Market Report Primavera 2017
Economic Overview 5
Agenda
Offices 19
Industrial 51
Retail 61
Tourism 79
Investment 97
Development and Building Rehabilitation 109 PRIMAVERA MARKET REPORT 2017
3
Economic Overview
Europe Economic Overview
6
AGUIRRE NEWMAN
Europe In 2016, the European Union’s Gross Domestic
central European countries like the Netherlands,
Product (GDP) fell by 100 basis points comparing
France and Germany, and also the recent rela-
to 2015. This decrease was, in part, due to the
tionship between Europe and the United States
instability felt in Europe which increased levels
since the election of Donald Trump.
of economic uncertainty: “Brexit”, elections in
Table 1
GDP in Portugal / Spain / EU 1998 → 2016 4.50% 3.50% 2.50% 1.50% 0.50% -0.50% -1.50% -2.50% -3.50% -4.50% 1998
1999
EU 28
2000
2001
SPAIN
PRIMAVERA MARKET REPORT 2017
2002
2003
PORTUGAL
2004
2005
2006
2007
2008 2009
2010
2011
2012
2013
2014
2015 2016 E
SOURCE: EUROSTAT
7
In the last quarter of 2016, the EU and the euro area’s GDP increased, by 1.8% and 1.7% year-on-year, respectively, indicating a slight economic growth for most countries.
Table 2
Brent Price / GDP in EU28 2005 → 2016 140
4.00% 3.00%
120
2.00% 100 1.00% 80
0.00% -1.00%
60
-2.00% 40 -3.00% 20
-4.00% -5.00%
0 2005
2006
BRENT PRICE
8
2007
GDP EU 28
2008
2009
2010
2011
2012
2013
2014
2015
2016 E
SOURCE: BLOOMBERG
AGUIRRE NEWMAN
The Brent price has maintained its upward trend
Last year, the inflation rate in Europe increased
since 2015, after having been at its lowest rate
by 0.3%, mainly due to the decrease in monetary
in the last 10 years in 2015, at US$37.28 per bar-
stimulus (programme of debt purchasing) and
rel. The European barrel price has been driven
the interest rate increase.
up because of anticipation that surplus in supply would decrease after the cut in production by members of the Organisation of the Petroleum Exporting Countries.
Table 3
Inflation Rate 2005 → 2016 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% -1.00% 2005
2006
PORTUGAL
PRIMAVERA MARKET REPORT 2017
2007
EURO ZONE
2008
2009
SPAIN
2010
EU 28
2011
2012
2013
2014
2015
2016 E
SOURCE: EUROSTAT
9
The European and Global economy continue
continued to be particularly positive in the
to grow; a reality which is reflected in
Spanish job market, with the unemployment
unemployment rates. The unemployment rate
rate decreasing from 22.2% in 2015 to 18.63%
in the European Union has decreased by 120
at the end of 2016. These figures confirm the
basis points since 2015, to 8.2% at the end
moment of growth acceleration for the Iberian
of 2016. The effects of economic recovery
Peninsula’s biggest economy.
Table 4
Unemployment rate 2005 → 2016 27.00% 24.00% 21.00% 18.00% 15.00% 12.00% 9.00% 6.00% 3.00% 0.00% 2005
2006
PORTUGAL
10
2007
EURO ZONE
2008
2009
SPAIN
2010
EU 28
2011
2012
2013
2014
2015
2016 E
SOURCE: EUROSTAT
AGUIRRE NEWMAN
The unemployment rate in the European Union decreased to 8.2% in 2016.
PRIMAVERA MARKET REPORT 2017
11
Portugal Economic Overview
12
AGUIRRE NEWMAN
Portugal According to the INE (National Statistical Insti-
The unemployment rate in the 4th quarter of
tute), GDP increased by 1.9% in the 4th quarter
2016 was at 10.5%, maintaining the rate of the
of 2016, driving up performance for the rest of
preceding quarter. For the whole year of 2016,
the year. For the whole year of 2016, an increase
the average annual rate was 11%, which was
of 1.4% in GDP was registered (compared to 1.6%
lower than the previous year (12.4% in 2015).
in 2015).
These figures reflect the positive effects of measures taken to boost the Portuguese economy.
Table 5
Unemployment and inflation rate Portugal 2010 → 2016 18.00%
13.00%
8.00%
3.00%
-2.00% 1ºT 2ºT 3ºT 4ºT 1ºT 2ºT 3ºT 4ºT 1ºT 2ºT 3ºT 4ºT 1ºT 2ºT 3ºT 4ºT 1ºT 2ºT 3ºT 4ºT 1ºT 2ºT 3ºT 4ºT 1ºT 2ºT 3ºT 4ºT 2010 2011 2012 2013 2014 2015 2016
UNEMPLOYMENT RATE PRIMAVERA MARKET REPORT 2017
INFLATION RATE
SOURCE: INE
13
For 2017, the projections of the Portuguese economy indicate sustained growth in economic activity, as a result of strong external demand.
Table 6
GDP growth forecast Portugal 2017 → 2019 2017 f (%)
2018 f (%)
2019 f (%)
Portuguese Government
1.5
1.9
2.0
Bank of Portugal
1.4
1.5
1.5
European Commission
1.6
1.5
–
OECD
1.3
1.3
–
SOURCE: MINISTRY OF ECONOMY, BANK OF PORTUGAL, EUROPEAN COMISSION AND OECD
For 2017, the projections of the Portuguese economy indicate sustained growth in economic activity, as a result of strong external demand.
14
AGUIRRE NEWMAN
Table 7
Economic Climate Indicator in Portugal 2005 → 2016 2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0% 2005
2006
2007
2008
2009
2010
EURIBOR 3M
2011
2012
2013
2014
2015
2016
SOURCE: INE
Growth in the confidence indicator was due to increased expectations for the growth of internal and external demand.
PRIMAVERA MARKET REPORT 2017
15
Table 8
Euribor Rate 2005 → 2016 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% 2005
2006
2007
2008
2009
2010
SÉRIE 1
2011
2012
2013
2014
2015
2016
SOURCE: BLOOMBERG, EURIBOR RATES
According to the CMVM (Portuguese Securities Market Commission), in December 2016, the market capitalisation reached €237,814.9 million; an increase of 2.9% from the previous year. The PSI20 share index fell by 11.9% from December 2015, reaching 4679.2 points in December 2016.
16
AGUIRRE NEWMAN
Positive expectations for internal and external demand increase the confidence indicator.
PRIMAVERA MARKET REPORT 2017
17
Offices
N
W
E
S
P d
IR C 2ª C
n ri qu e
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A v.
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17
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EMERGING OFFI SECONDARY OFFI “PARQUE DAS N WESTERN CO
24 J u l h o Av.
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CAIS do SODRÉ ALCÂNTARA
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AGUIRRE NEWMAN Av. Ín d ia
25 de ABRIL BRIDGE
COMPANIES’ MIGRATION VASCO da GAMA BRIDGE LISBON 2015
PARQUE das NAÇÕES
al G
ome
s da C os
ta
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ec h
e Av. In fa n te D. H
Mar
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VASCO da GAMA BRIDGE
PARQUE das NAÇÕES A v.
im
Av. D. J oã o II
Av. B erl
ORT
Lisbon Office Market Map
The present study is based on the information provided by LPI index (Lisbon Prime Index), a Real Estate Index used to evaluate the Lisbon office market performance, regarding the volume of sq. m traded, the number of recorded transactions and the Destination Office Zones (in which the companies have leased new office spaces) in the years 2013 and 2014.
