Post on 10-Sep-2018
Overview 2015 | Outlook 2016Office | Retail | Residential | Investment
Portuguese Real Estate Market
A year of consolidation!
•2015hasbeenanoutstandingyear.
•Onthecommercialrealestatetransactionalmarket,ithasbeenarecordyearintermsofinvestmentvolume.Ontheretailandofficesoccupationalmarkets,thegrowthtrendthathasemergedattheendof2013isnowcompletelyestablished.Theresidentialmarketiscurrentlyfacingoneofitsbestperformanceeverrecorded,leadingtoacompleteregenerationofLisbonandPortocitycentres.
•Portugalistrendyandtheunderlyingreasonsforthiswillremain.Generalperspectivesfor2016pointouttoacontinuousconsolidationandincreasingactivityontherealestatemarket.
TableofContents
Foreword ..................................................................................................................................................................................................................5
European Real Estate Market .................................................................................................................................................................................6
Portuguese Real Estate Market ............................................................................................................................................................................11
Economy.......................................................................................................................................................................................................11
OfficeMarket.................................................................................................................................................................................................13
RetailMarket.................................................................................................................................................................................................20
CapitalMarkets.............................................................................................................................................................................................28
ResidentialMarket.........................................................................................................................................................................................32
About a JLL ............................................................................................................................................................................................................37
PortugueseRealEstateMarket| 5
Foreword
Pedro LancastreManagingDirector
WhenIwrotethissametextayearago,weweregraduallybackontheradaroftheoccupationalrealestatemarketaswellasinvestmentmarket.Portugalwentfromarecoveringmarkettoamarketthathadrecoveredand,althoughexpectationsfor2015werehigh,thisyearsurpassedthemall.Thus,likelastyear,itisonaverypositivenotethatweanalysethegoodphaseweareexperiencing.
Regardingtheinvestmentincommercialrealestate,ithasbeensaidrepeatedlythatthiswasthebestyearever.Avolumeofalmost2billioneurosincommercialrealestatetransactionsrepresentsarecordliquidityratioandgreatinvestorconfidenceinthePortuguesemarket,with84%ofthetransactionscarriedoutbyforeignersandinstitutionalfundsintheforefront.
Regenerationisalsoatitshighest.ThroughthenewUrbanLeaseLaw,thethousandsofdegradedbuildingsinourcitieshavebecomerenewable.Andso,todaywehavedevelopersfromallovertheworldrebuildingthehistoriccentresandchangingLisbonandPorto’surbanlandscapesatasteadypace.
Buildingsinruinsarereplacedbyqualityprojects.Therefore,lifeinthecitiesiscompletelychanged,acquiringanunstoppabledynamic,anenergythatattractspeopleandretail.Thestreetsarereborn,withbuildingsoccupiedbyPortuguese,aswellasmanyforeignersfromnumerousoriginswhobuyhomesinPortugaleveryday.JLL/Coberturaalonerecorded24differentnationalitiesin2015,fromBraziltoChina,aswellasIraq,PakistanandVietnam.
Portugalisinvogue.Anditdeservestobe.Intheeyesoftheinternationalinvestorcommunity,thecountryhadanexemplaryperformance,displayingtransparencyandcredibility,andithassomethingnotallcountriescanoffer,namelyacombinationofpositiveattributes:safety,climate,gastronomy,beautyandfriendliness,whichattractpeopleandinvestment.
Wearehopefulbecausegoodthingsnevergooutoffashion.Unlesstheylosewhatmakesthemgood.Ifwemaintainthegoodsensethatguidesus,aswellasfiscalstability,thereisnoreasontodoubtthatPortugalwillcontinueonthefantasticcourseitiscurrentlytravelling.
6| PortugueseRealEstateMarket
Economy
Europe’srecoveryhasbeenoneofthemoreencouragingglobaltrendsofthelastyear,especiallytheincreasingresilienceofdomesticdemandintheeurozone.Recoveryin2015wasvisiblethroughoutallEUmembersandnonereportedadecrease.However,therearestillsubstantialgrowthdifferences,basedonstructuralcharacteristicsanddifferenteconomicmomentums.
AccordingtotheEuropeanCommissionreport“EuropeanEconomicForecast,Winter2016”,GDPfortheEuropeanUnion(EU)isexpectedtoaccelerateslightlyonlyin2017.Astablegrowthof1.9%isforecastfor2015and2016,anda2.0%growthisanticipatedfor2017.Thisgrowthisdrivenbyseveralpositivefactorssuchasoilprices,theeuroexchangerateandadecreaseinfinancingcosts,whichhadagreatimpactbothonexportsandthestimulationofprivateconsumption.However,investmentfacedsomeobstacles,namelyeconomicandpoliticaluncertainty,aswellasthehighdebtofsomecountries,suchasGreece.
TheforecastforprivateconsumptionintheEUis2.0%and2.2%in2015and2016,respectively,droppingto1.8%in2017.Thisgrowthismainlysupportedbythegrowthofhouseholdincomes,aswellasshrinkinginflationandthegreatimprovementofthelabourmarket.However,in2017thisindicatorisexpectedtoslowdownsinceincomemightlosesomemomentumduetoinflationgrowth,whichisexpectedtoreach0.5%and1.6%in2016and2017,respectively.
Regardingexports,2015registereda5.1%growthbut,despitedepreciationoftheEuro,uncertaintyregardingexternalfactorsstartedtohavesomeimpactontheEUactivity.Nevertheless,consideringthecompetitivenessofthesinglecurrency,aswellasstrongforeigndemand,exportsareexpectedtomaintaintheirpacewithagrowthof4.2%and5.0%in2016and2017,respectively.
Thelabourmarketalsosawimprovements,withemploymentgrowingandunemploymentratescontinuingtodecreasegradually.Theunemploymentratein2015fortheEUdropped9.5%,andisexpectedtoshrinkfurtherto9.0%and8.7%respectivelyfor2016and2017.ThisdecreaseisexpectedtoremaininalmostallEuropeancountries,especiallythosethathavebenefittedfromlabourmarketreforms,suchasSpain,Portugal,CyprusandIreland.
Furthermore,uncertaintyandrisksareexpectedtoappearfromforeignglobalmarkets,namelyduetogeopoliticalconflictsortheweakeninggrowthofemergingmarketssuchasChina.RiskswithinEuropemightalsoexertimpact,suchastheuncertaintysurroundingtheGreekeconomyortheBrexit.However,positivefactorsarealsoanticipated,suchaslowcommodityprices,lowfinancialcostsandthedepreciationoftheEuro,whichmayhaveastrongerimpactonthegrowthoftheEuropeaneconomy.
Investment
InvestmentvolumeintheEMEAregionreachedapproximately€238billionin2015,representinganincreaseofalmost14%comparedwith2014.ContinuedpressureontheeurohashadthecombinedeffectofpullinginvestorsawayfromriskierassetsandbreakingtheinterestratecycleinEurope.Inthiscontext,saferassetclasses,suchasrealestate,haveremainedinstrongdemandalthough,withyieldsforprimeassetseitheratoraroundthelowsrecordedinthepreviouscycle,themarketisbecomingincreasinglyselectiveintermsofassetallocation.
EuropeanRealEstateMarket
PortugueseRealEstateMarket| 7
“Investment volume in the EMEA region reached approximately €238 billion in 2015, representing an increase of almost 14% compared with 2014.”
€60 3.25%€192 4.25%
€1,500 3.00%
€35.50 4.35%€115 4.25%€310 3.80%
€40 4.50%€73 5.50%€358 4.25%
€18 7.50%€55 8.25%€200 7.00%
€32 4.25%€78 5.50%€313 4.35%
€20 4.75%€88 5.00%€250 3.90%
€100 11.25%€253 10.75%€345 11.00%
€30 4.75%€56 5.30%€242 3.50%
€18.50 7.50%€70 7.50%€60 N/A
€21 7.00%€70 7.00%€80 6.75%
€23.5 5.50%€130 5.00%€90 5.00%
€54 4.75%€126 4.75%€211 4.00%
€138 3.50%€285 3.85%
€1,200 2.00%
€46 4.00%€77 4.50%€180 3.75%
€11 4.25%€108 4.25%€217 4.25%
€27 4.25%€88 5.00%€245 3.90%€18.50 5.50%
€95 5.50%€120 5.00%
Office: Prime Rent (€/sq m) and Prime Yield (Gross)Shopping Centres: Prime Rent (€/sq m) and Prime Yield (Net)Unit Shops: Prime Rent (€/sq m) and Prime Yield (Gross)
Lisbon
Madrid
Barcelona
Milan
ParisFrankfurt
Amesterdam
London
StockholmMoscow
Warsaw
Budapest
Bucharest
AthensRome
Oslo
Dublin
Prime Rents and Yields - Q4 2015
Source:JLL
8| PortugueseRealEstateMarket
Ingeographicterms,investorsarebroadeningtheirfocus,investinginmarketsthathistoricallywerenotsoappealing.AmongthetopthreeEuropeanmarkets,therewasquiteasignificantdivergenceinperformancebetweentheUK,FranceandGermanyoverthecourseof2015.TheGermanmarketwasparticularlystrong,reporting€45.3billion,a29%increasecomparedwithanalreadystrong2014.TheUKreached£61billion,representingadecreaseof6.5%comparingwith£65.3billioninvestedin2014.
TheFrenchmarketmadeasluggishstartto2015withatotalinvestmentfalling41%behind2014atH1.However,twoconsecutivestrongquartersattheyear-endmeantthattotalinvestmentin2015remainedflat.Outsideofthethreelargestmarkets,SouthernEuropepresentedthefastestgrowingmarkets.WhileSpainledtherecoveryintheregion,bothPortugalandItalyreportedresurgentinvestmentmarketsin2015.Portugalwitnessedthelargestincrease,withinvestmentrisingfrom€892millionin2014to€1.8billionin2015.ItalyandSpainrecordedyearonyearincreasesof36%and16%,respectively.ThemomentumthatslippedintheScandinavianregionduringQ32015returnedwithforceinthefinalquarter,mostlyduetoNorway’sgreatperformance.TheBeneluxregioncontinuedtogrow,reaching€13billionin2015,rising15%from€11.3billionregisteredin2014.WhiletheNetherlandsandLuxembourgremainedflatyearonyear,theBelgianmarketsawa51%increaseininvestment.
