Research & Forecast Report Office & Investment Market Lisbon Porto 2018

Transcription

1 Research & Forecast Report Office & Investment Market Lisbon Porto 218

2

3 SUMMARY CITY FACTS (217) LISBON Population (city) 55. Population (metro) 2.8. Unemployment Rate (metro) 9,5% Services Net Monthly Pay (metro) 997 euros Newly formed companies (metro) 13.5 (+13%) Closed or bankrupt companies (metro) 5. (-4%) FAST FACTS Office Take-Up m² +16% yoy Office Stock m² +,6% yoy Prime Rent 2,5 eur/m² +8% yoy Average Rent 16,78 eur/m² +13% yoy Vacancy Rate 8,58% -16% yoy FORECAST (218) Office Take-Up Prime Rent Average Rent Vacancy Rate CITY FACTS (217) PORTO Population (city) 215. Population (metro) 1.7. Unemployment Rate (metro) 9,8% Services Net Monthly Pay (metro) 843 euros Newly formed companies (metro) 7. (+4%) Closed or bankrupt companies (metro) 3. (-15%) FAST FACTS Office Take-Up 41. m² +36% yoy Office Stock 925. m² +3% yoy Prime Rent 13,5 eur/m² +8% yoy Average Rent 12, eur/m² +4% yoy Vacancy Rate (CBD) 9% -8% yoy FORECAST (218) Office Take-Up Prime Rent Average Rent Vacancy Rate INVESTMENT (217) PORTUGAL Transaction Volume Transaction Volume (yoy) +34% Transaction Volume (3 year average) Prime Offices Yield (Lisbon) 5,25% Prime Offices Yield (Porto) 7,25% Prime High Street Retail Yield 5,% Prime I&L Yield 7,5% FORECAST (218) Transaction Volume Prime Offices Yield (Lisbon) Prime Offices Yield (Porto) Prime HS Retail Yield Prime I&L Yield Colliers International Summary 218 Research & Forecast Report 3

4 Lisbon Stock > > 217 did not shift substantially Lisbon s office stock. Office completions were below market requirements and pre-lets or owner occupied buildings are increasingly predominant in the local market. > > For the first time, since 213, Zone 5 increased marginally its total stock, but still well below 1% of the zone s total stock. > > Zone 4 was the most active zone in Lisbon s office market, prolonging an ongoing trend. In fact, Zone 4 has captured virtually one third of all new office stock in Lisbon, since 213. New stock, Pre-let and Owner-occupied (m²) Completions 4. Pre-Let or Owner-occ. 2. > > Overall, Lisbon s office stock has increased less than,65% pa, since 213. Vacancy Rate > > Lisbon s office vacancy rate has been dropping steadily for several years. In 217, Lisbon s office vacancy rate closed at 8,58% - the minimum since 29. > > With a stagnant office stock, Zone 5 vacancy rate has dropped below 3% - the lowest vacancy rate in the city. Zone 5 vacant office area is around 1. m². > > But this good performance is not exclusive to Zone 5, with zones 1 and 4 vacancy rate, staying close to 5%. > > In 3 years, Lisbon s vacant office stock dropped more than 15. m², with virtually no new offices vacant. Used offices account for 99% of existing vacant office space. > > In the periphery, vacant office space diminished almost 5. m², in the last 3 years. The drop was steeper in the CBD, accounting for more than 55% of total vacant office space reduction. since 214, vacant office space dropped more than 15. m² Vacancy (m²) and Vacancy Rate 6. 13,3% 4. 12,1% 11,1% 1,2% 2. New Stock (m²) 8,6% Pipeline > > Lisbon s office pipeline remains insufficient. > > Zone 1 concentrates the largest part of the future office stock to reach the market in 218. > > The existing pipeline comprises less than 5. m². > > Total supply in the pipeline will remain incapable to accommodate the expected demand growth, especially since owner occupied buildings or pre-lets are increasingly becoming the norm. > > Notwithstanding, it is worth mentioning that Colliers International is aware that some major local land owners are paying increased attention to the office market. > > In fact, some plans, with total office building potential clearly surpassing the existing pipeline, are being equated by important developers, not only in zones 4 and 3, but also in Zone 5 (Parque das Nações). Zone 2 Zone 4 Zone 1 4 Research & Forecast Report 217 Lisbon Offices Colliers International