RIVER
• Office Zones 1 - 7
riq u e
ni os U
D. He n
d Esta
a n te
os Av. d
ica Amér
Av. In f
Ala med a d os Oce a n os
Av. D. J oã o II
For the identification of each transaction’s origin, eleven categories of sources were considered: da dos
• Out of Lisbon – companies who moved from outside the Lisbon region to one of the Office Zones 1 - 7 The present study is based on the information provided by LPI index (Lisbon Prime Index), a Real Estate Index used to evaluate the Lisbon • Activity Start-Up – Start-up companies whose first office is in the office market performance, regarding the volume of sq. m traded, Destination Office Zone address for the transactions identified the number of recorded transactions and the Destination Office Zones (in which the companies have leased new office spaces) in the • Structural Growth - increase of leased area through growth of the company structure, corresponding to new premises in the Destina years 2013 and 2014. tion Office Zones 1-7 For the identification of each transaction’s origin, eleven categories • No Information - cases where it was not possible to identify the of sources were considered: transaction’s origin, due to insufficient information regarding the corporate name of the company and / or the correct address of the • Office Zones 1 - 7 Destination Office Zone - residual weight of less than 1% • Out of Lisbon – companies who moved from outside the Lisbon Office Zone 7, accordingly to LPI index, represents all offices located region to one of the Office Zones 1 - 7 outside the main zones, which corresponds geographically to all the • Activity Start-Up – Start-up companies whose first office is in the areas of Lisbon which are not within zones 1 - 6. In this sense, office transactions analysed in this report as having occurred in Office Zone Destination Office Zone address for the transactions identified 7, correspond only to those registered by LPI index, and, we believe, • Structural Growth - increase of leased area through growth of the are not representative of all transactions performed on the market company structure, corresponding to new premises in the Destina outside zones - 1-6. tion Office Zones 1-7
-
• No Information - cases where it was not possible to identify the transaction’s origin, due to insufficient information regarding the corporate name of the company and / or the correct address of the Destination Office Zone - residual weight of less than 1%
TEJO RIVER
Office Zone 7, accordingly to LPI index, represents all offices located outside the main zones, which corresponds geographically to all the areas of Lisbon which are not within zones 1 - 6. In this sense, office transactions analysed in this report as having occurred in Office Zone 7, correspond only to those registered by LPI index, and, we believe, are not representative of all transactions performed on the market outside zones 1-6.
PRIME CBD CBD EMERGING OFFICE ZONE SECONDARY OFFICE ZONE “PARQUE DAS NAÇÕES” WESTERN CORRIDOR ZONE 7
RIME CBD CBD ICE ZONE ICE ZONE NAÇÕES” ORRIDOR ZONE 7 PRIMAVERA MARKET REPORT 2017
21
Supply Offices
22
AGUIRRE NEWMAN
Supply Lisbon’s office market has been quite dynamic in
Compared with the main office zones in the
recent years. However, the stock of offices in the
Iberian Peninsula, Madrid and Barcelona, the
main zones has only grown moderately, existing
Portuguese market only represents 36% and 78%
currently about 4,637,921 sq.m. available. The
of their sizes, respectively.
biggest growth in 2016 was in the Emerging zone with a 2.26% increase in supply in terms of area, compared with the reduced general increase of 0.57%.
Table 9 Zone
2015 [sq.m.]
2016 [sq.m.]
% 2016
∆ 2015/ 2016
597.767
597.767
12.9%
0.00%
1.096.077
1.096.077
23.6%
0.00%
3. Emerging Zone
491.247
502.350
10.8%
2.26%
4. Secondary Zone
390.225
387.804
8.4%
-0.62%
5. Parque das Nações
359.149
359.149
7.7%
0.00%
6. Corredor Oeste
909.036
916.250
19.8%
0.79%
7. Zona 7
768.003
778.524
16.8%
1.37%
4.611.504
4.637.921
100.0%
0.57%
1. Prime CBD 2. CBD
TOTAL
PRIMAVERA MARKET REPORT 2017
23
In Portugal, the limited expansion in supply was
The conclusion of the new developments expan-
reflected through the conclusion of only 5 office
ded the market by about 35,760 sq.m.. It should
buildings between 2015 and 2016.
be noted that apart from Lagoas Park - Edifício 9, the new supply is not speculative construction since the future tenants had already been defi-
Table 10 Zone
Area [sq.m.]
Conclusion Date
EDP Head office
4
13.900
2015 - Q2
Castilho 24
1
7.161
2015 - Q4
Development / Building
TOTAL
ned when building work began.
Table 12
Distribution of Lisbon office stock in 2016
21.061
Development / Building
Zone
Area [sq.m.]
Conclusion Date
Lagoas Park - Edifício 9
6
4.900
2016 - Q1
D. Luis I
4
10.000
2016 - Q4
Edifício Santander
3
9.600
2016 - Q4
TOTAL
12,9%
16,8%
Table 11
23,6% 19,8%
24.700
7,7%
10,8% 8,4%
PRIME CBD CBD EMERGING ZONE SECONDARY ZONE PARQUE DAS NAÇÕES WESTERN CORRIDOR ZONE 7
24
AGUIRRE NEWMAN
Few developers are looking to develop office
Marquês de Pombal 14 and República 5-7 buildings
projects as a primary option, as they prefer
still have no final use, or defined conclusion dates,
sectors that provide more short-term profits,
because of the different uses the buildings can
namely the residential one. As such, there is
have, such as residential or hotels.
a reduced pipeline for the next two years of around 46,500 sq.m., from 4 developments.
Table 14
Future office supply by zones Table 13 Zone
Area [sq.m.]
Conclusion Date
Edifício VDA
4
12.000
2017
24 de Julho 62
4
10.500
2017
Edifício Abreu Advogados
4
6.000
2017
Fontes Pereira de Melo 41
1
18.000
2018
Marquês de Pombal 14
1
5.000
-
República 5-7
2
6.100
-
Development / Building
TOTAL
23 000 40% 28 500 49%
75.600
6 100 11%
PRIME CBD
CBD
SECONDARY ZONE
The Prime CBD and CBD zones involve a significant proportion of the entire stock on offer as the first has two office developments and the second has another one. The increased dynamics in the Secondary Zone are justified by the move of the EDP head offices to the riverside zone, resulting in a growing interest area for the office market.
PRIMAVERA MARKET REPORT 2017
25
Demand Offices
26
AGUIRRE NEWMAN
Demand The demand for offices in 2016 was similar to
There were 58 fewer leasing agreements (-23%)
the year before. The contracted area in 2016
than in 2015, event with the size of the deals
(143,799 sq.m.) was some 5% less than in 2015.
being greater.
Table 15
Lisbon Office Take-up (sq.m.) 1998 → 2016 250 000 232 620
201 430
200 000
165 000
158 000
161 680 148 660
150 000 129 000
139 600
139 000
135 000
144 513
143 799
2015
2016
126 529
125 000 115 628 105 674
100 000
101 974 87 649 77 802
50 000
0 1998
1999
2001
PRIMAVERA MARKET REPORT 2017
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
27
Comparing the correlation between the growth
between 2011 and 2013. After 2014, with
in GDP in Portugal and the annual absorption
the signs of economic recovery and greater
of office space, in the periods of the greatest
domestic and international interest, the
economic contraction, the absorption of office
absorption of office space returned to its pre-
space was also relatively poor, particularly
crisis figures.
Table 16
GDP Vs. Office Take-up 1998 → 2016 250 000
6.00%
200 000
4.00%
150 000
2.00%
100 000
0.00%
50 000
-2.00%
0
-4.00% 1998
1999
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
ABSORÇÃO LISBOA
28
2011
2012
2013
2014
2015
2016
PIB PORTUGAL
AGUIRRE NEWMAN
Looking at the main operations in 2016, the
area. The main transactions, with about 29,000
Emerging Zone (zone 3) stands out as being the
sq.m., involved, among others, Santander Totta,
one with the greatest demand in terms of leased
Manpower and BNP Paribas.
Table 17 Quarter
Zone
Building
Area [sq.m.]
Tenant
Q4
3
Santander Totta Building
9.800
SantanderTotta
Q2
3
Torres de Lisboa
7.887
Manpower
Q4
3
Torre Ocidente
6.122
BNP Paribas
Q4
6
Alfrapark- EdifĂcio Elevo
5.889
Nokia Solutions
Q1
3
Torres de Lisboa
5.137
Global Media Group
Q1
1
Liberdade, 252
4.572
Havas
Q1
7
Entreposto
4.491
CML
Q3
2
Ă lvaro Pais
3.532
Grupo CGD
Q3
4
D. Luis I
3.429
Sitel
Q3
1
Alexandre Herculano, 50
3.423
BNP Paribas
In terms of leased area, the two halves of the year were quite similar, although the second half was responsible for 55% of the total. The Manpower operation at Torres de Lisboa stood out in the first half, while the Santander Totta was the biggest in the second half.
PRIMAVERA MARKET REPORT 2017
29
Table 18 2015
2016
Area [sq.m.]
Transactions
Area [sq.m.]