Inasector-by-sectoranalysis,officesweretheassetsingreatestdemand,withatotalinvestmentofcirca€107billion,whichrepresentedabout45%ofthetotalinvestment.Inretail,€56.4billionwereinvestedacrossEuropeduring2015,up25%fromthesameperiodin2014.Theretailinvestmentmarketremainsstrongwithanincreasedfocusonretailassetsoutsidethetraditionalretailmarkets,andrisingsharesofretailparksandhighstreetinvestmentvolumesto22%inbothcases.Shoppingcentresmaintainthehighestdemand,with44%ofthetotalvolume,althoughwithalowersharethaninthepreviousyear.
TheEuropeanofficeyieldtightenedby34bpsy-o-yto4.53%andnowstandsatjust22bpsabovetherecordlowofQ22007–4.31%.Retailyieldsalsocompressedduring2015.Inshoppingcentres,mostmarketsreturnedbelowthelong-termaverage,whileintheretailparksandunitshops,investordemandhasimprovedandyieldsalsodecreased,althoughnotassharplyasinshoppingcentres.
“All major office markets registered growth in 2015, underlining the positive momentum built throughout the year, mainly due to economic improvement.”
PortugueseRealEstateMarket| 9
Note
• This diagram illustrates where JLL estimate each prime office market is within its individual rental cycle at the end of December 2015.
• Markets can move around the clock at different speeds and directions.
• The diagram is a convenient method of comparing the relative position of markets in their rental cycle.
• Their position is not necessarily representative of investment or development market prospects.
• Their position refers to Prime Face Rental Values.
RentalGrowth
SlowingRentsFalling
RentalGrowth
Accelerating
RentsBottomingOut
Athens, Bucharest, Dusseldorf, Helsinki, Istanbul, Prague, Rome,Zurich
London WE
Copenhagen
Budapest, Milan
Lisbon, Paris CBDBrussels
Amsterdam, Barcelona, Madrid
HamburgStuttgart
Munich
Frankfurt
Lyon, OsloCologne
KievGeneva, St Petersburg
MoscowWarsaw
ManchesterEdinburgh
Berlin, Dublin, London City,Luxembourg, Stockholm
Office
IntheEMEAofficemarketanalysis,24indexmarketsareconsidered:Amsterdam,Barcelona,Berlin,Brussels,Dublin,Dusseldorf,Edinburgh,Frankfurt,Hamburg,London,Luxembourg,Lyon,Madrid,Milan,Munich,Paris,Rotterdam,Stockholm,TheHague,Utrecht,Budapest,Moscow,PragueandWarsaw.
Allmajorofficemarketsregisteredgrowthin2015,underliningthepositivemomentumbuiltthroughouttheyear,mainlyduetoeconomicimprovement,namelyintermsofemploymentandGDPgrowth.CEEcountriesregisteredanaveragegrowthof14%,whileWesternEuropegrew13%.Europeantake-upwasagainboostedbystrongactivityinParis,sustainedgrowthinGermany(withBerlinintheforefront)andcontinuedmomentuminSouthernEurope,particularlyinSpainandItaly.Weexpectthisupwardmovementtobemaintainedinto2016asamorewidespreadrecoverytakeshold.
Intermsofcompletions,4.2millionsqmofnewofficespacewereaddedtothemarketin2015.FranceandGermanycontributedwithalmost50%ofnewsupply,whileRussiaandCEEstillregisteranoversupply.Nevertheless,mostofficemarketsexperiencedafurthertighteningofspace,withthemajorityrecordingadecreaseinvacancyrates.Thelackofqualityspaceisunlikelytoberesolvedintheimmediatefutureduetoalimitedspeculativepipelinereportedinmostmarkets,howevertheofficepipelineisexpectedtoincreasegraduallystartingin2016,albeitarelativelyweakdevelopmentresponsecomparedtopreviouscycles.
TheEuropeanofficevacancyratedroppedto8.7%attheendof2015,thelowestvaluesinceQ12009.ThereturntotherentalactivityhadaparticularimpactonvacancyinWesternEuropeanmarkets,includingDublin(-420bps),Dusseldorf(-210bps)andStockholm(-200bps).TheUKremainsthemarketwiththelowestvacancyrates–3.4%inLondon.Officevacancyisexpectedtodecreasefurtherin2016withthestrengtheningofoccupiermarketsandalackofnewcompletions.
European Office Property Clock Q4 2015 – The JLL Property ClocksSM
Source:JLL
10| PortugueseRealEstateMarket
Europeanofficeprimerentsgrewmuchmorethantheaverage1.7%riserecordedinthelastyears.ExcludingMoscow(wherecurrencyvolatilitycontinuestoimpactonrents),theincreaseinEuropeanrentsreached2.7%during2015.LondonandGeneva,followedbyMoscow,remainthedominantmarketswiththehighestprimeofficerents.However,thestrongestperformingmarketsareDublin,StockholmandBudapest.Arentalgrowthof2%to3%ayearisprojectedforprimeEuropeanofficesinboth2016and2017.
Retail
ImprovedconsumerconfidenceisstillevidentacrossEurope,signsofeconomicrecoveryintheEurozonearefuellingoptimismandretailsalesareboostedbyagrowthinsalariesandrisingemployment.Europe’sretailsalesincreased3%during2015andareforecasttogrowby2.0%in2016,withdemandledbytheUK,Turkey,Spain,Sweden,CEEmarketsandtheBaltics.RegardingtheEurozone,slowergrowthisanticipated,withaforecastof1.5%between2016and2018.
Retailersarebecomingmoreprofessionalinformulatingtheobjective,risksandopportunitiesoftheirstores.Improvingeconomicconditionsincreasedthepressureonretailerstoachievesalesgrowth.Intheirexpansionstrategies,globalmarketsareinthehighestdemand,namely,LondonandParis,followedbyMoscow,MilanandMadrid.Furthermore,demandishighlyconcentratedonprimeassetsbothinshoppingcentresandunitshops.
RegardingShoppingCentres,4.8millionsqmofnewsupplywerecompletedin2015,slightlybelowthe2014completions–down4.4%.AtrendforrefurbishmentandextensionactivitiesisexpectedacrossWesternEurope’smaturemarkets,sinceagrowingportionofshoppingcentrestockisbecomingoutdated.Forecastsindicateanadditional12.6millionsqmwillbecompletedbytheendof2017,ofwhich52%arelocatedinRussia,TurkeyandUkraine.
PrimerentsforshoppingcentreshaveimprovedinalmosteverymarketthroughoutEurope(+1.9%),withGreece,UKandHungaryforecasttoseethestrongestgrowthof5.7%,5%and3.8%,respectively,between2016and2019.Inhighstreetretail,rentsmaintainedtheirstabilityinmostmajorEuropeancities.London,Dublin,HamburgandStockholmareexpectedtooutperformintermsofprimerentalgrowth,andEurope’srentsmightincrease1.8%until2019.
PortugueseRealEstateMarket| 11
PortugueseRealEstateMarket
Economy
2015wasayearwhereadegreeofeconomicstabilitywasattained.AccordingtotheBankofPortugal,in2015theGDPrecordedcontinuousgrowthinthefirsthalfoftheyear,slowingdowninthesecondhalf.Therefore2015endedwithaGDPgrowthof1.5%,greaterthanthe0.9%registeredin2014.Thisgrowthisexpectedtoremainmodestbutstable,withforecastsof1.7%and1.8%for2016and2017,respectively.
Inflationremainedlowwithratescloseto0%,andthisindicatorisexpectedtoriseto1.1%in2016and1.6%in2017.
Unemployment,whichhitarecordhighof17.4%in2013,begantodecreaseconsiderably,reachingarateof12.4%in2015.Thistrendisexpectedtocontinue,albeitlessdramatically,in2016and2017,reaching12.1%in2017.
Thebudgetdeficitdroppedsignificantly,evendespiteunexpectedfinancialshortages,namelybankbailoutsandnewcalculationmethods,suchastheacknowledgementofdebtofpubliccompanies,whichwasnottakenintoaccountbefore.Portugalreduceditsdebtfromahighof11.2%in2010toaforecastof3%in2015.Finally,debtattainedapproximately132%oftheGDPin2015,interruptingasharprisingtrend.
Therewerealsosomeimportantpoliticaleventsthatmayimpacttheeconomyinthefuture.
Thecentre-rightcoalitionthatwasinofficesince2011,wontheOctober2015election,butwasunabletoobtainthenecessarysupporttoformagovernment,supportthattheSocialistParty(PS),thesecondmostpopularparty,wasabletogarnerfromtheotherrepresentedparties.PresidentialelectionswerealsoheldinJanuary2016,wonbythecentre-rightcandidate.
“The GDP growth is expected to remain modest but stable, with forecasts of 1.7% and 1.8% for 2016 and 2017, respectively.”
12| PortugueseRealEstateMarket
Main Economic Indicators Evolution
Inordertoincreasegrowthviaprivateconsumption,thecurrentgovernment’sprincipalmeasuresaretoreversesalarycutsandreducesomedirecttaxes.Othermeasureshavealsobeenproposedandarestillunderassessment,withpossibleconsequencesfortherealestatesector:anincreaseinmunicipalpropertytax(IMI)forcommercialassets;andtherevocationoftaxexemptionfrommunicipalpropertytax(IMI)andpropertytransfertax(IMT)forrealestateinvestmentfundsandpensionfunds.
External Factors
2016willstillmaintainsomeexternalitiesthatimpactthecountrydirectly.
Tonote,theECBshallmaintainthepurchaseofEuropeantreasurybondsuntilSeptember2016.However,EUandECBstatutesdemandthatatleastoneofthe4recognisedinternationalagencies(DBRS,Fitch,S&PandMoody’s)ratethecountry’sdebtabove“junk”status,aminimumrequirementthatPortugalonlyfulfilsaccordingtotheagencyDBRS,temporarilyguaranteeingsomestabilityforinterestratesonPortuguesepublicdebt.
TherearealsosomefactorsthatmaybenefitPortugal:Euriborrates,withminimumsaround0%,thelowvalueoftheeurocomparedwiththedollarandthedropinoilprices,theselasttwoprovingbeneficialforourtradebalance.
Themostnoteworthyeventsexpectedin2016areBritain’spossibleexitfromtheEuropeanUnion,or“Brexit”;adecreaseintheperformanceofBRICSandsomedevelopingcountrieswithdirectimpactonPortugal,suchasAngolaandVenezuela;andfinally,politicalunrestintheMiddleEastandtherefugeecrisis,whichaffectbothEuropeandtheWorld.