5 Take-Up > > Office take-up broke recent records and surpassed last 5 years average take-up by more than 25%. After 2 stagnant years, office deals increased more than 15% yoy. > > The geography of take-up is quite interesting with zones 2, 3 and 5 recording a lower figure, which is inherent to the lack of available space. Zone 1 led absorption in the CBD and coupled with Zone 4, more than compensated for Zones 2, 3 and 5 performance. > > Zone 4 recorded the highest increase and hosted the 3 largest deals. Zone 6 recorded the highest take-up, increasing almost 7% yoy, accounting for a quarter of total take-up. > > Q4 take-up was among the best performing quarter ever, ranking as third best, since 29, and hosting the 2 largest deals. take-up increased 15% yoy, surpassing 165. m² Annual Take-Up (m²) 5 yr average Take-up by Sector Sector > > Consultant and Lawyers accounted for one fifth of total take-up, recording 3 of the 4 largest deals completed in Lisbon, which account for 7% of total lawyers and consultants deals. TMT's & Utilities Financial Serv. Other Serv. State > > TMT remained as an important sector, however with only one deal in the top 1. Average TMT area per deal was 57 m². Health > > Financial Services and Corporate Services were important occupiers in Lisbon, accounting for approximately 15% of total, each, and with an average area of 75 and 725 m², respectively. > > The health sector tripled their take-up and increased the average area per deal by 6%, with Janssen Cilag deal accounting for one third of total health take-up. Corporate Serv. Consult and Lawyers Const. and RE Consumpt. Prod. Areas > > The average area deal decreased to 67 m² from 72 m². > > The average area per deal was highest in Zone m², which had happened before in 215. > > The largest number of deals were completed in Zone 6, where the average area per deal was just above 5 m². > > The lowest average area per deal - 35 m² - was recorded in Zone 2, with the second highest number of deals completed. > > Local demand has a clear preference for larger areas. Office spaces above 1. m² represented 62% of total take-up. Notwithstanding, there were only 4 deals above 5. m², which provides further evidence on the lack of available modern offices. > > On the contrary, office spaces below 2 m² accounted for 5% of total take-up. > > Companies expanding their premises were responsible for just under 3% of total take-up with new companies starting to operate in Lisbon accounting for more than 1% of total take-up. Average Deal Size and Highest Average Deal Size by Zone (m²) Z Z Z Z Z > > Overall, new companies in Lisbon absorbed 1. m² more than in 216. Colliers International Lisbon Offices 217 Research & Forecast Report 5

6 Rents > > Over the last 2 years, Lisbon office prime rents have been increasing steadily, across all zones in the city. > > The growth rate ranged between 6 and 9% in each zone of Lisbon, with the largest increase recorded in the Zone 4, where prime rents increased by almost 4%. Prime Rents (eur/m²) 2 > > The maximum rent achieved was recorded in Zone 2 and it lagged just 1 euro/m² from the all-time maximum rent, recorded in Zone 3, in Prime CBD Prime Periphery Future > > The lack of new supply will continue to hinder Lisbon s office market. Although take-up has increased, it is hardly a secret that supply has been unable to accommodate potential demand. 1 > > With office demand on the rise, prime rents have increased remarkably over the last year, closing the gap to Barcelona s prime office rents and will continue to grow in the near future. > > It is difficult to anticipate another large leap in office take-up, given supply constraints. Notwithstanding, Colliers predicts take-up will continue to increase, perhaps at a lower growth rate, unless takeup in the periphery continues booming. office rents will keep increasing in Lisbon 6 Research & Forecast Report 217 Lisbon Offices Colliers International

