In the context of the COVID-19 outbreak, the Portuguese economy contracted by 8.9% in 2020, with a fall of 20.5% in exports, a drop of 10.8% in investment and of 6.0% in private consumption, according to Moody’s Analytics.
During the last quarter of 2020, the Greater Lisbon office market registered 33 new lease deals in a total of 35,500 sq.m, adding up to a year-end take-up of 137,900 sq.m. Despite the year-on-year contraction of 29%, the average deal size increased to 1,310 sq.m – above the 1,110 sq.m registered in 2019.
In the last quarter of 2020, 2 schemes added 13,000 sq.m to the existing supply. The major completion relates to Norteshopping expansion of 7,000 sq.m, followed by the Caldas da Rainha Retail Park opening with 6,000 sq.m. Regarding take-up, a total of 430 deals with almost 135,600 sq.m were registered in Portugal by Cushman & Wakefield proprietary database in 2020, representing a year-on-year decrease of 50%.
In the last quarter of 2020, 14 new occupancy deals took place in Portugal, accounting for a total of 68,300 sq.m transacted. Overall, the Industrial & Logistics take-up volume in 2020 more than doubled in comparison to 2019 (+111% year-on-year), boosting to almost 340,000 sq.m. Greater Lisbon and Porto continued to be the main demanded logistic areas, recording 136,000 sq.m and 107,000 sq.m respectively.
Following the conclusion of several deals over the last month of the year, the fourth quarter of 2020 accounted for €350 million of investment volume, adding up to more than €2,800 million channeled into CRE in 2020. Given the high uncertainty of the current context, the outlook for 2021 is conservative and the current pipeline comprises transactions worth €1,800 million. However, given the increasing trend of off-market deals and the potential resumption of deals currently on hold, investment activity in CRE may exceed expectations.
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