14%
9%
4%
-1%
-6%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2017 (f)2016 (f)2015
GDP Private Consuption Unemployment Rate Inflation Rate
12.4%
2.7%1.5%
0.5%
Source:BancodePortugal
PortugueseRealEstateMarket| 13
Office Market
Mariana RosaHeadofOfficeAgency&CorporateSolutions
PortugueseRealEstateMarket
If2014wastheyearofgrowth,2015markedtheconsolidationofthatgrowth.TheactivityofLisbon’sofficemarketshowedgreatpositivisminallofthemainindicators:thetake-upvolumeincreasedcomparedwiththepreviousyear,theaverageareaoccupiedalsogrew,theexpansionofofficespaceandentryofnewcompaniesintothemarketsignificantlyincreasedtheirshareofthetotalarealeasedandprimerentsroseinsomeofthecity’sofficezones.
Thesearehighlyfavourableindicatorsthatpointtoagoodlevelofbusinessconfidence,withcorporationsmaintainingadynamicdemandfornewofficesthroughout2015,showingagreaterpropensitytooccupylargerspaces,whetherbychangingpremisesorexpandingtheareaoccupiedinthesamebuilding.Throughouttheyear,therewere28operationsinvolvingmorethan1,000sqm,5morethanin2014,mostofwhichwerecarriedoutbycompaniesinthecallcentre/backofficesector.
Thistrendisexpectedtocontinuetodrivetheofficemarketthroughout2016.Thereisanincreasingnumberoflargeinternationalcorporations,namelyintheITsector,thatchooseLisbontosetuptheircallcentresortechnologicalcentres.AsidefromcompetitiverentsandsalariesincomparisonwithotherEuropeancountries,Portugal,andLisboninparticular,hasmanystrengthscomparedtoothermarkets.Thereisexcellentqualityoflifeatlowercost,afantasticclimate,culturaldiversity,security,stabilityandmanyotherattributesthatmaketheleadingmultinationalsregardPortugalasoneofthebestcountriestoworkin.
Consideringtheimportanceofthistypeofdemandforourmarket,itiscrucialthatwepayattentiontothereducedsupplyofnewofficesinrecentyears,aswellastheshrinkingvacancyrates.Itistruethattherearemorethan500thousandsqmofvacantofficesinLisbon’smarket,buttherearezones,suchasthecitycentreandParquedasNações,wherevacancyisindeedverylow.Ontheotherhand,notalloftheavailableproducthasthequalityandconditionstomeet
therequirementsdemandedbycompanies,especiallyinternationalcorporationswhosestandardsandlayoutsaredictatedbytheparentcompany.Therefore,therenovationandmodernisationofthesespacespresentsanopportunityforownerstoplacetheirbuildingsonthemarketmorequicklyandsuccessfully.
AfinalnoteregardingPorto.Thisisagrowingmarketthatisstronglydrivenbyspacesleasedbycompaniesintheservicesindustry.Withverycompetitiverentsandspecialisedlabour,wearecurrentlywitnessingadriveinthismarketthathadbeenabsentforalongtime.
14| PortugueseRealEstateMarket
Consolidated Growth
After2014,whichmarkedtheofficemarket’sreversalofthedownwardtrajectoryinitiatedin2009,2015presentedacontinuousriseinthetake-upvolumethroughouttheyear,indicatingthemarket’sconsolidation.Withatotalofficetake-upofapproximately144,500sqm,2015grew14%comparedwith2014.
ThisevolutionwasduenotonlytothestablegrowthdemonstratedbythePortugueseeconomy,butalsototheriseinbusinessconfidence,anindicatorthatrosesteadilythroughout2015.Thisconfidence,combinedwithmarketconditionsthatfavouredthetenant,promptedmanycorporationstoimplementtheirrealestatestrategiesandupgradetheirpremises,bothintermsofspaceandquality,butalsolocation,takingadvantageofconditionsthatarebecominglessbeneficial,withlandlordsshowinglessflexibilityintheirnegotiationswithtenants.
Rentshavethusreachedtheendoftheirdownwardcycle,andthemostdynamiczoneswithlessvacancyrecordedthefirstincreases.
Demand
Ifweanalysetheevolutionoftake-upoverthelastdecade,therearetwodistinctmoments:thepre-crisisperiod,whichrecordedayearlyaverageofapproximately180,000sqm,andthecrisisperiod,where
10
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-5
-10
-15
-20
-25
-30
-35
-40
Jan.
07
Jan.
08
Jan.
09
Jan.
10
Jan.
11
Jan.
12
Jan.
13
Jan.
14
Jan.
15
Jan.
16
Seas
onall
y adju
sted v
alues
Services Confidence Indicator
Evolution of The Services Confidence Indicator
Evolution of The Services Confidence Indicator
thisaveragedroppedto100,000sqm.Indeed,asof2008,officetake-upbegantodecreaseyearafteryear,bottomingoutin2013withthelowestvolumeeverrecorded(77,800sqm).Thesetake-uplevelsreflectedcompanies’highlycautiousattitude,withdecisionsbasedonstrictstrategiestooptimizecosts.However,in2014wewitnessedachangeamongcompanieswhere,afterseveralyearsofrestraint,theybegantoreassesstheirrealestatestrategies,therebyinitiatingasignificantimprovementinofficetake-up.
2015wasthereforetheyearthatconfirmedtheupturnoftheofficemarket,withatotalgrosstake-upofapproximately144,500sqm,representinga14%growthcomparedwiththepreviousyear.Nettake-upalsorosesignificantly.Theexpansionofofficespaceandentryofnewcompaniesintothemarketincreaseditsshareinthetotalareaoccupied,representing46%,comparedwith28%in2014.However,operationstochangepremisespredominatedwith55%oftheareaoccupied,whichconfirmsamindshiftincompaniesregardingtheirinvestmentinimprovingtheiroffices.
Inatotalof257operations,theaverageareaperoperationalsoincreasedcomparedwiththeaverageareaof529sqmrecordedin2014,reaching562sqm.Thebasisofthisriseisthenumberoflarge-scaleoperations-above1,000sqm–whichgrewfrom23in2014,to28operationsin2015.
Inazonebyzoneanalysis,theCBDwasthemostactivein2015,witha20%shareoftheareatakenup.Thesecondlargesttransactionoftheyeartookplaceinthiszone,namelyatotal
Source:JLL/LPISource:INE
250
200
150
100
50
0
GLA
(thou
sand
sq m
)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
149162
201
233
116 10588
10278
127145
Evolução Anual da Absorção de Escritórios
Evolution of the Annual Office Take-up
PortugueseRealEstateMarket| 15
Source:JLL/LPI
GLA (sq m)
0 5,000
13,995
16,668
10,898
28,220
21,492
28,020
25,220
10,000 15,000 20,000 25,000 30,000
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
Take up by Zone - 2015
Office take-up by Zone – 2015
expansionof8,400sqmofofficesoccupiedbyTeleperformanceintheÁlvaroPaisbuilding.TheWesternCorridorcomesnext,historicallythezoneinhighestdemandduetoitsofferoflargeareasperfloor,whichisdifficulttofindintheLisboncentre,andduetotheconsiderablerentadjustmentsownerswereforcedtomakeduringthecrisisperiodtoattractcompaniestotheirproperties.ThereforetheWesternCorridorrepresented19%ofthetake-upvolumein2015.ParquedasNaçõesfollows,with17%oftheareaoccupied,showingoneofthegreatesttake-uprecoveriesinrecentyears.Modernbuildingsandagoodnetworkofinfrastructures,alongwithverycompetitiverents,makethisoneofthezonesinhighestdemand.
The“TMT’s&Utilities”sector,aswellas“BusinessServices”,representedmorethan50%oftheareatakenupthroughout2015,bothwithgreatinfluencefromcompaniesinthecallcentreandbackofficeservices.Weestimatethatthistypeofactivityhassurpassed19,000sqmoftheareaoccupiedin2015,andischaracterisedbytheneedforlargeofficespaces,asdemonstratedbyTeleperformance’sexpansion.Infact,lately,manymultinationalcorporationshaverelocatedthesetypesofservicestoPortugal,attractedbythecompetitiveoccupancyandqualifiedlabourcostscomparedwithotherEuropeancountries,aswellasthestrongpointsPortugaloffersintermsofqualityoflife.
Top 10 Office Deals in 2015
Zone Building Tenant GLA(sqm)
4 EDPHeadquarter EDP 13,9001 Castilho24 BancodePortugal 7,1612 ÁlvaroPais Teleperformance 5,5446 ParqueSuécia-Ed.SuéciaII Worten 4,0857 GagoCoutinho26 BNPParibas 3,0952 ÁlvaroPais Teleperformance 2,8342 DefensoresdeChaves,45 Allianz 2,7406 CentralPark Outsystems 2,4576 Zenith Unit4 2,2465 TorreFernãodeMagalhães Webhelp 2,138
Source:JLL/LPI
Source:JLL/LPI
Construction & Real EstateConsultants & Lawyers
Financial Services
State, Europe and AssociationsPharmaceutical & Health
Consumer ProductsBusiness Services
TMT's & Utilities
Other Services
4%8%
6%
8%
7%
25%
15%
26%
1%
Take up by Sector - 2015
Office take-up by Sector – 2015
Supply
TheofficemarketinLisboniscomprisedofatotalstockof4.6millionsquaremetres.ThezoneswherethisstockismostconcentratedaretheCentralBusinessDistrict(CBD)andtheWesternCorridor,with24%and20%shares,respectively.
16| PortugueseRealEstateMarket
Onlytwoofficebuildingswerecompletedin2015,bothinthe3rdquarter.Withatotalofapproximately21,000sqmofnewsupply,2015wasinlinewith2014,whentherewerealsoonlytwonewbuildingscompleted.Comparedwiththeaverageofthepast10years,whichisapproximately55,000sqm,thelastfouryearsclearlyshowthedifficultiesmanydevelopershaveexperienced,namelythelackoffinancingfrombanksforrealestatedevelopment.Thissituationisreflectedinthefactthatallnewsupplyisowner-occupied:thebuildingforthenewEDPheadquartersinLisbon’sHistoric&Riversidezonewithatotalof13,900sqm,displayingthisarea’sattractivenessforofficeuse;andtheEdifícioCastilho24buildinginthePrimeCBD,whichresultedfromtheregenerationof7,000sqm,belongingtotheBankofPortugal’sPensionFund.
