A Cushman & Wakefield publication
MARKET UPDATE PORTO
2024
01
ECONOMY
02
OFFICES
03
RETAIL
04
INDUSTRIAL & LogIsticS
05
HOSPITALITY
07
INVESTMENT
06
RESIDENTIAL
agenda
Economic Indicators
2023
According to Moody's Analytics, Gross Value Added ("GVA") growth in the Porto Metropolitan Area decreased to 0.9% in 2023 (after an increase of 6.5% in 2022), a sharper drop compared to the national level, but still above the average euro zone (+0.53%).
Gross Value Added
Unemployment Rate
+0.9%
+2.2%
10.5%
On the other hand, after having practically stagnated in the previous year, the disposable household income increased by 2.2% and the unemployment rate increased 10.5%.
Household disposable income
Porto Metropolitan Area
Economic Forecast
2024/2025
The outlook for 2024 and 2025 points to an acceleration in the region's economic activity, while the household disposable income growth is expected to slow next year. Additionally, the unemployment rate is forecasted to correct downwards from 2024 onwards.
+1.5%/ +1.9%
+3.8%/ +2.7%
10.3%/ 9.8%
50,050 sq.m (-14%)
2
9.3% (+0.2 p.p.)
780 sq.m (+2%)
53,700 sq.m
96,100 sq.m
TAKE-UP
Average Deal Size
VACANCY RATE(1)
New Supply
UNDER CONSTRUCTION
Greater
Porto
DEMAND
Take-up
Jan-Apr 24
21,280 sq.m (+82%)
790 sq.m (+28%)
Jan-Abr 24
SUPPLY
1.68 million sq.m
TOTAL SUPPLY
(1) First quarter of 2024
The total stock of offices is currently at 1.68 million sq.m of Gross Lettable Area ("GLA"), comprising over 525 projects. The city of Porto has most of this supply, with 900 thousand sq.m of offices spread over approximately 270 buildings. Due to the influence of the economic situation experienced in 2023 and the impact of hybrid working on occupation of office spaces, the office market in the Greater Porto area recorded a decrease of 14% in take-up volumes last year, with 50,050 sq.m transacted. However, it should be noted that, on one hand, this figure was achieved despite a significant lack of quality new supply; and, on the other, this drop was significantly lower compared to Greater Lisbon (-59%). In addition, and like the capital, Porto has already registered a recovery in the first four months of 2024, with take-up reaching 21,280 sq.m, a year-on-year growth of 82%. The largest deal in the last 16 months corresponded to the full occupation of the 7,820 sq.m Boavista Office Center (BOC) by the national flex office operator LACS. This was followed by two pre-leases by confidential entities, namely 5,650 sq.m in the ICON Office project and 4,300 sq.m in the Lionesa Business Hub. In 2024, the largest transaction to date corresponds to the lease of the entire 3,950 sq.m of the Matosinhos Office Centre to a consulting company. During the period under review, Matosinhos (Zone 6) has been the most active area, aggregating more than a fifth of the demand; with the TMT's & Utilities sector accounting for approximately 40% of the take-up.
Take-up per semester and average deal size
Source: Cushman & Wakefield; PPI * January to April
Since the middle of last year, the vacancy rate has registered a slight increase, currently standing at 9.3%, 0.2% percentage points (p.p.) above 2023. The completion of some buildings that are still not fully occupied have contributed to this. 53,700 sq.m have been completed since 2023, of which 35% are still vacant. Nevertheless, the demand for quality spaces continues to support the increase in future supply projected for the next 3 years, currently at 150,300 sq.m. Among these, 96,100 sq.m are under construction, of which 34% already have guaranteed occupancy. The largest buildings are scheduled for completion next year, corresponding to GFH/Sonae Sierra's Viva Offices (18,800 sq.m); the Castro Group's 14,500 sq.m SPARK Matosinhos ; and the office component (12,500 sq.m) of the conversion of the former Matadouro de Campanhã.
Main transactions
Source: Cushman & Wakefield; PPI
Main completions
Source: Cushman & Wakefield
Main developments under construction
Average & Prime Rents
The lack of quality supply and higher latent demand contributed to an increase in gross prime and average rental values in most zones. In the CBD Boavista (zone 1), the prime rent is currently at €19/sq.m/month and the average at €16.5/sq.m/month, reflecting in both cases an increase of €1/sq.m/month compared to 2022.