Transactions
∆ Area 2015 / 2016
1. Prime CBD
21.492
42
21.411
31
-0,4%
2. CBD
19.842
43
29.580
47
49%
3. Emerging Zone
19.276
29
43.664
26
127%
4. Secondary Zone
16.668
7
4.246
4
-75%
5. Parque das Nações
25.220
41
7.922
15
-69%
6. Western Corridor
28.020
74
25.644
56
-8%
7. Zone 7
13.994
21
11.331
20
-19%
TOTAL
144.513
257
143.799
199
-0,5%
Zona
The leased area in the Emerging zone (Zone 3)
The Secondary Zone, Parque das Nações
increased 127% between 2015 and 2016 because
and Corredor Oeste fell by 75%, 69% and 8%,
of the four major transactions mentioned above.
respectively. This reduction, particularly in the
These transactions accounted for about 66% of
Secondary Zone and Parque das Nações, was
the total leased area in that zone.
because of a drop in available supply in terms of demand, size and quality.
CBD recorded an increase of about 49% in the leased area and four more operations in 2016 than in 2015. The Prime CBD was in line with the previous year with just a 0.4% drop.
30
AGUIRRE NEWMAN
Table 19
Absorption by Zones (sq.m.) 2014 / 2015 / 2016 45 500 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 1. Prime CBD
2014
2015
2. CBD
3. Emerging zone
4. Secondary Zone
5. Parque das Nações
6. Western Corridor
7. Zone 7
2016
The Emerging Zone was in first place in new office leases in 2016 in terms of the area leased, closely followed by CBD and the Corredor Oeste.
PRIMAVERA MARKET REPORT 2017
31
Table 20
Number of Transactions by Zone – 2016 10% 16%
28% 24%
7% 2%
13%
PRIME CBD CBD EMERGING ZONE SECUNDARY ZONE PARQUE DAS NAÇÕES WESTERN CORRIDOR ZONE 7
The “Service Companies”, “Telecom, Media and Technology (TMT) and Utilities” and “Financial Services” sectors were the driving force behind the demand in 2016 with about 30%, 23% and 20% of the absorbed area respectively (approximately 42,539sq.m., 33,310 sq.m. and 20.079 sq.m.).
32
AGUIRRE NEWMAN
Table 21 2015 %
Transactions
%
Average area [sq.m]
Area [sq.m.]
%
Transactions
%
Average area [sq.m]
26%
51
20%
744
33 310
23%
40
20%
833
7 869
5%
24
9%
328
5 442
4%
12
6%
454
Company Services
36 564
25%
57
22%
641
42 539
30%
49
25%
868
Other Services
11 809
8%
32
12%
369
16 537
12%
39
20%
424
Consumer Products
10 224
7%
19
7%
538
3 427
2%
11
6%
312
Financial Services
21 126
15%
36
14%
587
29 079
20%
17
9%
1 711
Consultant & Law
5 200
4%
21
8%
248
2 579
2%
13
7%
198
State, Europe and Associations
11 750
8%
8
3%
1 469
6 135
4%
6
3%
1 023
Construction and Real Estate
2 002
1%
9
4%
222
4 750
3%
12
6%
396
144 513
100%
257
100%
562
143 799
100%
199
100%
723
Sector
Area [sq.m.]
2016
TMT's & Utilities Pharmaceutical & Health
TOTAL
All sectors recorded fewer transactions in
The “State, Europe and Associations” sector also
2016 that the year before, except for “Other
stands out because although there were few
services” and “Construction and Real-estate”.
transactions, just 6, the average leased surface
The “Financial Services” sector stood out with
area was the second highest of all with 1,023
17 transactions, 19 fewer than the year before,
sq.m. per deal. This figure is largely due to the
but with an average surface area of 1,124 sq.m.,
fact that CML (Lisbon city chambers) occupied
compared with 587 sq.m. in 2015. This increase
4,491 m of the Entreposto Building.
in area was mainly driven by transactions by players such as Santander Totta (9,800 sq.m.) and BNP Paribas (6,122 sq.m.).
PRIMAVERA MARKET REPORT 2017
33
Table 22
Average Absorption Area 2014 / 2015 / 2016 60%
50%
40%
30%
20%
10%
0% > 5.000 sq.m.
2014
2015
3.001 to 5.000 sq.m.
1.501 to 3.000 sq.m.
801 to 1.500 sq.m.
301 to 800 sq.m.
<300 sq.m.
2016
Table 23 2014 Take-up
2015
2016
Transactions
%
Transactions
%
Transactions
%
> 5.000 sq.m.
3
1%
3
1%
5
3%
3.001 to 5.000 sq.m.
5
2%
2
1%
5
3%
1.501 to 3.000 sq.m.
6
3%
12
5%
13
7%
801 to 1.500 sq.m.
12
5%
22
9%
18
9%
301 to 800 sq.m.
71
30%
85
33%
60
30%
< 300 sq.m.
142
59%
133
52%
98
49%
TOTAL
239
100%
257
100%
199
100%
34
AGUIRRE NEWMAN
In spite of the number of transactions in 2016
a higher demand for larger areas, over and
having fallen by 58 compared with 2015,
above 800 sq.m., rather than spaces that were
there was no reduction in business activity.
smaller than this, showing that companies are
Compared with previous years, there was
getting bigger.
Table 24
Average Absorption Area [sq.m.] 2014 / 2015 / 2016 2.500
2.000
1.500
1.000
500
0 1. Prime CBD
2014
2015
PRIMAVERA MARKET REPORT 2017
2. CBD
3. Emerging zone
4. Secundary Zone
5. Parque das Nações
6. Western Corridor
7. Zone 7
2016
35
Over the last three years, Lisbon has had an average leased area per transaction of around 23% more than in Barcelona. The situation is different when compared with Madrid. Over the period in question, the average leased areas in Madrid were always bigger than in Lisbon, with the biggest difference seen in 2015 (Madrid 950 sq.m. and Lisbon 562 sq.m.).
Table 25 2014
2015
2016
Average Area [sq.m.]
Average Area [sq.m.]
Average Area [sq.m.]
Lisbon
529
562
723
Madrid
851
950
884
Barcelona
458
539
589
Zone
The Portuguese and Spanish office space markets both show signs of growth as a result of the economic recovery and business growth in both countries.
36
AGUIRRE NEWMAN
Over the last three years, Lisbon has had an average leased area per transaction of around 23% more than in Barcelona.
PRIMAVERA MARKET REPORT 2017
37
Vacancy Offices
38
AGUIRRE NEWMAN
Vacancy The availability rate between 2014 and 2016 fell
looking for larger spaces along with a stagna-
by about 14.3% and is currently at 10.2%, which is
tion in the development of new office projects,
equivalent to about 473,460 m² of free space (in-
reducing the supply of office space, particularly
cluding zone 7). This is mainly due to companies
in Parque das Nações and Prime CBD.
Table 26
Availability by Zones [sq.m.] 2014 / 2015 / 2016 25.00%
20.00%
15.00%
10.00%
5.00%
0.00% 1. Prime CBD
2014
2015
PRIMAVERA MARKET REPORT 2017
2. CBD
3. Emerging zone
4. Secundary Zone
5. Parque das Nações
6. Western Corridor
7. Zone 7
2016
39
Table 27 2014 Zone
2015
2016
Availability [sq.m.]
%
Availability [sq.m.]
%
Availability [sq.m.]
%
1. Prime CBD
54 270
9,25%
52 424
8,77%
41 590
6,96%
2. CBD
103 596
9,78%
103 737
9,46%
93 317
8,51%
3. Emerging Zone
69 374
14,33%
64 488
13,13%
46 758
9,31%
4. Secondary Zone
23 066
5,99%
22 737
5,83%
30 053
7,75%
5. Parque das Nações
29 339
8,17%
17 414
4,85%
12 773
3,56%
6. Western Corridor
223 615
24,61%
210 165
23,12%
205 964
22,48%
7. Zone 7
49 270
6,43%
38 956
5,07%
43 007
1,11%
TOTAL
552 530
12,14%
509 922
11,06%
473 462
10,21%
Most zones were down compared with 2015, namely the Prime CBD and the Emerging Zone as a result of greater demand.
40
AGUIRRE NEWMAN
The availability rate between 2014 and 2016 fell by 14.3% and is currently at 10.2%, which is equivalent to about 473,460 sq.m. of available area.