Source:JLL/LPI
GLA (sq m)
0 200,000 400,000 600,000 800,000 1,000,000 1,200,000
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
Stock by Zone - end of 2015
390,225
484,017
597,767
908,775
359,149
768,003
1,075,873
Occupied Area Vacant Area
Stock by Zone – end of 2015
Source:JLL/LPI
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
5.00
4.00
3.00
2.00
1.00
0.002005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2017
(f)2015 2016
(f)
57,491
4.05 4.12 4.20 4.28 4.35 4.45 4.51 4.53 4.55 4.56 4.58 4.60 4.64
88,478
73,76282,154 77,662
85,497
54,259
21,70534,631
20,63521,061
17,000
41,100
New
Supp
ly (sq
m)
Stoc
k (sq
m)
New Supply Pipeline Stock
Evolução da Oferta de Escritórios
Office Supply Evolution
Vacancy
Therecentdynamicreflectsthereductioninthevacancyrate,whichwas11.1%attheendof2015.Thedropof232basepointsthathastakenplacesincethepeakin2013isduenotonlytoanincreaseinofficeoccupancy,butalsotothereduceddevelopmentofthistypeofpropertiesinrecentyearsandtheconversionofsomebuildingsforresidentialuse,namelyinLisbon’scentralzones.
ParquedasNaçõeswasthezonethatregisteredthegreatestdecreaseinvacancy,droppingfromitspeakof26.7%in2010to4.8%inthefourthquarterof2015,withcurrentlyonly17,500sqmofavailableofficespace.Thissituationisduetoacombinationofseveralfactors:reducedstock,alongwiththeconsolidationofrealestatedevelopmentandtheeffectiveandcriticaladjustmentofownerstothecrisis.Ontheotherhand,theWesternCorridorcontinuestodominateintermsofvacancy,concentrating41%ofthetotalvacantareainLisbonandpresentinga23.1%vacancyrate,belowthe27.3%recordedin2013.
Zone Building Developer Type GLA(sqm)1 Castilho24 F.PensõesBancoPortugal OwnerOccupier 7,1614 EDPHeadquarter Mota-Engil OwnerOccupier 13,900
Source:JLL
Office Competitions – 2015
PortugueseRealEstateMarket| 17
Thus,2016beganwithatotalof510,000sqmofavailablespace,approximately43,000sqmlessthaninthepreviousyear.However,notalloftheavailableofferpresentsthequalityandconditionstomeetthedemandsofcompanies,particularlyinternationalcorporationswhohaveveryhighstandards.Ontheotherhand,theofferofqualityspacesshouldcontinuetodiminishsincethepipelineofnewproducthasbeen,andcontinuestobe,quitereduced.
Future Supply
6newbuildingsareexpectedtoenterthemarketin2016and2017,withatotalareaof47,100sqm.Ofthese,threebuildingsarebeingdevelopedspeculatively,resultinginatotalof29,400sqmofnewofficespaceonthemarket.Twoadditionalbuildingswillalsoenterthemarket,bothpre-leased,intheHistoric&Riversidezone,
Source:JLL/LPI
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
23.1%
13.1%11.1%9.5%8.8%5.8%4.8%
Evolution of Vacancy Rate by Zone
Prime CBD CBDWestern CorridorNew Offices Area Historic & Riverside Zone
Parque das Nações Total
Evolution of Vacancy Rate by Zone
Source:JLL/LPI
52,424
103,737
64,488
22,737
17,414
210,165
38,956
GLA (sq m)
0 50,000 100,000 150,000 200,000 250,000
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
Área Disponível por Zona - final de 2015Available Area by Zone – end of 2015
aswellasabuildingtobeowner-occupiedintheNewOfficeArea.Theincreaseintheportionofbuildingsbeingdevelopedspeculativelyrevealsthegradualreturnofconfidencefromdevelopersinthissector.Therearecurrentlyonlytwobuildingsintheprojectphase,totallingapproximately30,000sqm,oneofwhichisthethirdColomboTower,placingapproximately24,000sqmofspeculativeofficesonthemarket,althoughthecompletiondateisyettobedetermined.
Rents
Rentsaccompaniedthemarketdynamicandthesupplyvs.demandrelationship.Afterheavypressureonrentsduringthelastyears,withdemandsufferingforit,somezonesinvertedtheirdownwardtendencyattheendof2015.ThePrimeCBDandParquedasNaçõesregisteredthefirstincrease,to18.5and14€/sqm/month,respectively.
Building Zone Developer GLA(sqm) Type Conclusion(Q/Year)LagoasParkBuilding9 6 TeixeiraDuarte 4,900 Speculative Q12016EdifícioSantanderII 3 BancoSantander 6,000 OwnerOccupier Q42016MarquêsdePombal14 1 Narcipromov 5,000 Speculative Q42016República5 2 Puaça 6,100 Speculative Q42016EdifícioSorel 4 Fidelidade 8,600 Pre-let Q12017OfficeBuildinginSta.Apolónia 4 Fidelidade 8,000 Pre-let Q12017FontesPereiradeMelo41 1 ECSCapital 19,500 Speculative Q42017Torre3Colombo 3 Sonae/CBREGlobalInvestors 24,000 Speculative -
Source:JLL
Future Supply
18| PortugueseRealEstateMarket
Source:JLL
Prim
e Ren
ts (€
/sq m
/mon
th)
25
20
15
10
5
0
18.50
15.0014.5014.00
11.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Evolução das Rendas Prime por Zona
Prime CBD CBDWestern CorridorNew Offices Area
Historic & Riverside Zone Parque das Nações
Evolution of Prime Rents by Zone
Theofficemarketisexpectedtomaintainitspositiveperformancein2016,providedthecountry’seconomicconditionsandstabilityremainfavourable,aswellasbusinessconfidence,whichhasimprovedinthelasttwoyears.Wealsoanticipatethattheimplementationofcallcentresandbackofficeserviceswillcontinuetoplayarelevantroleintheofficemarket’sactivitythroughoutthisyear.
Rentsshouldmaintaintheirupwardtrajectory,albeitgradually,especiallyinthezoneswithlessvacancyorinsomebuildingsofsuperiorquality.
FuTuRE PROSPECTS
TheWesternCorridorfollowed,rising1€/sqm/monthattheendoftheyearto11€/sqm/month,asituationthatrelievedsomeofthepressureexertedonlowrentsthathasbeenfeltinthiszone.Therefore,themarketismovingtowardsgreaternegotiatingbalancebetweenownersandtenants,sincevacancyisbecomingincreasinglyscarce.
PortugueseRealEstateMarket| 19
SANTAAPOLÓNIA
CAIS DO SODRÉ
TAGUS RIVER
TERREIRO DO PAÇO
CHIADO
BAIXA
SALDANHA
MARQUÊS DE POMBAL
PARQUEEDUARDO VII
RATO
AMOREIRAS
MONSANTOFOREST PARK
BELÉM
ALGÉS
COLÉGIOMILITAR
PONTINHA
CAMPOGRANDE
CIDADEUNIVERSITÁRIA ROMA
CAMPOPEQUENO
ALVALADE
OLIVAIS
ORIENTE
AREEIRO
SETE RIOS
PRAÇADE ESPANHA
BENFICA
AMADORA
LISBON AIRPORT
Av. A
lmira
nte
Rei
s
Av. da Índia
Av. 24 de JulhoAv. d
e C
euta
Av. Inf
ante
Santo
R. Maria Pia
Av. D. C
arlos I
Av. d
a Po
nte
Av. d
as D
esco
berta
s
Av. da Liberdade
Av. Joaquim A. Aguiar
Av. António A. Aguiar
R. B
raan
cam
p
R. A. Herculano
Av. da República
Av. de Rom
a
Av. do Brasil
Av. E. U. A.
Av. Marechal Gomes da Costa
Av. de Berlim
Av. A
lmira
nte
Gag
o C
outin
ho
Av. Santo Contestável
Alm
irant
e D
. Hen
rique
2.ª Circular
2.ª Circular
Av. 5 de Outubro
Av. de Berna
Av. LusíadaEixo N
orte-Sul
Eixo
Nor
te-S
ul
CRIL/IC17
CRIL/IC17
CRIL
/IC17
CRIL
/IC17
A5
A5
Av. dos Combatentes
Av. Duque D’Ávila
PONTE 25 DE ABRIL
A2/SULALGARVE
Map of Lisbon’s Office Areas
Zone1Prime CBD
Zone2CBD
Zone3NewOfficesArea
Zone4Historic&RiversideZone
Zone5ParquedasNações
Zone6WesternCorridor
Zone7Otherzones
20| PortugueseRealEstateMarket
2015confirmedthetrendsthatwereinitiatedin2014,underlininganundeniableboostintheretailmarket,bothinhighstreetretailandshoppingcentres.
Inthislastsegment,andafterayearwithoutanyopeningsin2015,therearecurrentlytwoprojectsunderdevelopment:ashoppingcentreintheAlgarve,developedbyIkeaCentres,duetoopenin2017,andtheNovaArcadainBraga(ex-DolceVitaBraga),whichwasonstandbyforseveralyearsandwillalsoopenwithanIkeastoreatthebeginningofthisyear.Retailerdemandforthistypeofshoppingcentreshasbeenverypositive,aswellasforprimecentresthatarealreadyoperating,wheremuchactivitytookplacethroughouttheyearwiththeopeningofnewshopsandtheredesignofothers.
Asforhighstreetretail,wehavebeenwitnessinganavalancheofprojectsthathavehelpedassertthecityofLisbonimmensely.ThecontinuousevolutionofAvenidadaLiberdadeisareality,withnewbuildingsundergoingregenerationandshopsopeningeveryyear.ThesameistakingplaceonRuaAugustaandintheemergingzoneofCaisdoSodré,especiallyintherestaurantsegment,phenomenathatareassociatedwiththeremarkableRibeiraMarket,thenewEDPheadquartersandthesurprisingPinkStreet.
ThusthenumerousretailzonesinLisbonarestartingtobecomeincreasinglyconnected,withregenerationandtheofferofcreativeandinnovativeproductsandservicesattractingagrowingnumberoflocalsandnon-locals,unquestionablyhelpingrepositionLisbonasanextremelyrelevantcityontheinternationalscene.
PortugueseRealEstateMarket
Patrícia AraújoHeadofRetail
Retail Market
Thankfully,thistrendhashadfollow-upinPorto,whereagoodpartoftheBaixazone(Clérigos,Aliados,RuadeSantaCatarinaandRuadasFlores)hasbeenwitnessingadrivethathadbeenlongabsentregardingtheopeningofnewretailspaces.
2016willbeayearofconsolidationofthistrend,bothinLisbonandPorto,withbothofthesecitiesbecomingincreasinglysurprisingandattractive.
