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Market Research - Portugal

Portugal : Lisbon office market - March 2020

Ultra low supply triggers a surge in development

Low vacancy and growing demand are driving rental values up

The office market in Lisbon continued to perform well in 2019 with take-up amounting to 193,892 sqm, down only 6% on an exceptional 2018. The most active business sectors in the Lisbon market are still consultancy and law firms, plus technology and client support services. The slowing of take-up is the result of the lack of office supply in the city, which be-came evident as vacancy in the Lisbon market stood at only 5.3% overall. Extremely low vacancy levels were reached in some districts such as Zone 5 (Parque das Nações) where only 1.4% of supply is empty, and the historical zone where vacancy is al-most non-existent at 0.3%. Supply will be fuelled in the coming two years by the completion of almost 320,000 sqm – of which 198,000 sqm is already under construction – of new office space expected by 2022. In the context of growing demand and low supply, prime rental values in the Portuguese capital experienced continuous growth over the last 3 years. At the end of 2019, the office prime rent in Lisbon CBD stood at €300/sqm/year and posted a 19% in-crease compared to 2018.

 

Investment volume reaches the second highest level of the decade 

 

The office investment volume in Lisbon reached €982m, which is more than twice as high as the 2018 volumes and second best in the last ten years. Foreign investors were the most active in the market and accounted for more than 80% of the volumes. The prime office yield remained stable over the year at 4.25%, although further compression may be witnessed in the coming months.
 

 

EOM Lisbon March 2020
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