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Market Update Portugal

Andreia Almeida • 18/08/2020

OFFICES

The overall suspension of decision-making processes generated by the current situation had a greater impact on the office market throughout the second quarter. In the Greater Lisbon area, the volume of occupation in the first half of the year registered a year-on-year drop of 23%, which was still mitigated by the conclusion of some large transactions that started in the pre-COVID-19 period. With 84,400 sq m transacted, over 57 transactions, a new historical record of average leased area was registered, reaching 1,480 sq m.

RETAIL

The volume of retail sales published by National Statistical Institute of Portugal (INE) shows the effects of the pandemic COVID-19 with a 4.5% year-on-year drop in the first five months of the year. This was due to a sharp reduction in April (-19.4%) and May (-12.0%), which was more significant in the non-food retail, with an accumulated decrease of 12.6%, still offset by a 3.6% increase in food.

INDUSTRIAL & LOGISTICS

The current pandemic has slowed the trade activity of the Portuguese economy and, according to INE, between January and May, exports and imports of goods registered a year-on-year decline of 18.3% and 19.1%, respectively. However, Oxford Economics’ forecasts point to a mitigation of this retraction in the remaining months of the year, with 2020 reaching negative growths of 5.8% in exports and 8.0% in imports.

INVESTMENT

Despite the negative impact of the current situation on the real estate investment activity, the first half of 2020 registered a new historical high - between January and June, €1,670 million of commercial real estate were transacted (a 50% year-on-year growth compared to 2019) distributed over 27 deals.

The sale of 50% of the Sierra Prime joint venture by Sonae Sierra and APG to Allianz Real Estate and Elo, for around €800 million in Q1 played a vital part in these results, which compensated for the 88% drop recorded in the second quarter compared to the previous year, to a mere €87.5 million.

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