PortugueseRealEstateMarket| 21
Maintaining momentum
Theretailmarketwasseriouslyaffectedbythecrisis.Salesdroppedandconsumerswereforcedtochangetheirconsumptionhabits,becomingmoredemandingandadaptingtheirspendingtoalessfavourablecontext.Thustheconsumerbecamelessloyal,forcingretailerstoadjusttothese“new”needs,needsthat,duringthecrisisperiod,causedamassreductioninretaildemand,makingconsumersvaluetheexperience,convenience,customizedserviceandnewconceptsthatretailbegantooffer.Duringthisperiod,thisnewtrendledtonewconceptsofcommunityandproximity,makinghighstreetretailthe“star”oftheretailmarketforthepastthreeyears.
Nevertheless,featuressuchastheconvenienceanddiversityofferedbyshoppingcentresmaintainedahighdegreeofconsumerinterestanditisnocoincidencethatshoppingcentreshavealwaysbeenthepreferredshoppingdestinationamongPortugueseconsumers.Inalessfavourablecontext,shoppingcentreswerealsoforcedtoadapt,andwhileprimedevelopmentsmaintainedtheirpositiveperformance,secondaryunitscontinuetoexperiencedifficulties.However,2015wasalsotheyearforrenovationandregeneration.Withlessuncertaintyregardingtheeconomiccontext,severalsmall-scaleshoppingcentreswereabletotakeadvantageofthenewconsumptiontrendstoreadjustandimplementmodernconceptsofconvenienceandproximity,suchasCentroComercialdeAlvalade.
Source:INE
10
0
-10
-20
-30
-40
-50
-60
Consumer Confidence Index (3MMA)Retail Confidence Index (3MMA)
Jan.
05
Jan.
06
Jan.
07
Jan.
08
Jan.
09
Jan.
10
Jan.
11
Jan.
12
Jan.
13
Jan.
15
Jan.
14
Confidence Index EvolutionConfidence Index Evolution
Asasignofmarketimprovement,boththeConsumerConfidenceIndexandRetailerConfidencemaintainedtheupwardtrajectorywitnessedin2014.Thus2015endedwiththehighestlevelsintheRetailerandConsumerConfidenceindexesachievedinthisdecade.
Retail Developments
Attheendof2015,JLLrecorded170retaildevelopments(withanareaabove5,000sqm),totallingapproximately3.6millionsqmofgrosslettablearea.
Whenit’stimetogoshopping,shoppingcentresareundeniablythefirstchoiceamongPortugueseconsumers,andthisformatdominatesthemarketwithatotalof2.8millionsqm,inotherwords,80%ofthetotalstock.However,thegreatvolumeofretailofferandtheretractioninconsumptionwitnessedoverrecentyearsbroughtaboutasubstantialdisparityintheperformanceofprimeandsecondaryunits,asituationthatisexpectedtocontinueinthemediumterm.TheColombo,VascodaGamaandCascaiShoppingcentresintheLisbonregion,andNorteShoppinginPorto,whichallbelongtotheSonaeGroup,arethemainleadersinthesector.Theseshoppingcentresareingreatdemandamongretailers,andtheirvacantspacesareoccupiedquickly.InPortugal,shoppingcentreshavehadapredominantlymass-marketpresence.However,theyarealsobeginningtobesoughtoutbypremium
Source:JLL
500
400
300
200
100
0
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0
New
Supp
ly (th
ousa
nd sq
m)
Stoc
k (mi
llions
sq m
)2.222.46
2.672.99 3.16 3.26 3.37 3.37 3.37 3.38 3.38 3.54
2006
234
2005
198
2007
215
90
2017(f)
2014
6
2013
0
2015
0
20162012
0
2008
318
2009
175
2010
95
2011
112
3.45
68
New Supply Pipeline Stock
Evolução da Oferta de Escritórios
Evolution of Retail Developments SupplyEvolution of Retail Developments Supply
22| PortugueseRealEstateMarket
brands,withCentroColomboandtheAmoreirasShoppingCenterstandingoutinthissegment,bothingrowingdemandamongtouristsandforeignconsumers.
Nonetheless,thecrisis,alongwiththematuritythatthemarketattainedinthemeantime,ledmostprojectsthatwereinthepipelinetobecancelled,bringingyearsofbleaknessintherealestatedevelopmentofthisclassofassets.Afteralmost3yearswithnoopeningsofnewretaildevelopments,attheendof2014,theAlegroSetúbalopenedandthepipelinehassincethenbeenreducedtotwoprojects:theNovaArcadashoppingcentreinBraga,whichhasapproximately68,000sqm,andopeningdateon1stquarterof2016,andtheretailcomplexintheAlgarvedevelopedbyIKEACentres,withapproximately90,000sqm,bothanchoredbyanIKEAstore.Evenso,despitetheshortpipelineofnewdevelopments,andconsideringthemarket’smaturity,manyshoppingcentresareinvestinginregeneration,modernizingtheirobsoletespacesandconcepts,successfullyadaptingtothemarket.
Retailparks,withasharearound12%,presentasimilarscenario,aggravatedonlybythelackofretailersinPortugalforthisformat.Inmanycases,thetopretailersgiveprecedencetostand-alonelocations,duetotheabilityofthebrandsthemselvestoattractcustomers.SintraRetailParkcontinuestostandoutdistinctlyasthebestdevelopmentofthisformatinPortugal,receivinggreatdemandfromtenantsandabove-averagerentsforthissegment.
Ontheotherhand,outlets,withonly3%ofthetotalstock,endedupbenefittingfromthecrisisduetotheirassociationwithhighlydiscountedprices.However,fullpriceshopshavealsoimplementedstrategiestoopposefallingsales,andendedupcompetingwiththeoutletstores.Freeport,intheLisbonregion,andViladoConde’sTheStyleOutlet,inthePortoregion,arethecountry’sleadingoutlets.
High Street Retail
AsteepriseintourismhasbeentheprincipalcatalystforthegreatboostthathastakenplaceinhighstreetretailintheconsolidatedareasofLisbonandPorto,sincemostnationalandinternationalretailersseekstreetshopsthatplacethemincloseproximitytoforeignconsumers.NewtrendsinPortugueseconsumptionhabits,alongwithademandfornewretailformatsandnewexperiences,aswellasthechangesmadetotheUrbanLeaseLawin2012,alsoplayedanimportantpartinthismarket.
2013registeredtherecordhighintermsofopenings,withmorethan40newshopsinthe6mainzonesofLisbonandPorto.2014,whichalsoboastedalmost40openings,maintainedthismomentum.In2015,theestimatednumberofstreetshopopeningswaslower,althoughdemandremainsundeniablyhighandisseriouslylimitedbythelackofvacantspaces.
High Street Retail – Main Openings in 2015Occupier LocationGuessPorcheDesignTumiBoutiquedosRelógiosPlusOtroCoccinelle
Lisboa–Av.daLiberdade
AdidasWell’s
Lisboa–Baixa
BurgerKing
CantêLx
NewBalance
Nuteleria
HamburgueriaHonorato
Pull&Bear
Gelatiamo–CafféBistrô
Ale-Hop
Oysho
Tiger
Lisboa–Chiado
100Montaditos
PizzariaZeroZeroLisboa–PríncipeReal
Source:JLL
Main Projects in Pipeline
Name Developer Status Opening GLA(sqm)
NovaArcada(ex-DolceVitaBraga) CGD InActivity Q12016 68,000
ShoppingCentreinAlgarve
IKEACentres Leasing 2017 90,000
ÉvoraShopping NovoBanco UnderConstruction n.d. 16,500
Source:JLL
PortugueseRealEstateMarket| 23
Retailerspositionthemselvesinareasthatarewellconsolidatedorwithgreattouristfootfall,thatsetthemapartthroughtheproductsonofferandbrandsthattargetdifferentconsumerprofiles.And,indeed,thezonesthatbestrespondtotheserequirementshavefaredbetterinthemarket.Atthesametime,newsiteshaveemergedtothedetrimentofothersthathavelosttheirrelevanceasshoppingdestinations.
Regardingtheconsolidatedareas,wehighlightChiado,theprimeandtrendyzone,withmassmarketlabelsandamedium-highpositioning,undoubtedlyoneofthezonesinhighestdemand.ThisistheaddressofbrandslikeZara,H&MandMassimoDutti,butalsoHugoBossandHermès.AvacantspaceonRuaGarrettcanreach120€/sqm/month,andsomebrandsarewillingtopaykeymoneyduetothelackofvacancies.Despitethis,thiszoneregisteredthehighestnumberofnewopenings,wherewehighlightyetanotherInditexGroupbrand–Oysho–aswellastheDanishstore–Tiger–whichhasmaintainedaveryactiveexpansionstrategy.
Baixa,whichhousesthestreetwiththehighestfootfallinLisbon–RuaAugusta–attractsmainlytouristsandretailerswhowanttobeclosetothismarket.Amongtraditionalshops,restaurantsandthelargermassmarketchains,Baixahasenjoyedgrowingdemandsince2014.Therearecurrentlyseveralbuildingsundergoingregenerationinthiszone,whichmayleadtonew,qualityretailspaces.
AvenidadaLiberdade,thefavouritezoneamongluxurybrands,hasmaintainedsteadydemandandcurrentlyhasseveralvacantspacesduetothecompletionofseveralprojectsandrecentlyrenovatedbuildings.Anumberofstrategiclabelsareexpectedtoopeninthiszone,therebyassertingtheAvenidaastheaddressforluxuryretail,suchasVersace.
PríncipeRealstandsapartasthemostalternativezone,combiningseveraluniqueandentrepreneurialconceptsofpredominantlyPortugueseorigin.
RuaCastilhohasbeenthelocationofseveralshopsinthepremiumsegment,yetsomeretailersarecurrentlymovingtoAvenidadaLiberdade,suchasLojadasMeiasandCoccinelle.Whilethiszoneislosingsomeofitspopularity,theCaisdoSodrézonehasemerged,becomingparticularlyrelevantforrestaurantconcepts,whilealsobeingincreasinglyindemandforoffices.
HighstreetretailhasgainedprominenceinPortoaswell,alsoinfluencedbythegreatincreaseintourists.Twozonesstandout:RuadeSantaCatarinaandClérigos/Aliados.WhileRuadeSantaCatarinatargetsmostlythemassmarketsegmentandClérigos/Aliadosismoretargetedtowardsthepremiumsegment,bothareinhighdemandamongbrandswhowishtoexpandtothiscity.