195 (+39%)
70%
NEW OPENINGS
HIGH STREET RETAIL
Porto Metropolitan
Area
40 (-25%)
67%
FOOD & BEVERAGE
47%
41%
Total Supply of Retail Schemes
Total High Street Retail Supply (Porto)
848 thousand sq.m
233 thousand sq.m
The Porto Metropolitan Area has the second largest volume of commercial schemes in Portugal, with more than 30 projects and 848,000 sq.m of GLA. This represents 29% of the total national area, only surpassed by the Lisbon Metropolitan Area with 48%. The municipalities of Vila Nova de Gaia and Matosinhos have the highest concentration of supply in the region, namely 220,000 sq.m of GLA each; with the shopping centre format being the most representative (86%). The only project planned for the next 3 years in this region recently opened – Arco Retail Park (Santo Tirso) with 6,600 sq.m of GLA. On the other hand, equally influenced by the recovery of tourism, high street retail in the city of Porto continues to show high dynamism. Currently, there are 1,340 units covering more than 233,000 sq.m of sales area; half of which located in the Baixa area, where the Time Out Market Porto opened in May, in the south wing of São Bento Station.
(2) Non-random sample of retail demand aggregated by Cushman & Wakefield based on public sources and targeted fieldwork
Although Cushman & Wakefield's aggregated retail demand(2) shows a different evolution between 2023 and the first four months of 2024, accumulated values regard 235 new openings, 22% above the same period last year. It is anticipated that the recent openings in the Arco Retail Park and Time Out Market Porto projects will contribute to reversing the drop recorded in 2024 during the first half of the year. During the period under review, high street retail remained dominant, accounting for 71% of the total openings, of which a fifth in the downtown area; followed by shopping centres with 14%. On the other hand, the Food & Beverage sectors continued to dominate, accounting for almost half of the number of transactions, with highlight to the expansions of Padaria Portuguesa and Jeronymo with three units each; and food retailer My Auchan being the most active, accounting for 5 new openings in the municipality in the last 16 months.
New
Openings
Prime
Yields
Due to increased demand and scarcity of supply, prime rents have corrected upwards in all segments since 2023, with historical highs reached in Baixa, at €80/sq.m/month, and by shopping centres, at €87.50/sq.m/month, corresponding to increases compared to 2022 of €5.00/sq.m/month and €7.50/sq.m/month, respectively.
113,500 sq.m (+1%)
8,730 sq.m (+25%)
INDUSTRIAL & LOGISTICS
Q1 - 24
58,500 sq.m (+79%)
7,310 sq.m (-33%)
After an all-time high in 2021, the occupational activity of the industrial & logistics market in Greater Porto has stabilized in the last two years, with 113,500 sq.m transacted in 2023, just 1% above the previous year. However, the first quarter of 2024 showed a significant increase in take-up, of 79% year-on-year, to 58,500 sq.m. Among the largest deals recorded in the period under review is the future occupation by Aldi of a 41,400 sq.m logistics unit in Santo Tirso; the acquisition of the Itron building in Vila Nova de Famalicão comprising 29,000 sq.m; and the full pre-leasing of the Gandra North Green Logistics Park by Olicargo, totalling 16,600 sq.m. In addition, the dominance of sale or lease transactions remained, with 63%, compared to build-to-suit projects.
The sector’s increased dynamism continues to foster the development of new projects, with the main recent conclusions corresponding to Logicor's 30,600 sq.m Ermida Park, and the 24,300 sq.m Invicta Park.
Among the main future supply currently under construction, all of which scheduled for completion this year, we highlight the 75,000 sq.m Panattoni Park Valongo and Gandra North Green Logistics Park and Gaia Park, both 16,600 sq.m.
Take-up per semester and average area transacted
Main Transactions
Source: Cushman & Wakefield; IPI
Source: Cushman & Wakefield; IPI * January to March
The rental values of logistics spaces registered a general increase in 2023, having practically stabilized in Q1 2024; except for Maia - Via Norte area (zone 1), which remained unchanged compared to 2022.