7 Porto Stock > > Porto s office stock increased by 3% in 217, with a large part of pre-lets and building regenerations. > > The pipeline has been increasing, and is expected to keep adding stock: in the periphery, with modern, international standard buildings; in the city centre, through the regeneration of existing buildings, usually, pre-let or owner occupied. > > The present trend of the local office market has started to induce a supply growth, including projected office plans to the city s CBD (Boavista), once deemed consolidated or otherwise unattractive in comparison with tourism or residential related investments. Total Office Stock ( m²) 1. Total Stock New Supply Take-up and Deals > > The large Natixis deal, completed in the first half of 217, led the ranking of major office deals until the end of the year (it was marginally surpassed by Vieira de Almeida s deal, in Lisbon). Besides that ground breaking deal in an area with little tradition in the office market (former Central Shopping), Porto s office market performed well, with total take-up closing above 4. m². > > Porto s enhanced international attraction has been remarkable, with several international companies considering Porto as a potential venue for partial relocation or internal growth. And Porto has not been overlooked by niche markets, such as smaller startups, which are also electing Porto as an option. > > This performance is even more remarkable since it came on the verge of Porto s application loss to host EMA, which would equate to a ground-breaking office take-up, when completed. The potential and much discussed relocation of Infarmed (from Lisbon), will never make amends for local office take-up potential loss, but will have a positive impact on the local market. > > The most in-demand office size band largely exceeds what was the local historical trend (below 5 m²) and highlights the major shift in office demand and, inherently, the major impact on local supply and, especially, the troubling lack of adequate supply, which has been inducing refurbishings-to-suite. it is not only tourists, international companies are discovering Porto Rents and Occupancy > > In the CBD (Boavista), modern buildings have virtually no vacant space, with parking spaces at a premium. > > The pipeline has been mostly concentrated in Porto s periphery, with some important new buildings under construction and others expected to start construction in 218. > > The lack of supply coupled with an increasing International demand will extend pressure on prime rents, that will keep increasing. Additionally, Porto yields are still lagging Lisbon s, showing room to decrease further, especially, with Portugal s economy showing little sign of slowing down. Source: Colliers International Take-up by Size Band 2. m² - 5. m² Source: Colliers International Prime Rents (eur/m²) 12,5 8,5 > 5. m² Prime CBD 12,25 12,25 9, Source: Colliers International 1. m² - 2. m² 9,5 < 5 m² 5 m² - 1. m² Prime Periphery 13,5 12,75 1,25 9,75 Colliers International Porto Offices 217 Research & Forecast Report 7

8 Investment General Performance > > European commercial property investment stood close to 3 billion euros, increasing 4% yoy. Germany and the United Kingdom led the pack with 7 billion euros, each, with a growth rate close to 1%. > > Portugal property investment closed just below 2 billion euros, increasing 34% yoy. Portugal s property investment growth rate compares to few countries in Europe (e.g., Spain had a similar growth rate, with 2 billion euros investment total) and places the country inside the top-2 of the most active countries. in 217, property investment was close to 2 billion euros Property Investment in Portugal Total Source: Colliers International, RCA National Sectors > > In Europe, the I&L market registered a record year, with investment volumes flooding in. Two major portfolio deals GLP s acquisition of Gazeley and CIC s purchase Logicor were key to this performance. > > Portugal I&L market followed that trend, with the highest growth rate sector and recording an investment volume above 3 million euros. CIC s acquisition of Logicor was a strong contributor to this trend, since the acquired global portfolio included several assets located in Portugal, predominantly, in Azambuja. > > Office investment, although stagnant in Europe, recorded an important growth rate, in Portugal. Bank disposals, usually grouped in portfolios, have been fueling this sector over the past years and are expected to remain important in the future to come. > > Although marginally, office investment surpassed the traditional investment sector leader - retail. Retail investment still rose by more than 15%, slightly offsetting the 16% drop on a European level. In Portugal, it is quite obvious that several deals prepared in 217, ended up being completed in 218. Geography > > Lisbon has always been predominant in Portugal s property investment. Notwithstanding, Lisbon s overall weight has diminished last year and, in 217, accounted for less than half of all property investment. This is not a trend to be extrapolated upon and Lisbon will remain predominant in the years to come, especially, when capturing international investment. > > Algarve s investment reduction is something to be considered, but with the local core business - tourism - flourishing, hotel investment will bring Algarve back to the investors radar. > > The emergence of Porto as an attractive investment location has been a recent, but hardly surprising, trend that will continue in time. Furthermore, investment in Porto has not been focusing on retail (as it happens in other locations), including the sale of hotels, I&L properties, and even office buildings, once exclusively dealt in Lisbon. 217 Volume Change (Portugal, yoy) Total Industrial Hotel Office Retail -5% % 5% 1% 15% 2% Source: Colliers International, RCA Property Investment by Region Source: Colliers International, RCA 8 Research & Forecast Report 217 Investment Colliers International

