portuguese real estate market - jll · portuguese real estate market | 5 foreword pedro lancastre...

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


“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


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.”


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


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

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.”


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


Office Market

Mariana RosaHeadofOfficeAgency&CorporateSolutions


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.


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

5

0

-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


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.


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


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


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.


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


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.


Patrícia AraújoHeadofRetail

Retail Market

Thankfully,thistrendhashadfollow-upinPorto,whereagoodpartoftheBaixazone(Clérigos,Aliados,RuadeSantaCatarinaandRuadasFlores)hasbeenwitnessingadrivethathadbeenlongabsentregardingtheopeningofnewretailspaces.

2016willbeayearofconsolidationofthistrend,bothinLisbonandPorto,withbothofthesecitiesbecomingincreasinglysurprisingandattractive.


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


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


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


Weanticipatethetrendsandmomentumin2016willpresentasimilarscenarioasin2015.Shoppingcentreswillcontinuetoexhibitadisparitybetweenprimeandsecondaryunits,whileanewdevelopmentisfinallyexpectedtoemergeinBraga.Inhighstreetretail,thetendencythatbegantoshowthisyear

shouldbecomeclearer,withnewzonesemerging.Therentsthatincreasedtorecordhighsmayriseevenmoreinsomezonesbut,giventhecurrentvalues,thisgrowthisnotexpectedtobeaspronouncedasitwaslastyear.

FuTuRE PROSPECTS


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


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


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


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



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


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


Theinvestmentvolumein2016isexpectedtoremainatthecurrentlevels,originatingfromcountriessuchasUSA,France,UKandChina,andmainlyfrominvestmentfunds.Forecastsdonotpredictthevolumewillriseasconsiderablyasin2015,notonlybecausethatyearexceededallexpectations,butalsoduetoalackofproductsuitedtothedemandthatisalreadybeingfelt.

Theretailsectorshouldremainthemostdesirable,however,weexpectgreatermarketequalitysinceseveraloperationsinvolvingofficebuildingsshouldemergeduringthisyear,aswellasanincreaseininvestmentinthehotelsector.Regardingyields,webelievethesearealreadyquitecontractedandthereforehavelittleroomforgreaterreductions.

FuTuRE PROSPECTS


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


RegardingtheappreciationofLisbon’sresidentialmarket,pricesintheprimezones(Av.LiberdadeandChiado)reachedapproximately10,000€/sqm,whichisstillbelowthepricesfoundinmostEuropeancapitals.

ThisisoneofthebesttimesinPortugal’sresidentialmarketanditseemsthat2016willbeayearofgreatactivityandconsolidation,becomingthedrivingforceinthePortugueserealestatemarket.


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


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%


Following2014,whichwasmarkedmainlybyforeigninvestment,andwith2015consolidatinggrowthalsoduetothereturnofdemandfromthedomesticmarket,weanticipatethatin2016,theresidentialmarketwillhaveaverypositiveandrobustperformance.Lisbonhasgainednewlifeandistodayontheworldtourismmap,aswellasonthemapofinternationalinvestors,whoseethePortuguesecapitalasauniqueopportunitytoinvestinresidentialrealestateinaEuropeancontext.

Duetotheamountofbuildingscurrentlyundergoingregeneration,severalnewandqualityunitsareexpectedtoenterthemarket,therebyrenewingthehousingstockwithproductthatmeetsthenewrequirementsofdifferenttypesofbuyers,fordifferenttypesofuses.Astrendsthatstartedtoemergein2015,newaccommodationformatsarealsoexpectedtoappear,namelytheconversionofbuildingsforstudenthousingorseniorresidences.

FuTuRE PROSPECTS


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


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.

Our servicesCapital MarketsOffice AgencyRetail LeasingResidential AgencyProperty & Asset ManagementValuationCorporate SolutionsArchitecture & WorksStrategic ConsultingProject & Development Services (P&DS)ResearchHotels & Hospitality

COPYRIGHT©JLLIP,INC.2016.Allrightsreserved.NopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeanswithoutpriorwrittenconsentofJLL.Itisbasedonmaterialthatwebelievetobereliable.Whilsteveryefforthasbeenmadetoensureitsaccuracy,wecannotofferanywarrantythatitcontainsnofactualerrors.Wewouldliketobetoldofanysucherrorsinordertocorrectthem.

Printinginformation:paper,inks,printingprocess,recycledirective.

www.jll.pt

Overview2015|Outlook2016

JLL Offices

LisbonEdifícioHeronCastilhoRuaBraamcamp,n.º40-8.º1250-050LisboaTel:+351213583222Fax:+351213583223

Pedro [email protected]

Patrícia Araú[email protected]

Sofia [email protected]

Rui Pereira da [email protected]

Miguel KreiselerHeadofProperty&[email protected]

Karina SimõesVice-PresidentofHotels&[email protected]

Mariana RosaHeadofOfficeAgency&[email protected]

Fernando Vasco [email protected]

Fernando [email protected]

Maria EmpisHeadofStrategicConsultancy&[email protected]

Patrícia Barã[email protected]

João MarquesHeadofDesign&[email protected]

AMI8654

portuguese real estate market - jll · portuguese real estate market | 5 foreword pedro lancastre...

Documents