Rents
Giventhismarketdrive,rentsgenerallypresentedapositiveevolutionin2015.Inprimeshoppingcentres,rentscanreach95€/sqm/month,representinga10€/sqm/monthrisecomparedwith2014.ExceptforRuaCastilho,allhighstreetretailzonesalsoregisteredrentincreases.WehighlighttheBaixaareaofLisbonandRuadeSantaCatarinainPorto,whoserentsrose25€,to85€and50€/sqm/month,respectively.AvenidadaLiberdadeandPríncipeRealincreased5€/sqm/month,withrentsreaching90€and40€/sqm/month,respectively.Andlastbutnotleast,Chiadoroseto120€/sqm/month.
Source:JLL
€/sq m
/mon
th
140
120
100
80
60
40
20
0
120.00
95.00
50.00
10.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 20152014
Shopping Centres High Street Retail Lisbon Retail ParksHigh Street Retail Porto
Evolution of Prime RentsEvolution of Prime Rents
24| PortugueseRealEstateMarket
Weanticipatethetrendsandmomentumin2016willpresentasimilarscenarioasin2015.Shoppingcentreswillcontinuetoexhibitadisparitybetweenprimeandsecondaryunits,whileanewdevelopmentisfinallyexpectedtoemergeinBraga.Inhighstreetretail,thetendencythatbegantoshowthisyear
shouldbecomeclearer,withnewzonesemerging.Therentsthatincreasedtorecordhighsmayriseevenmoreinsomezonesbut,giventhecurrentvalues,thisgrowthisnotexpectedtobeaspronouncedasitwaslastyear.
FuTuRE PROSPECTS
PortugueseRealEstateMarket| 25
Lrg. Luís de Camões
Lrg. da Trindade
Lrg. de S. Carlos
R. Garrett
R. do
Car
mo
R. N
ova d
o Alm
ada
Lrg. do Chiado
R. N
ova d
a Trin
dade
R. da Trindade
Travessa do CarmoR.
Ser
pa P
into
R. do
Alec
rim
R. A
nt. M
ª Card
oso R.
Paiv
a And
rade
R. A
nchie
tta
R . d
a Mes
ericó
rdia
Lrg. do Loreto
R. Iv
ens
1 2
34
71
657
1819
8 9
20 21 22 23 2425
1011 12 13 14 15 16 17
26 27 28
30
29
31
3233 43
55
54
5657
58
59
6061
7069
68
53
46
45
4434
35
36 47
37
3848
39
404950
5152
4142
6362
64
65
66
67
8984
85
86
90
91
9288
87
83
82
817978
77
8073
7475
76
72
9493
95
97
96
98
99100
102
101
Chiado High Street Retail Map
Main Brands
Leitão&IrmãoVistaAlegreSalsaHermèsGuessCasaHavanezaZilianDuPareilauMêmeHugoBossStradivariusGardeniaTousHavaianasProfBershkaSwarovskiGeoxU.C.ofBenetton
2
14
8
20
5
17
11
3
15
9
6
18
12
1
13
7
19
4
16
10
ParisemLisboaLivrariaBertrandVitaminasAndréÓpticasLanidorIntimissimiBlancoImaginariumNikeMassimoDuttiZaraÓpticadoSacramentoHugoBossOyshoNespressoSantiniPerfumes&CompanhiaFootLocker
30
27
23
33
25
21
31
28
24
34
29
26
22
32
36
39
37
40
35
38
42
43
41
44
48
54
51
45
49
55
52
46
47
53
50
56
ZaraHomeW52MujiNewBalanceLuvariaUlissesJoalhariadoCarmoArmazénsdoChiado:FnacKikoCosmeticSephoraStarbucks
SpringfieldWomen’SecretH&MGMSStoreAppleAle-HopLivrariaAilludLellosOculistadoCarmo
100
101
102
97
98
99
SoChicChiadon.º8Levi’sAdolfoDominguezBonpointAldeiadaBolotaPadariaPortuguesaDieselJorgeWelshChiadoFactoryUp!TownLisboaTMColectionOrganiiJoséAntonioTenenteMikelsGardeniaforMan
82
79
80
81
78
77
HarmourConceptRoofKiehl´sEmpatiasSacolinhaSkinlifeBairroArteMarcJacobsGodivaLojadoBurelQuiosquedasBonecasCubanasAVidaPortuguesaOrganiCosméticaPopTraditionGardeniaG-StarRawIzuChiado
85
83
86
84
91
88
89
90
87
96
94
92
95
93
64
61
57
59
62
58
63
60
66
65
AccessorizeMultiOpticasPepeJeansBenefitSkunkfunkOctoberTeresaAlecrimLivrariaFerinTendênciaStoreIntukasaEurekaShoesPull&BearTigerElGansoSacoorBrothersSandroFerroneWESCInterdesign
67
68
70
73
72
69
71
76
74
75
26| PortugueseRealEstateMarket
Marquês de Pombal
ParqueEduardo VII
Avenida da Liberdade
Prç. da Alegria
Restauradores
R. do Salitre
R. Ale
xandre
Hercu
lano
R. Ba
rata S
algue
iro
R. Ro
sa Ara
újo
R. Alex
andre
Hercula
no
R. da
s Pret
as
1
34
10
7
89
1514
13
1617
1819
2221 23
2425
2627
2829
4342
41
30
3332
31
4544
4746
4950
515253
54
595857
55 56
6061
6263
64
65
1112
3435
3738
4039
36
48
2
20
56
Avenida da Liberdade High Street Retail Map
Main Brands
19
LuisOnofreGonçaloPinheiroTruTrussardiMarinaRinaldiJulianaHercTumiMaxMaraTorresJoalheirosFendiCasaCollectionCartierBvlgariVersace
2
8
5
3
9
6
1
7
4
10
14
17
15
18
20
13
16
RimowaPorscheDesignFlyLondonVilebrequinEmporioArmaniPradaRosa&TeixeiraBurberryFurlaTimberlandTod’sGuess
23
24
22
30
27
33
25
31
28
34
29
26
32
36
35
BoutiquedosRelógiosPlusFashionClinicLongchampLouisVuittonEscadaLoeweErmenegildoZegnaHugoBossAristocrazyJoyasHackettHugoBossBoutiquedosRelógiosPlus 43
44
48
54
51
45
49
52
46
47
53
50
CarolinaHerreraPurificaciónGarciaA.Lange&SöhneAndréÓpticasMangoMassimoDuttiMichaelKorsMariaJoãoBahiaMiuMiuTonyMirandaZadig&VoltaireLacoste55
56 StivaliGantPenhaltaElisabettaFranchiDavidRosasOfficinePaneraiCOSRosaClaráVisionlabMango
Abrebrevemente
65
57
61
59
63
58
62
60
64
39
37
40
38
42
41
DaraJewelsGillesFineJewelleryMontBlancPronoviasTivoliFórum: AdolfoDominguez Gucci FashionClinic BCode MachadoJoalheirosCoccinelleBabyLiberdade
11
12
21
PortugueseRealEstateMarket| 27
Main Brands
2
8
5
3
9
11
6
1
7
4
10
12
14
17
15
18
13
16
23
24
22
34
33
35
30
27
25
31
28
29
26
32
20
21
R. de Santa Justa
R. da Assunção
R. da Vitória
R. da Conceição
R. de S. Nicolau
R. Augusta
R. dos SapateirosR. Áurea
R. da Prata
1
2
345
9
6
78101112
13
20
23
1918
1716
1514
24
2122
32
34
3533
25
26
27
2930
31
28
Praça do Comércio
Praça D. Pedro V
Praça da
Figueira
Baixa/Chiado
Rossio
Baixa High Street Retail Map
U.C.BenettonVitaminasFarggiCasaMacárioVitrineSolarisW52Amorino
SeasideSapatariaLordCamisariaPittaChezChemiseZaraSapatariaLisbonenseBijouBrigitteAle-hop
MarionnaudTruzCalzedoniaBenficaH&MTypographiaIntimissimiParfois
StradivariusBershkaPull&BearCasaPereiradaConceiçãoMangoAdidasSpringfieldH&M
FredPerryAPadariaPortuguesaTiger
AbreBrevemente
19
28| PortugueseRealEstateMarket
Capital MarketsHistorical–justonewordsumsupthepastyear.Takingcuefrom2014,whichwasalreadyextremelypositiveforcapitalmarkets,2015provedtobeanabsolutelyremarkableyear,recordingthehighestvolumeofinvestmentevertradedinPortugal.
Thecombinationofseveralendogenousandexogenousfactors,includingthecontinuousrecoveryandincreaseintheconfidenceofeconomicagentsinPortugal,aswellastheoverheatingofcoreEuropeanmarkets,definitivelyshiftedtheorientationofinvestors(especiallyinternationalinvestors)tomoreperipheralgeographies,resultinginanunprecedentedallocationofcapitalinthiscountry.
RetailandOfficeassetsremainedinthehighestdemand,withseveraloperationsinvolvingshoppingcentresandiconicofficebuildings.However,wehighlightanincreaseindemandforassetsintheHotelandIndustrial&Logisticssectors,demonstratingtheattractivenessanddiversityofopportunitiesthemarketpresentedin2015.Weanticipatethattherecoveryoftake-upintheofficemarketwillrepresentagreatershareofinvestmenttransactionsinthesesegmentsthroughout2016.
Noteventhepoliticalinstabilityexperiencedinthefinalquarteroftheyearcouldshakeinvestorconfidence,andextremelyimportanttransactionstookplaceattheyear’send.
ApositivegapofreturnsinPortugalcomparedwithEurope,themaintenanceoftheEuropeanCentralBank’smonetarypolicyandacontinuouslackofalternative,non-volatileassetoptions,createtheconditionsfor2016tocontinueinlinewiththepreviousyear,withsomestabilizationofyieldcompressioninallsectors.
Fernando FerreiraHeadofCapitalMarkets
PortugueseRealEstateMarket
PortugueseRealEstateMarket| 29
Source:JLL
2013
2,0001,8001,6001,4001,2001,000
800600400200
0
Millio
n Eur
os
2005
2006
2007
2008
2009
2010
2011
2012
2015
2014
International National
1,764
892
126312
190393
1,1361,253
704829 760
Investment Turnover EvolutionInvestment Turnover EvolutionInvestment volume reaches record high
2015certainlymadeitsmarkincommercialrealestatecapitalmarkets.Thismarketwasheavilyhitduringthecrisis,withinvestmentvolumesdroppingtorecordlows.However,thesecondhalfof2013sawthereturnofinternationalinvestorsandthemarkethasbeenrisingsteadilyeversince.TheinvestmentvolumeinPortugalreachedarecordhighin2015,withatotalof1.8billioneuros.Comparedwith2014,thisvolumerepresenteda98%growth,dispellinganydoubtsregardingthemarket’scomeback.