Main logistics projects recently opened
Main projects under construction
Average & Prime rents
7.6 million (+21%)
149 thousand (+37%)
AIRPORTS
CRUISES
DISEMBARKED TOURISTS (2023)
During 2023, tourism in Greater Porto observed recovery rates in line with the national trend, which were maintained at the beginning of the current year. During 2023, Francisco Sá Carneiro airport recorded the second highest traffic volume, with a total of 7.6 million passengers, a year-on-year growth of 21%. In the context of cruise tourism, the number of passengers in the port of Leixões stood at 149 thousand passengers, 37% above the previous year; reflecting a new all-time high not only in this indicator, but also in terms of cruise stopovers (116).
Source: INE; APDL, C&W
4.5 million (+22%)
€83.3 (+20%)
Overnight stays
REVPAR
Q1 -23
884 thousand (+12%)
€49.1 (+8%)
T1-23
Occupancy rate
67.8% (+15 p.p.)
52.9% (+1 p.p.)
Total OFFER
NEW OPENINGS (2023/2024)
170 Hotels 10,800 keys
20 Hotels 1,200 Keys
Municipality
of Porto
In 2023, the number of overnight stays in the hotel segment increased by 22% to 4.5 million; with RevPAR standing at €83.3 and occupancy rate at 67.8%. The first quarter of 2024 indicates a continuation of this trend, with new year-on-year growth, of 12% in overnight stays, 8% in RevPAR and 1 p.p. in the occupancy rate.
Overnight stays & RevPar
Total supply by category
The city of Porto currently has more than 170 hotel establishments, offering a total of 10,800 rooms. Given the greater investment in higher category projects over the last few years, close to half of the accommodation units are in 4-star projects, followed by 5-star projects with 24%.
Source: INE * January to March
Source: C&W, Turismo de Portugal
Since 2023, the city has seen 20 new hotel units, with a total of 1,200 rooms, with the 4- and 5-star categories maintaining their dominance, namely with 37% and 33%, respectively. The estimated future supply for the next 3 years totals 6 hotels with a total of 500 rooms, with no visibility on the category of most of them. Among the planned openings, we highlight the B&B Hotel Madalena with 180 rooms and the Altis Porto Hotel (5 stars) with 100 rooms.
Main
openings
4,740 (-18%)
€3,240/ sq.m (+15%)
Nr. of Units Sold
Average Sale Price
Nr. of Available Units
8,280
OFERTA
Average Discount AND Adjustment Rate
Average Asking Price
-7%
€4,520/ sq.m (+20%)
Average Absorption Time
6 MONTHS
Source: SIR / Confidencial Imobiliário (SIR Ci)
PROCURA
(3) Compared to annual figures.
In a context of rising interest rates and deterioration in families’ spending power, over the last 12 months the market for the purchase and sale of apartments in Porto has seen a retraction in the volume of transactions, although with an increase in average prices, according to data from SIR / Confidencial Imobiliário. Compared to the same period last year, the average asking price increased by 20%. In terms of demand, there was a further sharp drop of 18% in the number of apartments sold, offset by an increase in transaction values, by 15%, to €3,240/sq.m. All zones recorded year-on-year increases, with the Foz area retaking the lead, with a new all-time high(3) of €4,060/sq.m. Despite maintaining the lowest average price, the Outlying Zones areas also recorded a new record, with €2,780/sq.m. On the other hand, the average discount and adjustment rate remained at 7%; with the take-up period decreasing by 1 month, to 6 months.
Apartments Sales Values
Source: SIR Ci *12 months accumulated value
Source: Cushman & Wakefield; SIR Ci
490 (+12%)
€15.3/sq.m /month (+18%)
Nr. of Leased Units
Average Monthly Contracted Rent
860 (=)
Average Discount and Adjustment Rate
Average Monthly Asking Rent
-4%
€16.8/sq.m month/ (+39%)
3 MONTHS
Lease of apartments – Q1-24 (12 months accumulated)
Regarding the private rented sector (PRS), the imbalance between supply and demand in the city of Porto remained, according to data from SIR Ci. The shortage of supply has continued in the last 12 months, with a consequent increase in average asking values to €17/sq.m/month. Even so, the number of rented apartments in the period increased (+12%), although associated with an average contracted rent that remained at an all-time high(4) of €13.3/sq.m. Also in this segment, all areas recorded year-on-year increases, while the highest values were recorded in Foz, which reached a new peak of €16.9/sq.m/month. The discount and revision rates corrected downwards by 3 p.p.; with the take-up period reducing by 1 month, to 3 months.