PRIMAVERA MARKET REPORT 2017
41
Rents Offices
42
AGUIRRE NEWMAN
Rents Average rents saw a general increase between
As regards the two main business zones, Prime
2015 and 2016. The only exception was the Prime
CBD and CBD, these rose to €19.00 /sq.m. and
CBD, because of a lack of quality supply and
€15.80/sq.m., for prime rent in 2016.
the fact that there were transactions involving large spaces with lower sq.m. rents. The prime rents were all in all very similar to most zones and went up compared with 2015.
Table 28 2014
2015
2016
Prime Rent (€/ sq.m.)
Average Rent (€/ sq.m.)
Prime Rent (€/ sq.m.)
Average Rent (€/ sq.m.)
Prime Rent (€/ sq.m.)
Average Rent (€/ sq.m.)
1. Prime CBD
19,00
14,74
18,50
15,89
19,00
14,83
2. CBD
15,00
11,78
14,00
11,49
15,80
12,53
3. Emerging Zone
14,00
12,06
12,00
10,85
16,00
12,57
4. Secondary Zone
NA
8,66
NA
11,55
NA
14,41
5. Parque das Nações
14,00
12,14
16,50
13,32
15,00
13,72
6. Western Corridor
12,00
9,44
11,50
9,40
12,50
10,49
Zone
PRIMAVERA MARKET REPORT 2017
43
Comparing rents in Lisbon with Madrid and Barcelona, prime rents in Lisbon remained fairly stable, unlike the other two cities where there was some instability.
Table 29
Prime rents in Lisbon, Madrid and Barcelona (€/ sq.m.) 1998 → 2016 50.00
40.00
30.00
20.00
10.00
0.00 1998
1999
LISBON
44
2000
2001
MADRID
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
BARCELONA
AGUIRRE NEWMAN
Rents outside the city centres and on the city outskirts generally went up in 2016. Rents went up more modestly in the central business districts than outside the city centres and outside the city.
Table 30
Average Rents in Lisbon, Madrid and Barcelona 2015 → 2016 15.00%
12.00%
9.00%
6.00%
3.00%
0.00% CBD
Decentralized
Out of town
LISBON MADRID BARCELONA
PRIMAVERA MARKET REPORT 2017
45
Oporto Offices
46
AGUIRRE NEWMAN
Oporto Oporto saw a significant growth in the office space market in 2016, driven by a wide range of industries such as Contact Centres, TMTs, Shared Services, the food industry and healthcare. The demand was as diversified as the supply. → Areas of over 1,000 sq.m.: International companies already operating in Lisbon, to expand their representation to the north of the country → Areas between 100 – 500 sq.m.: Medium-sized Spanish companies → Areas of under 100 sq.m.: Start-ups / SMEs, generally associated with new technologies On the demand side, they usually require being close to the Metro, modern buildings and location, preferably in Boavista or the Historical Zone. There are basically two, quite separate but well established, main office supply markets in Oporto.
PRIMAVERA MARKET REPORT 2017
47
Oporto
AVEN ID
A DA
BOAV
ISTA
ROTUNDA DA BOAVISTA
PRIME ZONE: 13 – 16€ / SQ.M
48
EMERGING ZONE : 9 – 12 €/ SQ.M
AGUIRRE NEWMAN
Gaia
AFURADA DE BAIXO AFURADA DE CIMA
Centro Comercial Arrábida Shopping M CANDAL Oliveira do Douro
Mafamude V ILA NOVA de GAIA
Canidelo COIMBRÕES
Gaia Shopping
FREIXIEIRO M SANTO OVÍDIO
RENT: 9 – 12€ /SQ.M.
Maia PA D R Ã O
C A R VA L H A L M Zona Industrial
REAL
Vermoim
GODIM Moreira
BRANDINHÃES O UTEIRO
OUTEIRO ALTOS
M Fórum Maia
BARREIROS
Zoo da Maia Câmara Municipal da Maia
SENDAL
Parque da Maia M
RENT: 9 – 12€ /SQ.M.
PRIMAVERA MARKET REPORT 2017
49
Industrial
52
AGUIRRE NEWMAN
The Portuguese industrial market is centralised in the Metropolitan Area of Lisbon, where most of the existing supply is concentrated. In the Metropolitan Area of Lisbon, the main axes of supply are concentrated in warehouses in 6 distinct zones.
ZONE 1 NORTH MARGIN OF TEJO RIVER SACAVÉM – ALVERCA: Sacavém, Bobadela, São João da Talha, Santa Iria da Azóia, Póvoa de Santa Iria e Forte da Casa ALVERCA – AZAMBUJA: Alverca do Ribatejo, Sobralinho, Alhandra, Vila Franca de Xira, Castanheira do Ribatejo, Carregado, Vila Nova da Rainha, Azambuja LOURES – VIALONGA: Prior Velho, Camarate, Portela, Moscavide, Unhos, Apelação, Frielas, Santo António dos Cavaleiros, Loures, Santo Antão do Tojal, Fanhões, Lousa, Bucelas, Arruda dos Vinhos, Odivelas, Famões, Póvoa de Santo Adrião
ZONE 2 SOUTH MARGIN OF TEJO RIVER MONTIJO – ALCOCHETE: Montijo, Porto Alto, Samora Correia, Benavente PALMELA – SETÚBAL: Almada, Seixal, Sesimbra, Barreiro, Moita, Palmela, Setúbal
ZONE 3 WESTERN CORRIDOR ALFRAGIDE – CARNAXIDE: Alfragide, Carnaxide, Amadora SINTRA – CASCAIS E OEIRAS
PRIMAVERA MARKET REPORT 2017
53
Demand Industrial
54
AGUIRRE NEWMAN
Demand The year 2016 was marked by low activity in the
Small to medium businesses have, however,
logistics sector, a trend of recent years. During
been seeking out larger areas, as they begin to
the period hardest hit by the economic crisis,
see significant growth in their activity, after a
many companies concentrated their Iberian
long stagnant period. Because of this, despite
Platforms in the Spanish market, significantly
the low number of transactions registered com-
reducing their Portuguese areas, and in many
pared with the pre-crisis period, we already see
cases closing them. Because of this, demand has
some demand for spaces for above 3000 sq.m..
been evolving slowly, with speculation of a slow growth in revenue.
Main Leases Contrary to the leasing market, demand for investment products in the logistics sector has been more active. In 2016, investment pertaining to logistics assets surpassed â&#x201A;Ź140m, mainly in Sale & Leaseback transactions.
PRIMAVERA MARKET REPORT 2017
Table 31 Logiters
Nave LogĂstica Webasto
11.500 sq.m.
Quinta das Minas
7.300 sq.m.
Conforama
Quinta da Marquesa
4.000 sq.m.
Leroy Merlin
Abrunheira Business Center
3.000 sq.m.
DHL
55
Supply Industrial
56
AGUIRRE NEWMAN
Supply In terms of supply, speculative projects have not
Portugal currently has 3 large-scale logistical
been developed. In terms of future supply, no
areas: in Porto Leixões, Lisbon North Logistics
future construction has been planned.
Platform and another located adjacent to the Port of Sines.
PORTO LEIXÕES Logistical Platform: → Polo 1 31 hectares 5 plots 98.000 sq.m. logistical warehouses → Polo 2 35 hectares 14 plots Main tenant: PORTO SINES
LISBON NORTH
ZILS Global Parques – Industrial and Logistical area of Sines: → Over 2.000 hectares
→ 100 hectares → 52 plots Main tenant:
PRIMAVERA MARKET REPORT 2017
ZALSINES made up of two areas: → The intra-port area, with 30 hectares, of which 12.3 hectares have complete infrastructure
57
Rents Industrial
58
AGUIRRE NEWMAN
Rents The stabilisation of logistical activity resulted in a similar stabilisation of average lease prices. Average lease prices in 2016 varied between 3 €/sq.m./month and 3.50€/sq.m./month, depending on region, product features and level of demand – supply of each one.
Table 32 Lisboa
2014
2015
2016
Due to the market do not show signs of growth,
1. Sacavém - Alverca
3,25 €
3,50 €
3,50 €
either in the present or in the future, develo-
2. Alverca - Azambuja
4,00 €
3,50 €
3,50 €
pers will have less interest in embarking on new
3. Loures - Vialonga
4,00 €
3,50 €
3,50 €
4. Montijo - Alcochete
3,50 €
4,00 €
3,00 €
5. Palmela - Setúbal
4,75 €
4,50 €
3,00 €
6. Alfragide/ Carnaxide
3,00 €
3,00 €
3,50 €
7. Sintra - Cascais - Oeiras
3,00 €
3,00 €
3,50 €
industrial projects. The viability of these projects is risky because of reduced activity of the sector and low demand, becoming them unappealing.