Asetofcircumstancesenabledinvestmentintherealestatemarkettore-entertheinvestorradar.Onagloballevel,highliquidity,lowinterestratesandagreaterwarinessofthevolatilityoffinancialmarkets,havemaderealestateassetsmoreappealingtoinvestors.Onanationallevel,Portugaliscurrentlyinabetterfavourablepositiontoattractinvestment:economicrecovery;recoveryofoccupationalmarkets,highlyattractiveyieldsabove5%andabovetheyieldspracticedinmostEuropeanmarkets;rentsthatstillhavepotentialtoprogress;growingacknowledgmentofthecountryasadestinationfortourismandtolive,withimportantdifferentiatingfactorssuchassafety,climate,naturalandculturalheritage;andthelegislativechangesmadetoattractinvestment,aresomeofthecountry’sstrengthsthataredrawingattentionfromtheinternationalmarket.
Origin of the Investment
Thegrowingpresenceofinternationalinvestorshasstoodoutsince2013,thereforetheshareofinvestmentfromnationalsourcesiscurrentlyverysmall.In2015,84%oftransactionswerecarriedoutbyforeignersfromseveralpartsoftheworld:China,USA,SpainandBrazilaresomeexamples,amongothercountries.InvestmentfromtheUSAisthemostrepresentative,bothintermsofvolume,representing48%ofinternationalinvestment,andintermsofthenumberoftransactions,with9ofthe45transactionscarriedoutbyforeigninvestors.TheUSAisentirelyrepresentedbyinvestmentfunds,whichgenerallyhavebigtickets,investinginlarge-scaleassetssuchasshoppingcentres,largeofficebuildingsorevenrealestateportfolios.SomeexamplesofthisarethetransactionsinvolvingAlmadaFórum,FórumMontijooraportfolioofofficebuildingslocatedatQuintadaFonte.Indeed,institutionalfundsrepresentthelargestshareoftheinvestedvolume–65%–whichisreflectiveofthistypeofinvestor’stickets,whichare,generallyspeaking,muchbiggerthanotherssuchasprivateinvestors
Source:JLL
2% Private & Family Offices
Corporate & InstitutionalUnknown
Pooled Funds
Hotel owner/operator
Propco’s, Developers & REIT7%7%
15%
65%
4%
Investment Volume by Type of Investor - 2015
Investment Volume by Type of Investor – 2015
Source:JLL
Office
Other
RetailI&L
24%15%
7%
54%
Investment Volume by Type of Assets - 2015
Investment Volume by Type of Assets – 2015
30| PortugueseRealEstateMarket
andFamilyoffices,alsoquiteactiveinthemarket.In2015,thelatterweremainlyrepresentedbyBrazilianinvestors,whilein2014theyweremostlyofChineseorigin.Thistypeofinvestorsseekssmallerassetssuchashighstreetshopsorsmallbuildingsandofficespaces.
Demand
Inasectorbysectoranalysis,retailisintheleadnotonlyduetothediversityandquantityofproduct,(shoppingcentres,retailparks,foodretail,standaloneunits,highstreetretail,etc.)butalsobecauseofthebigticketsthatsomeofthesetypesofassetsinvolve,namelyshoppingcentres.Investmentinretailrepresentedmorethan50%ofthevolumeachievedin2015,whichincluded3transactionsinvolvingportfolios:theDolceVitashoppingcentres,Continentefoodretailunitsandasetofretailparks.Buttherehasbeendemandforeverytypeofasset:thenumberofhighstreetshopstradedgrewfrom7in2014to15in2015;officeandindustrial&logisticsassetswerealsotargetedbyinvestorsseekingcoreproduct,inotherwords,assetswithlong-termleasesand/orsolidtenants,and2015wasalsomarkedbyagrowinginterestinhotelacquisition,alesscommontypeofassetincommercialrealestatecapitalmarkets.Investmentinthistypeofassetsreachedatotalvolumeof240millioneuros,includingthepurchaseoftheTivolihotelsportfoliobytheThaigroupMinorInternational(MINT).InPortugal,hotelacquisitionhasneverbeenasactiveasitisnow,provingjusthowdynamicthemarketis,combinedwithfactorssuchasanoutstandingperformanceintourism.
Yields
Yields,whichnaturallytranslatetherelationshipbetweendemandandsupplyaswellastheassets’potentialandlocation,experiencedvariationsthatarecorrelatedwiththeinvestmentvolume.Afterreachingtheirhighestpeakin2013,webegantowitnessaslightimprovementinretailyields,andin2014
“Investment in retail represented more than 50% of the volume achieved in 2015. But there has been demand for every type of asset. ”
and2015,yieldsineverysectordroppedsignificantly,withvariationsbetween175and250basepoints,returningin2015totheminimumsrecordedin2007.
Offices,representedbytheyieldinthePrimeCBD,finishedatthelowestvalueever–5.5%.Inretail,highstreetshopsinLisbon’sprimeareasalsoreachedaminimumyieldof5%andshoppingcentresdecreasedto5.5%.Retailparksandindustrial&logisticsassetspresentedthehighestratesofreturn,bothat7.25%,afterdropping50basepointsfrom2014.
Source:JLL
%
10.0
9.00
8.00
7.00
6.00
5.00
4.002005 2006 2007 2008 2009 2010 2011 2012 2013 20152014
7.25
5.50
7.25
5.505.00
Office Shopping Centres Retail ParksHigh Street Retail - Lisbon Industrial & Logostics
Evolução das Rendas Prime por Zona
Prime Yields Evolution
PortugueseRealEstateMarket| 31
Theinvestmentvolumein2016isexpectedtoremainatthecurrentlevels,originatingfromcountriessuchasUSA,France,UKandChina,andmainlyfrominvestmentfunds.Forecastsdonotpredictthevolumewillriseasconsiderablyasin2015,notonlybecausethatyearexceededallexpectations,butalsoduetoalackofproductsuitedtothedemandthatisalreadybeingfelt.
Theretailsectorshouldremainthemostdesirable,however,weexpectgreatermarketequalitysinceseveraloperationsinvolvingofficebuildingsshouldemergeduringthisyear,aswellasanincreaseininvestmentinthehotelsector.Regardingyields,webelievethesearealreadyquitecontractedandthereforehavelittleroomforgreaterreductions.
FuTuRE PROSPECTS
32| PortugueseRealEstateMarket
Residential marketTheresidentialmarketresumeditsactivityinfullforce,andweallknowthemainfactsthatdrovethischange.Butlet’srecapitulate:safety,qualityoflife,tourism,GoldenVisas,attractivetaxregimefornon-habitualresidentsandincentivesforurbanrenewal.ThesearesomeoftheargumentsthatplacedPortugalonthemap,breathingnewlifeintotheresidentialmarketandforcingdeveloperstopursueconceptsthathadnotbeenexploredbefore.Asanexample,residentialprojectsweredevelopedtogenerateincome,namelytouristapartmentsandtheHotelApartmentconcept,bothwithguaranteedreturnsandpositionedforshort-termrental.
Anothertrendconcernsthecarefulchoiceoflayoutsandfinishingsinregenerationprojects,takingintoaccountthenewmarkets’needsandpreferences,makingbuildingsforresidentialuseadoptfeaturesthatwereunusualonly5yearsago.
Developerswillhavetorespondtothesenewdemandsfromforeignmarkets,takingintoconsiderationthetarget’sdifferentprofilesandadjustingtheproducttotheinvestmentgoalsofthediversebuyers:pureinvestment,secondhome(forforeignandPortuguesebuyers),aswellaspersonalandpermanentresidence.
InternationalinvestorscontinuetobelieveinthePortugueserealestatemarket,principallyintheLisbonandPortoregions,whichcreatesaveryinterestingpipelineofresidentialprojectstobelaunchedin2016.Thisisgoodnews,consideringthatthenewdevelopmentslaunchedinpreviousyearshavealreadyalmostcompletedtheirsellingphase.
Patrícia BarãoHead of Residential
PortugueseRealEstateMarket
RegardingtheappreciationofLisbon’sresidentialmarket,pricesintheprimezones(Av.LiberdadeandChiado)reachedapproximately10,000€/sqm,whichisstillbelowthepricesfoundinmostEuropeancapitals.
ThisisoneofthebesttimesinPortugal’sresidentialmarketanditseemsthat2016willbeayearofgreatactivityandconsolidation,becomingthedrivingforceinthePortugueserealestatemarket.
PortugueseRealEstateMarket| 33
A Renewed Market
ThePortugueseresidentialmarket,traditionallycharacterisedbyhomepurchase,wasseverelylimitedinrecentyearsduetotheunfavourableeconomicclimate.FinancingtopurchasearesidencebecameexpensiveandinaccessibletomostPortugueseconsumers,causingadramaticdropinthemarket’sactivity.
However,attheendof2013andthroughout2014,therewasavisiblerecoveryinthissector,particularlyinthecitiesofLisbonandPorto.Foreigninvestmentwasthecatalystforthisnewmarketmomentum,withagreatcontributionfromsuccessfulprogramstoencourageforeigninvestment,suchasGoldenVisasandtheNon-HabitualResidentTaxRegime.Comparedwith2014,in2015JLL/Coberturarecorded13newnationalitiesamongitsforeignclients,indicatingabroaderinterestinourmarket.
Newtrendsarenowemergingonthemarket.Homepurchase,whichwasgenerallyintendedforowneroccupation(primaryorsecondhome),iscurrentlyalsocarriedoutwiththegoalofgeneratinganincome.ThissituationishighlyvisibleinpurchasesmadeviaGoldenVisas,wherethebuyersdonotneedthepropertiestolivein,andisalsoduetotherecentdynamicinthemarketofapartmentsaimedforshort-termtouristrental,aswellastheentryintoforceofcrucialchangesmadetothe“UrbanLeaseLaw”,whichuntilthenhadbeentoodetrimentaltoowners.
Furthermore,contrarytowhathappenedduringthemarketboominthe90’swhennewdevelopmentsemergedmostlyontheoutskirtsofthecities,especiallyinLisbon,thedevelopmentofnewresidentialprojectsistakingplaceinthecitycentre,leadingtoagreatnumberofbuildingsundergoingregeneration.
