Portugal’s property market has continued to break records in 2018. Colliers’ most recent report estimates property investment to have closed above 1,5 billion euros, making it easy to anticipate that the 2 billion euros threshold will be surpassed by the end of the year.
The office market in the most important Portuguese cities mirrors perfectly Portugal’s property market: prime rents close to historical highs, absorption breaking rents and prime yields decreasing from historical lows.
In the office market, it is important to highlight that developers seem to have discovered the market’s potential, with an increasing supply, although slight in Lisbon, but important, in Porto. “80.000 sqm of new offices in Porto will definitely impact the local office market” says Vasco Carvalho, Colliers International.
In Lisbon, supply growth rate will not match Porto’s, but that is something that may change soon. “The consequences of that increase should not be feared by local players” states Gustavo Castro, Research Colliers International. “The potential demand appears to be capable to absorb, without major difficulties, the new office space, which will requalify the existing supply and make it easier to accommodate international investors” adds Gustavo Castro.
In this context of consensual optimism, only the European news advise caution. However, in a growing economy, with low unemployment, in a market where returns are still higher than in more mature European markets and where prices, although close to all-time highs remain competitive in the European landscape, a shift is not expected in the near future, and, especially, in the second half of 2018.