Forecasts for the L&I sector in 2017 The market is not expected to see a much grea-
Demand will come, as in 2017, mainly from Small
ter growth in 2017 than in 2016. Demand throu-
to Medium businesses that, thanks to the re-
gh tenders has not been seen in recent years,
covery in purchasing power, will be expanding
and there is uncertainty over whether this type
their current areass. In this segment, assets typi-
of activity will return to the Portuguese logisti-
cally do not surpass 3000 sq.m., both in rental
cal market in 2017.
and sale.
PRIMAVERA MARKET REPORT 2017
59
Retail
62
AGUIRRE NEWMAN
Retail The retail market in Portugal remained qui-
versy, namely because of the New Rent Law.
te dynamic in 2016 largely due to High Stre-
Under the terms of the law, landlords now find
et. Apart from the constant improvement in
it easier to evict tenants without having to go
economic conditions, with greater purchasing
to court. This situation has resulted in a decre-
power and lower unemployment rates, there
ase in the older, more traditional trade in the
was also an increase in tourism in the country,
commercial zones and a more modern com-
particularly in Lisbon and Oporto. These fac-
mercial supply.
tors led to greater confidence by domestic and international store keepers.
Recently there has been a development of zones that has so far been less dynamic in terms
The continued increase in tourist flows and the
of commerce, such as secondary streets in
high flows of consumers from countries such
down town Lisbon, Alfama and Cais do SodrĂŠ.
as Brazil, Angola, France, Russia and China,
The impact of this dynamism in the surroun-
along with beneficial tax policies for foreign
ding zones has created new centralities and
investment, such as the â&#x20AC;&#x153;Golden Visaâ&#x20AC;? pro-
attracted new consumers, inhabitants and
gramme, helped keep Portugal in the sights of
tourists to these areas.
international operators. The rehabilitation of abandoned buildings has come up as an alternative option to install operators who are looking for High Street spaces and find there is little supply compared with the high demand. The question of rehabilitating old buildings has led to some contro-
PRIMAVERA MARKET REPORT 2017
63
Supply Retail
64
AGUIRRE NEWMAN
Supply The High Street is distributed along the commercial axis with specific characteristics in terms of the kind of activity and the target audience they attract. The most attractive zones, and those in most demand by visitors to Lisbon, continue to be the zones around the historic centre: Rossio, Rua do Carmo, Rua Garrett, Avenida da Liberdade, Rua Augusta, and the area around Saldanha.
PRIMAVERA MARKET REPORT 2017
65
Lisbon
Av en
ida
Fo
nte
sP
ere
ira
de
Me lo
Museu Calouste Gulbenkian
de
rda
ibe
aL
ad
nid
e Av
Castelo de S. Jorge
Portas do Sol
Assembleia da República Baixa Pombalina
Alfama Sé de Lisboa
Praça do Comércio
PRIME ZONE
66
EMERGING ZONE
AGUIRRE NEWMAN
Oporto
Mercado do Bolhão
Teatrio Municipal Rivoli
Fonte dos Leões
Torre dos Clérigos
Sé do Porto
PRIME ZONE
EMERGING ZONE
PRIMAVERA MARKET REPORT 2017
67
Demand Retail
68
AGUIRRE NEWMAN
Demand Most High Street in Lisbon saw an expansion in 2016 with catering expanding the most, followed by high demand by the fashion and accessories sector. The Prime Zones continue to see the highest demand in Lisbon, focused moving from Avenida da Liberdade to Rua Garrett and Rua Augusta. Operatorsâ&#x20AC;&#x2122; demand for these zones is justified be the preference for zones with more people.
PRIMAVERA MARKET REPORT 2017
69
Retail in Lisbon
PRIME ZONE Prime rent: 120 € / sq.m.
EMERGING ZONE Prime rent: 70 € / sq.m.
DEMAND INTENSITY BOILING
Rua Garret/ Chiado
WARM
Av. Liberdade
BOILING
Rua Augusta
WARM
Rua do Ouro/ Rua da Prata Ribeirinha HOT
Eixo MP/ Saldanha
70
AGUIRRE NEWMAN
Retail in Oporto
PRIME ZONE Prime rent: 60 € / sq.m.
EMERGING ZONE Prime rent: 40 € / sq.m.
DEMAND INTENSITY BOILING
Rua Santa Catarina
WARM
Rua das Flores Avenida dos Aliados Clérigos Praça da Liberdade Mouzinho da Silveira
PRIMAVERA MARKET REPORT 2017
71
Shopping Centres Retail
72
AGUIRRE NEWMAN
Shopping Centres The Portuguese shopping centre market is one of the most competitive in Europe. Most of the shopping centres in the country were built between 1995 and 2009, and in 2010 it attained a
Mar Shopping Algarve
level of maturity, so few have appeared since then. Currently, most large and medium cities and towns have at least one shopping centre that covers the retail needs of the surrounding population. In the current market context, the supply of shopping centres in Portugal has seen one or two openings a year at most. In 2016 only one shopping centre was opened: the Nova Arcada, in Braga (formerly Dolce Vita Braga), in a partnership between SONAE and IKEA. This project has a total area of around 68,500 sq.m, with an IKEA store (20,000 sq.m.), Hypermarket (11,000 sq.m.) and about 110 shops. Mar Shopping Algarve is expected to open in 2017, with about 83,000 sq.m. Developed by the IKEA Group, it is going to have 220 shops, 8 cinemas, 1 IKEA store and 3,500 parking places. Because of its location, size and diversity, the project will boost the zone of the Algar-
Ă&#x2030;vora Shopping
ve to a level that the other shopping centres have not been able to reach so far. In Alentejo, Ă&#x2030;vora Shopping will have 74 shops, 19 restaurants and 1,200 parking places covering about 16,400 sq.m.
PRIMAVERA MARKET REPORT 2017
73
Table 33
Shopping Centres (sq.m.) 2000 â&#x2020;&#x2019; 2016 350 000
300 000
Area (m2)
250 000
200 000
150 000
100 000
50 000
0 2000
74
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016 2017 P
AGUIRRE NEWMAN
AÃ&#x2021;ORES
17%
20%
1%
22 Shopping Centers
26 Shopping Centers
1 Shopping Center
MADEIRA
2%
26%
3 Shopping Centers
18%
21 Shopping Centers
34 Shopping Centers
9%
10 Shopping Centers
1%
1 Shopping Center
PRIMAVERA MARKET REPORT 2017
6%
9 Shopping Centers
75
Because of the fact that shopping centre supply has, in a certain way, attained a level of stability, the developers have opted for new
Table 34
Modernity of Shopping Centres in Portugal (%) 2%
strategies to attract more visitors.
17%
Although many shopping centres are quite recent, with an average age of about 16 years, recently various centres have been refurbished, namely C.C Amoreiras, in Lisbon and Mar Shopping, in Matosinhos. They invested in more modern, trendy designs (e.g. gourmet food court and more pleasant look).
57% 24%
Another approach has been to invest in the innovation of the spaces, making them more welcoming and comfortable and providing better experiences in the shopping centres. As an example of these initiatives, there are
UP TO 5 YEARS BETWEEN 5 AND 10 YEARS BETWEEN 10 AND 15 YEARS OVER 15 YEARS
some shopping centres with customer support lines via Whatsapp, making the contact more practical and immediate. There are also georeferencing systems associated with the shopping experience, such as apps that provide the users with real time information about special offers, sales, services and other information about where they are. The Shopping Centres have used differentiation and customisation to offer quality to the spaces and conquer customers’ loyalty.
76
AGUIRRE NEWMAN
Forecasts for 2017 Because of the tourism that is certainly going to
There is some speculation about the effect of the
flow into Lisbon and Oporto, the retail market,
New Rent Law, because of a possible revision.
particularly High Street, will continue to see high
In 2017, any events this causes will determine
levels of demand. The catering area will be one
the continuation of High Street in the historical
of the most dynamic among the different sec-
parts of the city. Another possible scenario is
tors of commerce.
more modern retail shops moving in.
In the down town and Chiado zones of Lisbon, it
As regards the shopping centres, it will continue
will be recorded eccentric amounts in Key Money
the adaptation and improvement of the units to
transactions because of a lack of quality supply
follow the new trends more allied with techno-
in 2017.
logy.
