%)

1º 2º 3º

North 999 500 (49.4%) Spain – 217 300 (21.24%) France – 117 700 (11.51%) Brazil – 110 500 (10.80%)

Center 869 500 (62.1%) Spain – 118 400 (22.27%) Brazil – 73 500 (13.82%) France – 50 400 (9.48%)

MA Lisbon 848 800 (28.5%) France – 223 900 (10.49%) Brazil – 220 700 (10.34%) Spain – 215 900 (10.12%)

Alentejo 345 500 (65.8%) Spain – 33 000 (18.42%) Brazil – 21 800 (12.17%) germany – 18 700 (10.44%)

Algarve 405 300 (25.8%) uk – 398 200 (34.10%) Spain – 128 600 (11.01%) germany – 125 600 (10.76%)

Ar Azores 140 000 (63%) germany – 16 400 (19.95%) uSA – 16 200 (19.71%) Spain – 6 800 (8.27%)

Ar Madeira 112 500 (19.3%) germany – 123 500 (26.31%) uk – 105 400 (22.45%) France – 59 500 (12.68%)

Portugal 3 721 100 (40%) uk – 738 600 (13.22%) Spain – 728 800 (13.04%) France – 570 300 (10.21%)

Top guest Issuers 2019 January to May

ADR January to May

Source travelBI

90

.92€

64

.89

€

61.0

1€

56.16

€

63

.08

€

56.17

€

51.8

2€

45.

71€

MA lisbon Total Ar Madeira North Algarve Ar Azores Center Alentejo

5,00 p.p.

4,00 p.p.

3,00 p.p.

2,00 p.p.

1,00 p.p.

0,00 p.p.

-1,00 p.p.

-2,00 p.p.

-3,00 p.p.

-4,00 p.p.

-5,00 p.p.

Room Occupancy Rate January to May

80,00%

70,00%

60,00%

50,00%

40,00%

30,00%

20,00%

10,00%

0,00%

Source travelBI

2019 Δ19/18

MA lisbon Ar Madeira total North Algarve Ar Azores Alentejo Center

guests by Region January to May

10 000 000

9 000 000

8 000 000

7 000 000

6 000 000

5 000 000

4 000 000

3 000 000

2 000 000

1 000 000

0

12,00%

10,00%

8,00%

6,00%

4,00%

2,00%

0,00%

-2,00%

-4,00%

Source travelBI

2018 2019 Δ19/18

Total MA lisbon North Algarve Center Ar Madeira Alentejo

Uni

ts

Source travelBI

Overnights per Region 2019 January to May

8 000 000

7 000 000

6 000 000

5 000 000

4 000 000

3 000 000

2 000 000

1 000 000

0

14,00

12,00

10,00

8,00

6,00

4,00

2,00

0,00

-2,00

-4,00

dormidas Δ19/18 (%) Average Stay per Night

MA lisbon Algarve North Ar Madeira Center Alentejo Ar Azores

Uni

ts

Uni

ts /

%


2120

€ 393 Million Euros of Investment

Commercial investment in the hotel segment recorded the highest value of the last semesters, 393 M € (proof of the vitality, consistency and attractiveness of the Portuguese market, especially for foreign investors), achieved mainly through transactions in Lisbon and Porto. sale of the portfolio, which included 3 major hotels in Lisbon in North American Invesco, with a combined value of 313 M €.


Hotel City Buyer Nationality rooms amount (M€)

Portfolio - Avani Avenida Liberdade, tivoli Av. Liberdade e tivoli Oriente lisbon Invesco uSA 704 313

Doubletree by Hilton - Hotel Lisboa Fontana Park lisbon Commerz real Ag germany 146 37,5

Eurostars Marquês de Pombal lisbon Swiss life rEIM France 163 23

Hotel EXE Porto Centro oporto Privado Estrangeiro N.A. 74 12,5

Palácio Condes de Azevedo oporto BPI Asset Management Portugal NA 7

Main Business Transactions


Zone Hotel New / rebranding Stars rooms

lisbon

Maxime Hotel New 3 149

Casual Belle Époque lisboa New 4 28

the one Palácio da Anunciada New 5 83

vIP Folque New 4 131

oporto

Moon and Sun Porto New 4 48

Hotel Acta the Avenue New 4 NA

Hotel NH Porto Jardim New 4 NA

Hotel vila galé Porto ribeira New 4 130

oporto Airport & Business Hotel New 4 158

Porto royal Bridges New 4 138

vila Foz Hotel & Spa New 5 136

Porto Bay teatro rebranding 4 77

Algarve

grand House Hotel - v.r.S. António rebranding 5 31

Monchique resort & SPA rebranding 5 185

Iberostar Selection lagos Algarve rebranding 5 220

Main Openings 1st Semester 2019

As regards openings, the geographical dispersion of the new national units should be highlighted. The opening of units such as Vila Galé Collection in Elvas or Verde Mar & Spa in Ribeira Grande (São Miguel - Azores), prove the sustainability of the sector and the ability of areas outside the major urban centers of Lisbon and Porto to attract investment. of internationally renowned operators.

Rebranding activities have also had a significant impact, especially in the Central and Algarve regions, and should continue to be a phenomenon throughout the country as has been the case over the last few years.


22

Savills ResearchWe’re a dedicated team with an unrivalled reputation for producing well-informed andaccurate analysis, research and commentary across all sectors of Portugal's property market.

Cristina Cristóvãodirector Agency [email protected]

Joana Rodriguesdirector [email protected]

Paula Sequeiradirector [email protected]

Eurico AlvesMarket [email protected]

Paulo SilvaHead of Country [email protected]

Patrícia Melo e LizChief Executive officerpatrí[email protected]

Alexandra Portugal gomesMarket [email protected]

Rodrigo Canasdirector [email protected]

portugal real estate market report - savills · 2019-08-20 · portugal foresee a real gdp growth...

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