In the third quarter of 2022, commercial real estate investment soared: €1.1 billion was transacted, bringing the total volume invested up to September to €1.92 billion, indicates JLL in the Market Pulse study, where it reveals that the Portuguese real estate market continued to exhibit "a strong performance" after a "more timid start to the year".
The year-to-date figure is 43% above that recorded for the same period in 2021, thus reinforcing the good prospects outlined for 2022: "with three months to go, it is only €100 million away from matching the €2,020 million invested in the whole of last year (...) the expectations are for activity to exceed the 2021 result by at least 25%, despite anticipating some revision in asset values in the coming months and consequent adjustments in some prices", the study indicates.
Tourism
At the end of the 3rd quarter of 2022, in the tourism sector, the main performance indicators largely exceeded the levels of activity seen in the last two years and, in most cases, had already recovered to levels very close to 2019, a year that marked new records in this market.
Residential market
The study also reveals that the residential market continued to exhibit resilient performance between July and September, underpinned by the continued mismatch between available supply and demand, with prices continuing to rise and a stabilisation in sales.
Both domestic and international demand is active, rapidly absorbing new supply as it arrives. It is expected that some natural retraction may occur in this market in the coming months, both in terms of absorption and price adjustment.
Office Market
In Lisbon and Porto, the occupational activity totaled more than 293,000 sqm between January and September, as far as the office market is concerned. In Lisbon, the historical record of take-up registered in 2008 has already been surpassed, with the current 248,000 sqm confirming that 2022 will be an unprecedented year for the sector, according to the study. In Invicta, take-up by the end of September had reached 45,230 sqm. The study also points out that the demand for large areas, greater than 1,000 sqm, remains strongly active, with many companies opting to pre-let their future offices among the projects currently under construction.
Retail
Retail continues to strengthen its activity across all formats, leveraged by the recovery in tourism, indicates JLL. The brands, resuming their expansion plans, are focused on securing space in the main market locations, but face some constraints imposed by the scarcity of available supply.
Despite the increase in consumer prices, the retail sales outlook remains optimistic until the end of 2022. The study highlights prime shopping centres, retail-parks and stand alone stores, which are recording a positive performance sustained by the arrival of the festive season.
Industrial & logistics market
In terms of the industrial & logistics market, the study points to the high level of new and quality supply, which continues to hold back further growth in occupancy, which nevertheless already totals 323,000 sqm. This third quarter contributed around 50% to the year-to-date occupancy of 163,000 sqm.
The volume of demand to be filled continues, however, to be substantial at this stage, causing new development projects to continue to be announced, where a focus on supply qualification and environmental sustainability is evident.
The study also exposes the rise in construction costs, which has been negatively impacting the initial timetable foreseen for the completion of the new stock: it will continue to make it difficult to meet the existing demand.
For Pedro Lancastre, CEO of JLL Portugal, "the Portuguese real estate market continues to evolve in a very positive way, despite the conjuncture and macroeconomic conditions, registering significant growths in practically all transactional segments, proving not only its resilience, but also why it is one of the preferred asset classes for investment. The 3rd quarter was no exception and, taking into account all the processes currently underway and the contacts that reach JLL on a daily basis, there is no doubt that 2022 could be one of the best years ever for the sector.
The CEO of JLL Portugal also states that "it is clear that we have many challenges ahead of us due to the economic context. We undoubtedly foresee a slowdown in absorption and price revision in several segments, but the main impact should be felt mainly over the next year. This is because, despite growing inflation and rising interest rates, with the corresponding drop in the purchasing power of families and the financial capacity of companies, the unemployment rate is at historic lows and savings levels are high. Furthermore, even with these factors potentially affecting the dynamics of demand, we are at a market moment where supply is clearly insufficient in the most diverse segments. In other words, even if it is very adverse, the macroeconomic context will not be, for now, sufficient to curb demand to such an extent that the existing supply volumes are sufficient to meet it.