PRIMAVERA MARKET REPORT 2017
77
Tourism
80
AGUIRRE NEWMAN
Tourism 2016 continued to see intense tourist activity
All these events, along with the marketing that
in Portugal to a great part driven by foreign
has been developed, has led to an increase in
demand. The tourism sector indicators went
tourist demand for the country.
up compared with 2015 and Portugal proved its capacity to reinvent itself in terms of tou-
There was an increase in flights to Portugal in
rism/hotels in areas such as organising events.
2016 in response to this demand. Azul Linhas Aéreas Brasileiras, announced connections
In 2016, Lisbon hosted the Web Summit event
from Brazilian cities to Lisbon and Oporto, first
which had more than 55,000 participants,
with three flights a week, and then 5 a week.
which added to its growing fame as a city
Delta Airlines, the second largest US airline,
and the country as a whole. A mega event of
presented its schedule that included New
this size sees changes in terms of accommo-
York - Lisbon in 2016. Another case was the
dation, catering, transports etc. As the event
Portuguese flag-carrier TAP that expanded its
was held over a three-day period, the return
operations out of Lisbon and Oporto to other
in economic terms is difficult to quantify, but
European cities, African countries, Brazil and
the Portuguese hotel and a catering associa-
the USA.
tion reckoned that there was a direct impact of hundreds of millions of euros (greater than EXPO’98 and EURO2004). I the sports area, Portugal organised the “Lisbon Rock’n’Roll Half Marathon” and this year, Peniche hosted one of the stages of the World Circuit. Looking at other leisure events, Portugal has been standing out with a range of summer festivals (NOS Alive, Super Bock Super Rock, etc).
PRIMAVERA MARKET REPORT 2017
81
Domestic Tourism
82
AGUIRRE NEWMAN
Domestic
Table 35
Overnights in Portugal - 2015 According to figures released by the Portuguese statistics agency (INE), hotels had total takings of about €2.9 billion and €2.1billion
14.482,8 30%
from room sales. These interim results show increases of around 18% and 14.4% respectively compared with 2015, as a result of an increase in the number of stays following a marketing
51,023.9
campaign run by the domestic tourist agency, instability at some competing destinations and organised events. 34.367,9 70%
Lisbon was awarded the ‘Best City or Short Break Destination’ prize by the Travel Media Awards 2016, ahead of cities such as London,
PORTUGAL
Paris, Rome or Barcelona. Lisbon stood out because of the quality and diversity of its hotels, restaurants, museums, entertainment and other tourist attractions.
FOREIGN
Table 36
Overnights in Portugal - 2016
Looking at the hotel behaviour in mainland Portugal, Lisbon, the Algarve and Porto are the
15.238,8 28%
areas with the greatest number of tourists.
53,526.4 38.287,6 72%
PORTUGAL PRIMAVERA MARKET REPORT 2017
FOREIGN 83
Lisbon Demand The Lisbon Metropolitan Area accommodated
tional guests accounted for 66% of the total.
about 5.6 million tourists in 2016, who contri-
This figure was also reflected in the overnight
buted towards the 13.1 million overnight stays
stays, with foreign tourists representing 77%
(+7.6% and +7.2% than in 2015). Foreign demand
of the overall amount (10.1 million overnight
was very important as the number of interna-
stays).
Main Nationalities of Overnight Stays 12%
13%
FRANCE
9%
SPAIN
GERMANY
8%
BRAZIL
7.5%
UNITED KINGDOM
Table 37 2016 Total Income
RevPar
Room occupancy rate
€874.2 M
€59.2
72,5 %
+13,2 %
+10,5%
+ 1,9%
SOURCE: TURISMO DE PORTUGAL (2016)
84
AGUIRRE NEWMAN
Supply In and around Lisbon, most supply of accommodation comes from hotels rather than other options (Pousadas, resorts and so on) and this is almost 90% of all the supply.
Table 38
Hotels 2016 - A.M. Lisbon 5%
2%
3%
89%
APARTMENT HOTELS
TOURIST APARTMENTS HOSTELS HOTELS
TOURIST VILLAGE
As the Tourism sector gains importance in the Lisbon region, hotel supply grew interestingly between 2009 and 2016 and the number of units went up almost 71% (249 in 2016 compa-
In Lisbon, Hotel supply increase around 70% between 2009 and 2016. PRIMAVERA MARKET REPORT 2017
red with 146 in 2009).
85
Table 39
Hotels by Typology - A.M. Lisbon (number of units) 250 46 45 42
200 42 39
61 60
29
150
58
23 52
18 51
49 50
100
47
88
101
94
80
50
60
66
71
76
21
24
26
26
2009
2010
2011
2012
34
37
38
41
2013
2014
2015
2016
0
5 STARS
4 STARS
3 STARS
SOURCE: INE/ AGUIRRE NEWMAN
2 AND 1 STARS
Over the next two years, there is expected
Table 40
to be an increase in hotel rooms in Lisbon, as there are already 25 new hotels in the pipeline, which should increase the number of available rooms by more than 2,000. Increased consumer confidence has been
RevPar
Occupancy rate
Average Room Rate (ARR)
5 Stars
92.3
67.0%
144.56
4 Stars
56.4
74.5%
75.81
3 Stars
50
75.4%
63.65
2016
driven by the results and indicators that have been seen in the sustained growth of the sector in Lisbon. 86
AGUIRRE NEWMAN
Oporto Demand The north of the country had about 3.8 million
52% of the total. However, the number of over-
guests in 2016, who contributed with 6.9
night stays by foreigners in the north of the
million overnight stays (+11.1% and +12.8% than
country has been growing and it has increased
in 2015). There is a greater balance between
by about 18.2% (3.8 million overnight stays in
domestic and foreign tourists in this part of
2016 compared with 3.2 million in 2015).
the country, with Portuguese guests making up
Main Nationalities of Overnight Stays 9%
16%
23%
SPAIN
FRANCE
BRAZIL
8%
GERMANY
7%
UNITED KINGDOM
Table 41 2016 Total Income
RevPar
Occupancy rate
€361.9 M
€35.1
60.8 %
+21.7 % (2015)
+18.2%
+ 8.7% (2015)
SOURCE: TURISMO DE PORTUGAL (2016)
PRIMAVERA MARKET REPORT 2017
87
Supply Just like in Lisbon, most of the accommodation in the north of Portugal is in hotels, which
90% of Hotel Establishments in Oporto correspond to Hotels.
account for 91% of the total. The supply of hotel rooms in the north of Portugal has been expanding in a sustained manner since 2009. Much of the growth has been in 4-star accommodation, which doubled between 2009 and 2016. Generally, 3-, 4- and 5-star hotels have increased by 123% (from 141 units in 2009 to 315 in 2016).
Table 42
Hotel Establishments 2016 – North of Portugal 2%
2%
4%
91%
HOTELS
88
APARTMENTS HOTELS TOURIST APARTMENTS TOURIST VILLAGE HOSTELS
AGUIRRE NEWMAN
Table 43
Hotels by Typology - North of Portugal (number of units) 300
116 109
225
99 93
90
69 84
150
84
45 35
80
76
85
62 55
75
50
0
64
56
49
71
71
77
99
89
7
7
10
13
14
14
15
16
2009
2010
2011
2012
2013
2014
2015
2016
5 STARS
4 STARS
3 STARS
SOURCE: INE/ AGUIRRE NEWMAN
2 AND 1 STARS
The north of the country can expect an increa-
Table 44
se in the number of hotels as there are already RevPar
Occupancy rate
5 Stars
75.8
67.7%
4 Stars
40.4
60.2%
3 Stars
25.6
59.3%
10 new ones in the pipeline for the next two
2016
years. The 2016 hotel indicators for the different kinds of establishment have figures which, just
Average Room Rate (ARR)
€83
like Lisbon, attract hotel investment.
PRIMAVERA MARKET REPORT 2017
89
Algarve Demand The Algarve is Portugal’s greatest tourist acti-
foreigners all year round and they are respon-
vity zone and it had around 4.0 million guests
sible for 73% compared to domestic guests.
in 2016 that were responsible for 18.1 overnight
In 2016, there were 14.2 overnight stays by
stays (+10.1% and +9.0% than in 2015). Tou-
foreign tourists, almost three times more that
rist activity in the Algarve is mainly driven by
domestic visitors.
