Country Spotlight: Portugal

The Portuguese Commercial Real Estate Market is booming and set for a record-breaking year. JLL has reported that 2018 investments are expected to reach €2.5 billion, and if the current pace continues, it could reach close to €3billion.

The country’s economy is reportedly growing at the fastest rate since 2000 with GDP increasing by 2.7% in 2017 compared with 1.5% in 2016.  The unemployment rate fell to 7.9% in the first quarter of 2018 – the lowest since 2008. This growth is having a significant positive impact on the confidence of investors, consumers and business owners. Tourism also reached a new record in 2017, totaling 12.7 million visitors, almost 12% higher than 2016. This has benefitted the country’s economy and retail market.

The retail sector is enjoying a positive upward trend following growing consumer confidence, increased tourism and improved employment levels. Shopping centres are experiencing momentum, enjoying high footfall and increasing sales.

The threat of online is present, however, the shopping centre sector is responding with enhancing the experience, transforming shopping centres into destinations where consumers can shop, eat, meet friends and enjoy a leisure activity. There has been a lot of developments concentrating on F&B advancement. Cushman & Wakefield have reported that 150 deals closed in Q1 2018 delivering 45,000 sq m of take-up; the F&B sector accounted for 75 of these deals, clearly demonstrating the growth of developing and diversifying a centre’s offering.

The office market in Portugal is buoyant, with unemployment decreasing, economy strengthening and increased interest from international investors, the sector received a total investment volume of €728m in 2017.  BNP Paribas Real Estate has reported that Lisbon’s office take-up has reached the highest figure since 2008, totaling 166,819 sq m – this is a clear reflection of the economic growth. Continued office demand has resulted in a considerable number of projects in the pipeline, JLL has reported that more than 360,000 sq m is projected to be developed until 2021.

A substantial proportion of the office transactions were by new companies entering Lisbon, with the technology sector being a driving force in the growth. There have also been several large, international companies including Google and Amazon looking to expand in Portugal which has had a big impact on the propelling take-up level and the average area per transaction.

Portugal’s reputation is really flourishing from an economic viewpoint and tourism. All trends look to be heading in a positive direction with demand and development set to continue.