Althoughthemarketisrecoveringthankstogreatforeigndemand,aswellasamorefavourableeconomiccontext,nationaldemandhasalsobeenessentialtothemarket’scurrentpositiveperformance.DespitePortugueseconsumerspurchasinghomeswiththeirowncapitalinrecentyears,accesstohousingloansisreturninggradually.
Indeed,bankcreditconditionshavebecomemorebeneficialanddomesticdemandhasrecovered.SinceFebruary2014,homemortgagerateshavedropped,reachingarateof2.1%inNovember2015,accordingtoBankofPortugal.Asaresultofthismorefavourablescenario,demandforhousingloansincreasedthroughout2015andtheprovisionofloansforhomepurchaseexceeded4billioneuros,almostdoubletheamountprovidedin2014.
AccordingtotheNationalStatisticalInstitute(INE),thenumberofhousingtransactionsforfamilyaccommodationtotalled77,467transactionsinthefirstthreemonthsof2015,registeringa32%growthcomparedwiththesameperiodinthepreviousyear.Althoughtheyear’sstatisticsarenotfinalyet,ifthismomentummaintains,weexpectthat2015willbetheyearwiththegreatestnumberoftransactionssince2011.
Lisbon’s Residential Market
Thelocationwhereapropertyissituatedisthepredominantanddecisivefactorforthoseinvestinginrealestate.Intheresidentialsector,thiselementtakesonevengreaterimportance.ThedynamicwearecurrentlywitnessingintheresidentialmarketinLisbonhasbroughtnewopportunitiestozoneswhere,afewyearsago,itwould
34| PortugueseRealEstateMarket
havebeendifficulttopurchasearesidencewiththequality,comfortandconvenienceavailabletoday.Thisisthecase,forexample,ofAvenidadaLiberdade,theprimeofficezoneandaprivilegedlocationforthecity’sluxuryretailand5-starhotels.Theregenerationofanextensivesetobuildingstakingplaceonthisartery,oneofthemostcentralandimportantinLisbon,hasbroughtnewprominencetotheresidentialmarketwiththedevelopmentofseveralprojectsaimedexclusivelyforhousing.
TheChiado/SantaCatarina,PríncipeReal/SãoBentoandBaixaPombalinazonesarealsolocatedinthecitycentre.ThefirstisoneofthemosticonicandtrendyareasinLisbon,withseveralrestaurants,museumsandthemostdynamichighstreetretailinthecity.Thisiswheretheresidentialmarketfindsitsmostcovetedaddress,withseveralregeneratedbuildingsandplentyofalluringapartmentsthatofferstunningviewsoftheTagusriver,CastelodeSãoJorgeandthecity,factorsthatmakethesezonesthemostexclusiveinLisbon,attractingnumerousinternationalinvestors.
NearChiadoliesPríncipeReal,alsooneofthemostcosmopolitanresidentialdistrictsinLisbon,characterisedbynumerousmansionsandagrowinghighstreetretailsupplywithamorealternativeprofile.Thesearethequalitiesthathavesustainedarisingdemandinthiszone,notonlyforhomepurchase,butalsoforincomeassets.
WecannotconcludethisjourneythroughLisbon’smainresidentialdistrictswithoutmentioningBaixaPombalina&Alfama,themosttraditional,historicandiconiczoneinthecity.FromTerreirodoPaçotoCastelodeSãoJorge,manytouristswalkthedistinctivestreetsintheheartofLisboneveryday,withoutmissingRuaAugusta,considered“oneofthemostbeautifulstreetsintheworld”bytheSpanisheditionofCondéNastTravellermagazine.Therestorationthatistakingplaceinthisareaisrejuvenatingandbringingnewlifebacktooneofthefavouritelocationsamonginternationalinvestors,especiallythoseseekingaresidentialpropertyforincomepurposes.
ThusJLLhascharacterisedthe11principalzonesinLisbon,whichincludethemostcentralandsoughtoutamongforeignersmentionedabove,aswellasotherzonesthatshouldalsoemergeinthemedium-term,suchasColinadeSantanaandMouraria.
Prices
Growingdemandhasexertedgreatpressureonprices.AccordingtotheResidentialInformationSystem(SIR)theaveragepricesinthecityofLisbonrosemorethan25%sincetheminimumreachedatthebeginningof2013.Inananalysisofthehighestmarketvalues,theaverageinLisbonregisteredbythesameentityisabove4,500€/sqm,18%higherthanthreeyearsago.
Ifwefocusonthe“new”AvenidadaLiberdade,oftheprojectsthatemergedinthelast2-3years,JLLrecordedanaveragesalevalueofmorethan7,000€/sqm,aclearindicationofthedynamiccurrentlytakingplaceinthecity.
InthemainzonesofLisboncharacterisedbyJLL,wherewefindbuildingsthattargetanuppermiddleandhighmarketsegment,primepricescanrangefrom3,500to9,000€/sqm.
Source:SIRandSIR95
Evolution of Lisbon Average Asking Prices
4,750
4,250
3,750
3,250
2,750
2,250
Total High Segment
2008 2009 2010 2011 2012 2013 2014 2015
4,569
3,144+27%
+18%
PortugueseRealEstateMarket| 35
Following2014,whichwasmarkedmainlybyforeigninvestment,andwith2015consolidatinggrowthalsoduetothereturnofdemandfromthedomesticmarket,weanticipatethatin2016,theresidentialmarketwillhaveaverypositiveandrobustperformance.Lisbonhasgainednewlifeandistodayontheworldtourismmap,aswellasonthemapofinternationalinvestors,whoseethePortuguesecapitalasauniqueopportunitytoinvestinresidentialrealestateinaEuropeancontext.
Duetotheamountofbuildingscurrentlyundergoingregeneration,severalnewandqualityunitsareexpectedtoenterthemarket,therebyrenewingthehousingstockwithproductthatmeetsthenewrequirementsofdifferenttypesofbuyers,fordifferenttypesofuses.Astrendsthatstartedtoemergein2015,newaccommodationformatsarealsoexpectedtoappear,namelytheconversionofbuildingsforstudenthousingorseniorresidences.
FuTuRE PROSPECTS
36| PortugueseRealEstateMarket
SANTAAPOLÓNIA
CAIS DO SODRÉ
TAGUS RIVER
TERREIRO DO PAÇO
CHIADO
BAIXA
ALFAMA
SALDANHA
MARQUÊS DE POMBAL
PARQUEEDUARDO VII
RATO
AMOREIRAS
MONSANTOFOREST PARK
BELÉM
ALGÉS
COLÉGIOMILITAR
PONTINHA
CAMPOGRANDE
CIDADEUNIVERSITÁRIA ROMA
CAMPOPEQUENO
ALVALADE
OLIVAIS
ORIENTE
AREEIRO
SETE RIOS
BENFICA
AMADORA
LISBONAIRPORT
PRAÇADE ESPANHA
Av. A
lmira
nte
Rei
s
Av. da Índia
Av. 24 de JulhoAv. d
e C
euta
Av. Inf
ante
Santo
R. Maria Pia
Av. D. C
arlos I
Av. d
a Po
nte
Av. d
as D
esco
berta
s
Av. da Liberdade
Av. Joaquim A. Aguiar
Av. António A. Aguiar
R. B
raan
cam
p
R. A. Herculano
Av. da República
Av. de Rom
a
Av. do Brasil
Av. E. U. A.
Av. Marechal Gomes da Costa
Av. de Berlim
Av. A
lmira
nte
Gag
o C
outin
ho
Av. Santo Contestável
Alm
irant
e D
. Hen
rique
2.ª Circular
2.ª Circular
Av. 5 de Outubro
Av. de Berna
Av. LusíadaEixo N
orte-Sul
Eixo
Nor
te-S
ul
CRIL/IC17
CRIL/IC17
CRIL
/IC17
CRIL
/IC17
A5
A5
Av. dos Combatentes
Av. Duque D’Ávila
PONTE 25 DE ABRIL
ESTORIL/CASCAIS
A2/SULALGARVE
Map of Lisbon’s Residencial Areas
AvenidadaLiberdade
Chiado/SantaCatarina
PríncipeReal/SãoBento
HistoricCentre
RiversideZone
Lapa/Estrela
CampodeOurique/Amoreiras
AvenidasNovas
ColinadeSantana
Restelo/Belém
ParquedasNações
Estoril/Cascais
PortugueseRealEstateMarket| 37
AboutJLL
JLLisaprofessionalservicesandinvestmentmanagementfirmofferingspecialisedrealestateservicestoclientsseekingincreasedvaluebyowning,occupyingandinvestinginrealestate.JLLhasmorethan230corporateoffices,operatesin80countriesandhasaglobalworkforceofapproximately60,000.
OperatinginPortugalsince1997,JLLhasateamofmorethan160people,carringoutintheoffice,retail,industrial/logistic,residentialandhotels&hospitalitysectors.Wearetheonlyonestopcompany,providingourclientswithawiderangeofcomprehensiveservicesthroughasinglepointofcontact.
Wearepartofaglobalplatformthatsharesinformation,bestpracticesandexperienceinordertoaddvaluetoourclients’realestatebusiness.Toaccomplishthisgoal,JLLcombinesglobalknow-howandexperiencewithadeepknowledgeofourlocalmarket.
Weanticipatechangebasedonourresearchandsolidknowledgeofthemarket,byanalysingthecurrentconditions,trendsandfutureprospects.Onlythiswaycanweprovideourclientswithcustomisedrealestatesolutionsthatwillhelpthemprepareorreacttomarketchangesandmakeinformeddecisions.
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Overview2015|Outlook2016
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Pedro LancastreManagingDirectorpedro.lancastre@eu.jll.com
Patrícia AraújoHeadofRetailpatricia.araujo@eu.jll.com
Sofia CoelhoHeadofValuationssofia.coelho@eu.jll.com
Rui Pereira da SilvaHeadofResidentialrps@cobertura.pt
Miguel KreiselerHeadofProperty&AssetManagementmiguel.kreiseler@eu.jll.com
Karina SimõesVice-PresidentofHotels&HospitalityGroupkarina.simoes@eu.jll.com
Mariana RosaHeadofOfficeAgency&CorporateSolutionsmariana.rosa@eu.jll.com
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Fernando FerreiraHeadofCapitalMarketsfernando.ferreira@eu.jll.com
Maria EmpisHeadofStrategicConsultancy&Researchmaria.empis@eu.jll.com
Patrícia BarãoHeadofResidentialpatricia.barao@eu.jll.com
João MarquesHeadofDesign&BuildJoao.marques@tetris-db.com
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