Main Nationalities of Overnight Stays 43%
UNITED KINGDOM
13%
10%
GERMANY
HOLLAND
8%
IRELAND
6%
FRANCE
Table 45 2016 Total Income
RevPar
Occupancy Rate
€904.6 M
€46.7
64.9 %
+19.4 % (2016)
+13.6%
+ 5.0%
SOURCE: TURISMO DE PORTUGAL (2016)
90
AGUIRRE NEWMAN
Supply The supply by accommodation developments in the Algarve is very diversified, with Hotels representing 36%, Tourist Apartments 35% and Apartment Hotels 19%. The growth in hotels has been sustained and more prudent than in Lisbon. Between 2009 and 2016, the number of hotels increased 48% (91 units in 2009 and 135 in 2016).
Table 46
Hotel Establishments - Algarve
35%
36%
9% 19%
HOTELS
Between 2009 and 2016, the number of hotels increased by 48%. PRIMAVERA MARKET REPORT 2017
APARTMENTS HOTELS TOURIST APARTMENTS TOURIST VILLAGE HOSTELS
91
Table 47
Types of Hotel - Algarve (number of units) 125
22 21 20
15
100
21
20
12 33
10
37
34
32
75
35
35
33 29
50 46
45
43
49
50
52
47
41
25
11
15
2009
2010
19
16
19
23
23
24
2011
2012
2013
2014
2015
2016
0
5 STARS
4 STARS
3 STARS
2 AND 1 STARS
SOURCE: INE/AGURRE NEWMAN
Because of the high demand for accommodation, hotels are faced with stiff competition from Apartment Hotels, Tourist Apartments and Tourist Resorts. Although the supply of this kind of establishment has not shown significant growth in recent years, these units are established on the market and with representation in the Algarve market.
92
AGUIRRE NEWMAN
Table 48
Hotel Establishments - Algarve (number of units) 250
10
12
21
20
20
35
34
45
47
49
50
2012
2013
2014
2015
200
21
22
15
150 29
33
32
41
43
46
2009
2010
2011
33
35
37
100
52
50
0
HOTELS-APARTMENTS
TOURISTIC VILLAGE
vestors and there are another 23 units in the pipeline for the coming years. About 10 are expected to open in the Algarve in 2017/18.
PRIMAVERA MARKET REPORT 2017
FONTE: INE/AGURRE NEWMAN
TOURISTIC APARTMENTS
The Algarve is in the cross-hairs of hotel in-
2016
Table 49 RevPar
Occupancy Rate
5 Stars
89.6
59.4%
4 Stars
55.0
65.6%
3 Stars
38.5
64.8%
Apartment hotels
45.4
71.6%
Resorts
36.6
37.4%
Tourist Apartments
30.1
40.4%
2016
93
Outlook for 2017 In 2017 the outlook remains high and in line with the performance seen in 2016. On the demand side, the attraction of new tourists through the marketing that has been run by sector entities is going to continue to fuel interest in Portugal. Because of the political and social instability in competing destinations (such the North African destinations, the Middle East and Turkey), Portugal may continue to benefit in terms of tourism, receiving the tourists unwilling to go to those destinations. It is expected that Portugal can manage to retain and maintain this public over the long run as it is a segment with greater disposable incomes. As regards the supply, with the foreseen increase in hotel units, there is greater and greater differentiation of the hotel establishments, according to market trends (technology, ecological awareness, theme concepts and so on). The main challenge for Tourism in Portugal over the coming years will be the balance between the occupancy rate and the average room prices. There was a 3.37% fall in hotel prices in Portugal in 2016 when it stood at â&#x201A;Ź92. Portugal, particularly Lisbon, is considered a cheap destination by foreign tourists and this is the label that the entities are going to have to face to make the hotel sector profitable. 94
AGUIRRE NEWMAN
PRIMAVERA MARKET REPORT 2017
95
Investment
98
AGUIRRE NEWMAN
Investment The real-estate investment in Portugal in 2016
There was a greater demand by foreign inves-
was highly dynamic, similar to what was seen
tors from the rest of Europe for investment
previously, in 2015. The sources of the in-co-
products in Portugal in 2016. The European
ming capital were quite varied and new inves-
investors, namely those from Spain, were
tor nationalities also appeared on the market,
looking for a more interesting investment on
namely French investors who represented a
the Portuguese market because of the rapid
large proportion of the amount invested in
recovery of the Spanish economy. Various
commercial property last year.
European countries currently offered historically low yields, making the Portuguese market
Last year’s real-estate market in Portugal
more tempting as its yields are higher.
was quite attractive compared with the other countries in Europe, namely regarding the re-
To corroborate the described dynamic, about
turns that it “offered”, and was a good alterna-
€1.6 billion was invested in the domestic real
tive to savings options/applications the banks
estate market, with 68% of this in the first half
were offering (low term deposit rates).
of the year, equivalent to €1.08 billion.
The characteristics of the commercial assets on the Portuguese market attracted distinct and varied investor profiles (different nationalities, different risk profiles and different investment amounts).
PRIMAVERA MARKET REPORT 2017
99
Table 50
Investment amount [M â&#x201A;Ź] 2005 â&#x2020;&#x2019; 2016 2.500
2.400
2.000
1.603
1.600
1.500 1.128
1.000
826 749
734 609
597
547
500 224
274
0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
The investment amount in 2016 was 40% lower
the domestic real-estate market performance in
than in 2015, mainly because of the 2nd half per-
the second half of last year.
formance, which saw a significant slow-down. This fact was impacted by the characteristics of
As regards the demand by sectors, 2016 saw gre-
the operations in progress (portfolio complexity,
at diversification in the investment in Portugal.
the size of them and transaction constraints),
In the investment in commercial property, the
meaning that some of the more complex opera-
Office and Shopping Centre segments stand out,
tions were postponed until early 2017. The global
with weights of 40% and 17% respectively out of
economic situation, namely questions such as
the total amount of the investment. The real-
Brexit and the election of Donald Trump in the
-estate development/rehabilitation area should
USA have created some investor jitters and the-
also be stressed as it captured around 20% of
se facts also contributed to the deceleration of
the real-estate investment.
100
AGUIRRE NEWMAN
As regards the demand by sectors, 2016 saw
respectively out of the total amount of the
great diversification in the investment in
investment. The real-estate development/re-
Portugal. In the investment in commercial
habilitation area should also be stressed as it
property, the Office and Shopping Centre seg-
captured around 20% of the real-estate in-
ments stand out, with weights of 40% and 17%
vestment.
Table 51
Breakdown of Investment by Sector in 2016 Offices
40%
Shopping Centres
42,5 M
3%
Hospitality
2%
35,0 M
High Street Retail
1%
32,4 M
Others
203,1 M
14%
Logistics
Retail Parks
273,0 M
17%
Supermarkets
643,3 M
1% 18,0 M
1% 14,0 M
Development
284,9 M
20%
0,0
PRIMAVERA MARKET REPORT 2017
100,0
200,0
300,0
400,0
500,0
600,0
700,0
101
Foreign capital remained higher than domestic capital and was responsible for 87% of the real-estate investment in Portugal in 2016.
Table 52
Investment by origin of investor [%] 2005 → 2016 100% 13%
90% 80%
18%
18%
18%
27% 43%
45%
50%
70% 60%
85%
86%
86%
87%
14%
14%
13%
2014
2015
2016
50% 87%
40% 30%
82%
82%
82%
73% 57%
55%
50%
20% 10%
15%
0% 2005
2006
PORTUGUESE
102
2007
FOREIGN
2008
2009
2010
2011
2012
2013
SOURCE: AGURRE NEWMAN
AGUIRRE NEWMAN
The investment by nationality was varied, in 2016.
Table 53
Investment by nationality of investor 2016
109 M€
300 M€
270 M€
260 M€
212 M€
19% of Total Investment
19% of Total Investment
17% of Total Investment
16% of Total Investment
13% of Total Investment
53%
Offices
25%
Development
92%
75%
Retail
8%
Logistics
Retail
25%
Offices
57%
Offices
43%
Development
47%
Offices
22%
Development
SOURCE: AGURRE NEWMAN
As regards Real-Estate Investment Funds, the
associated with banks, because of sector res-
Portuguese Securities Exchange Commission
tructuring measures.
said that the amount under management in December 2016 was €10.528 billion (-6.1% than
Interfundos was the manager with the largest
in December 2015) and there was a total of
market share (13.2%), followed by Norfin (12.7%)
233 active funds (245 in December 2015). The-
and Fundger (9.5%). In total, these companies
se numbers prove some divestment by various
managed 35.4% of the real-estate assets held by
domestic funds, particularly in investment funds
funds.