9 International Investment > > After a long period where national property investment was virtually irrelevant, in 217, national investors accounted for almost a third of all property investment in Portugal. Although a long way from Europe, where outside investment accounts for little more than 3% of the market, national investment more than doubled. > > CIC s acquisition of Logicor also reshaped the geography of international investment in Portugal, with China leading for the first time. Even if Asia-Pacific players spent more than 3 billion euros in property investment in Europe, Portugal s presence in the Logicor deal was collateral, making it highly unlikely Chinese investors will start flooding the country. > > On the contrary, US investors seem to be turning their attention back to Portugal, although at relatively lower levels. EU countries, led by Spain, continue to regard Portugal as an interesting investment destination. > > Portugal s performance in the investment market has been achieved with a relatively scarce presence of the major international players. Institutional money from China, Singapore or South Korea remains absent from the Portuguese market, preferring consolidated central European locations. > > The example of Madrid s recent performance is self-explanatory. Blackstone tie-up with Banco Popular has driven the expansion of their Spanish portfolio, propelling Madrid to third place (just behind London and Paris) in the European ranking, hosting more than 12 billion euros property investment, on a 7% growth yoy. > > Portugal s relatively small market is highlighted by the fact that 9% of all deals completed in 217, were below 15 million euros. In Europe, over one-quarter of deals were completed in transactions above 5 million euros. > > Investment brokers are key in these deals, being present in almost 65% of all deals completed in Portugal. On the world scene, the top 1 firms account for more than three quarters of all brokered transactions, with seven of them (e.g., Colliers) acting globally. more than 1 billion euros deals were completed in January > > 218 will brake all property investments records in Portugal. In the first month of 218, more than 1 billion euros deals were completed, largely with deals prepared late last year. > > These deals included the disposal of several shopping centres by Baupost, Sierra and Blackstone. And other shopping centres remain on the market and will likely be dealt in 218. > > Office buildings and logistics properties have, also, already been sold in 218, and major portfolios, like Tranquilidade s, are on the market and attracting potential demand. > > The signs for 218 could not be brighter and this beginning of the year is unmatched. The 2 billion euros threshold has been close, but will certainly be surpassed in 218, with Colliers International expecting property investment to close above 2,5 billion euros. MAJOR INVESTORS IN THE WORLD China Vanke CHN m (Pt) 15. m (total) Morgan Stanley USA m (Pt) 75. m (total) Evergrande CHN m (Pt) 6. m (total) CBRE GI USA 3 m (Pt) 45. m (total) Deutsche Bank GER 3 m (Pt) 4. m (total) MAJOR INVESTORS IN PORTUGAL Blackstone USA 1.1 m (Pt) 215. m (total) Fundimo POR 1. m (Pt) 1. m (total) Square Asset POR 9 m (Pt) 9 m (total) Santander SPA 65 m (Pt) 3. m (total) Groupe Auchan SA FRA 45 m (Pt) 4. m (total) International Investment Buyers by Nationality Mauritius USA Source: Colliers International, RCA Property Investment by Deals Band Spain China Source: Colliers International, RCA UK EU Germany Others > 25 m 15 m - 25 m 1 m - 15 m 5 m - 1 m Colliers International Investment 217 Research & Forecast Report 9

10 43 offices in 68 countries on 6 continents 2.3 billion global turnover 17 million sq m under management 15, professionals FOR MORE INFORMATION OFFICES Vasco Carvalho vasco.carvalho@colliers.com INVESTMENT Joaquim Chambel joaquim.chambel@colliers.com RESEARCH AND FORECASTING Gustavo Castro gustavo.castro@colliers.com This report gives information based primarily on Colliers International data, which may be helpful in anticipating trends in the property sector. However, no warranty is given as to the accuracy of, and no liability for negligence is accepted in relation to, the forecasts, figures or conclusions contained in this report and they must not be relied on for investment or any other purposes. This report does not constitute and must not be treated as investment or valuation advice or an offer to buy or sell property. February 218 Colliers International Portugal Largo das Palmeiras, Lisboa colliers.com/portugal