Apartments Values
(4) Compared to annual figures
Apartments Rental Values
In line with the trend seen at country level, as well as in all European markets, corporate real estate investment in the Porto Metropolitan Area recorded year-on-year decreases in 2023 and early 2024. In a region with little stock suitable for international investment, the year-on-year drop of 17% in the last 16 months nevertheless demonstrates greater resilience compared to the national market, which recorded a contraction of 36% in this period. During the period, €226 million in commercial real estate were transacted in Greater Porto, of which €38 million between January and April 2024. Similar to the trend seen in Portugal, 66% of the volume transacted was by foreign investors.
Investment in Comercial Real Estate(5) 2023 and Jan-Apr 24
€226 million
(-17%)
66%
42%
TOTAL VOLUME
RetaIl
Foreign Investment
(5) Institutional investment in finished real estate product and income; excludes properties traded in a portfolio and whose geographical breakdown has not been possible to account.
With a dozen deals registered in the last 16 months, the retail sector has retaken the lead, representing 42% of the total invested, with €93 million. The largest transaction took place in this sector, corresponding to the acquisition by a group of Spanish family offices of 75% of ViaCatarina from CBRE IM (RPFI) and APG for an estimated value of €40-45 million. This was followed by the Alternatives segment, which attracted 24% of the volume transacted with €55 million; influenced by the purchase by Stoneshield Capital of the Big City Asprela & Milestone Porto Asprela student residences from Big City for €39-44 million. On the other hand, the hospitality sector accounted for 20%, with the largest deal involving the first acquisition by the new partnership between Sonae Sierra and PGIM Real Estate in this segment – a superior category hotel in the centre of Porto, for an estimated amount of €30-35 million. With the sector representing 9% of the total transaction volume, the largest transaction in industrial & logistics corresponded to the sale & leaseback of Lusocargo's warehouses, acquired by Banco Carregosa for €11-13 million. Finally, the office sector attracted only 5% of the total amount invested, with a single transaction – the acquisition by Serris REIM of the Latino Coelho, 142 building from NIPA Capital for €10-12 million.
Investment by quarter
Source: Cushman & Wakefield * January to April
Investment by sector
(6) Or €/room in hotels. In case of a range in the "Value (M€)" column, the calculation of this indicator is based on the average value of the range.
Main investment
transactions
In the context of the international investment climate, prime yields registered an overall increase in 2023, having remained stable in the first quarter of 2024, currently standing at 5.75% in high street retail, 6.00% in industrial & logistics, and 6.75% in shopping centres and offices.
Yield
Uma publicação Cushman & Wakefield
CONTACTS
For further information or additional copies of this or other reports, please contact: MARKETING & COMUNICATION Miguel Sena miguel.sena@cushwake.com Tel.: +351 213 224 757 Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in approximately 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), Environmental, Social and Governance (ESG) and more. For additional information, visit www.cushmanwakefield.com © 2024 Cushman & Wakefield. All rights reserved. Cushman & Wakefield Av. da Liberdade, 131- 5º 1250-140 Lisboa Av. Da Boavista, 1837- 8º 4100-133 Porto www.cushmanwakefield.com
HEAD OF PORTUGAL Eric van Leuven eric.vanleuven@cushwake.com TRANSACTIONS Paulo Sarmento paulo.sarmento@ cushwake.com RESEARCH & INSIGHT Andreia Almeida andreia.almeida@cushwake.com RETAIL João Esteves joao.esteves@cushwake.com INDUSTRIAL, LOGISTICS & LAND Sérgio Nunes sergio.nunes@cushwake.com HOSPITALITY Gonçalo Garcia goncalo.garcia@cushwake.com DEVELOPMENT & LIVING Ana Gomes ana.gomes@cushwake.com
INVESTMENT David Lopes david.lopes@cushwake.com ESG & SUSTAINABILITY Ana Luísa Cabrita analuisa.cabrita@cushwake.com ASSET SERVICES Bruno Silva bruno.silva@cushwake.com RETAIL ASSET SERVICES André Navarro andre.navarro@cushwake.com PROJECT MANAGEMENT Carlos Pueyo carlos.pueyo@cushwake.com VALUATION & ADVISORY Ricardo Reis ricardo.reis@cushwake.com BUSINESS DEVELOPMENT Isabel Correia isabel.correia@cushwake.com