PRIMAVERA MARKET REPORT 2017
103
104
AGUIRRE NEWMAN
Main Transactions
Table 54
The most attractive real-estate has well-located been prime assets with good tenants and lease agreements of at least 10 years. The main transactions in Portugal last years were the following:
Description
Area (sq.m.)
€ (M)
Campus de Justiça
65.000
223
Algarve Shopping + Estação Viana
63.800
185
Portfólio Douro (12 Assets)
158.000
164
Torre A (Torres Lisboa) + Monumental
55.000
100
NOS HQ
15.000
52,5
Portfolio Continente (4 Assets)
23.000
39
Alexandre Herculano 53
13.000
32,5
Campus de Justiça
Monumental
On the other hand, the limited supply of pro-
start of the geographic dispersion of the in-
duct to trade, compared with the amount
vestment, shifting the concentration from the
of identified demand, with the consequent
Lisbon area, namely to Oporto.
pressure on the yields being offered, led to the
PRIMAVERA MARKET REPORT 2017
105
Offices Investment in offices in 2016 totalized around €640 million, which was 56% more than in 2015 (about €410 million). The average European yield dropped 0.25 percentage points between 2015 and 2016, slipping from 4.10% to 3.85%. As in the rest of Europe, the yield in Portugal went down from 5.50% in 2015 to 5.00% in 2016 due to the high number of operations in this sector in a very aggressive, competitive market. As a result of these movements, the risk premium on the Portuguese office space market is 115 basis points above other European capitals. The prime yields of offices in the various European markets in 2016 were between 3.10% and 5.00% London, Munich, Paris, Berlin, Stockholm and Vienna were the capitals with the lowest values, below the European average. At the other end of the range came Dublin, Lisbon, Brussels and Milan with the highest levels, above the European average. According to the current economic framework, the yields in Portugal are expected to continue to fall next year, both in prime and non-core assets.
106
In 2016, investment in offices totalled around €640M, 56% more than in 2015.
AGUIRRE NEWMAN
Retail – High Street The retail investment market, namely High Street saw an investment of around €32.4 million in 2016 (only 1% of all the investment) and less than the investment that was made in 2015 of about €50 million. International investors were responsible for the lion’s share in 2016 because of their higher purchasing power (or greater availability of capital) and because of the tax incentives for foreigners. The average European yield fell from 3.60% in 2015 to 3.5% in 2016. To corroborate the European trend, the yield in Portugal remained stable at 5.00% in 2016, because of the high demand for these assets for which there is a very limited supply. The prime yields of High Street in the various European markets in 2016 were between 2.25% and 5.00% London, Paris, Rome, Munich and Vienna were the capitals with the lowest values, below the European average. At the other end of the range came Lisbon, Dublin, Frankfurt and Geneva with the highest levels, above the European average. The yields are expected to remain low and even go down in some cities next year because of the continued real-estate interest in Portugal and the liquidity on the domestic and international markets. PRIMAVERA MARKET REPORT 2017
107
Development and Building Rehabilitation
110
AGUIRRE NEWMAN
Development and Building Rehabilitation The Development and Building Rehabilitation industry has become increasingly prominent over the past year, in a market which
Table 55 Description
Area (sq.m.)
€ (M)
has scarce supply in certain segments such
Lisbon North Platform
100.000
100
as office space and logistics, whilst increased
7 Colinas Fund
70.000
90
opportunities have arisen in other sectors such
CTT – S. José 10 & 20
9.600
25
as the residential sector.
Hospital da Marinha
15.000
18
Braz & Braz Building
8.000
9,5
The characterisation of property investment in this segment can be described in accordance with investor profiles: types of assets/uses they look for, as well as the size of projects.
→ Small scale
areas, due to the positive return they present.
This kind of project mainly involves domestic
Boosted by the growth in tourism, the profi-
developers/investors, who, after the crisis,
tability of these investments come through
started to reinvest in the Portuguese market,
the sale of apartments, and their manage-
particularly in Lisbon. The main focus for this
ment and rental in the tourism market.
type of investor has been the rehabilitation of derelict buildings for residential property.
→ Large scale Large scale projects have often been sou-
→ Medium scale
ght after by foreign entities. These projects
Medium-sized projects have tended to raise
mainly incorporate varied uses, often brin-
the interest from international businesses,
ging together office, retail and residential
working in partnership with Portuguese de-
space. In 2016, the “Fundo 7 Colinas”, made
velopers, focusing on the residential market.
up of assets located in different parts of the
This type of investor has analysed “small sca-
city of Lisbon, was one of the big commer-
le” projects in the Historical and Riverfront
cialised portfolios.
PRIMAVERA MARKET REPORT 2017
111
→ Hotels
→ Golden Visa and Non-Habitual Resident
The structural growth of tourism in Portugal
Regime
has prompted the expansion of national and
The introduction of tax incentives like the
international hotel chains. There has been a
Golden Visa and the Non-Habitual Resident
significant increase in demand from new ho-
Regime have stimulated demand in the
tel chains aiming to enter/ explore the Portu-
property market in Portugal. In addition to
guese market. These investors tend to search
the sector’s growth, we also see an increase
for spaces that are suitable for the construc-
in sales prices of assets, and, recently,
tion of a medium-sized building, for between
with the new Golden Visa condition for
100 and 120 rooms.
the renovation of buildings, city centre renovation.
→ Student Residences and Senior Residences The demand for buildings that are suitable
Over 4400 visas have been granted since
for student residences has been growing. For
the introduction of the Golden Visa scheme
these projects, investors look for a central
in October 2012, with a return on investment
location and good access to public trans-
of around 2.7 billion euros in property in
port (especially the Metro). Interest for this
Portugal. The majority of visa holders are of
segment comes predominantly from foreign
Chinese origin, followed by Brazilian, Russian,
investors who are keen to establish them-
South African and Lebanese, primarily in the
selves in the country’s main cities; Lisbon
residential segment.
and Oporto. The greatest challenge for this business relates to the cost associated to its
Many foreigners have been drawn to Portugal
start-up; being a business that requires a high
for fiscal benefits. The regime, introduced in
number of bedrooms for it to be viable.
2009, provides tax exemption for ten years, as long as 183 days are spent in the country
112
In terms of senior residences, which have also
and the person has not had fiscal residence in
become more prominent in the Portuguese
Portugal in the last five years. This status has
market, we can see a desire to replicate con-
received the most interest from residents of
cepts that already exist outside of Portugal,
French, English, Swedish, Dutch, Finnish and
namely those originating in France.
Italian origin.
AGUIRRE NEWMAN
The interest in the residential segment is the greatest, due to its high return on investment.
PRIMAVERA MARKET REPORT 2017
113
Supply Development and Building Rehabilitation
114
AGUIRRE NEWMAN
Supply The current assets supply for property devel-
With an already defined and concentrated
opment or rehabilitation does not cover the
urban fabric in the city centre, new areas of
existing demand. The available supply is, in its
expansion opportunities are becoming avail-
majority, held by Banks, Private Investors and
able for building rehabilitation; all of the River
Management Companies.
Front and Alta de Lisboa/ Telheiras. These are areas with potential for urban growth.
In 2016, because of the greater investment interest in the residential market, many office
The existing supply for hotel development has
buildings were converted into housing to cir-
presented certain limitations and adversities.
cumvent the limited supply. By analysing exist-
Not only are there few projects approved for
ing cases, we see that a significant number of
hotel use, this market has to compete with
derelict or semi-derelict buildings end up not
residential demand which, owing to its higher
being an option, for legal/contractual reasons
profitability, receives more funding at the time
which impede their divestment.
of purchase.
Forecasts for 2017 In 2017, we will certainly see more property
In relation to the scarce supply of quality office
development in the major cities, both in Lisbon
spaces, it is hoped that residential property in-
and Oporto.
vestors begin to look at opportunities that are available for projects within this sector.
The completion of student residences and similar projects is very promising, given the
The residential rehabilitation and construction
characteristics and growth of Portugalâ&#x20AC;&#x2122;s
market will continue to be targeted by investors,
university-level offering.
who will need to diversify the areas they work in, because of decreasing supply in prime areas.
PRIMAVERA MARKET REPORT 2017
115
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