Offices

From January to September 2024, Lisbon’s office market recorded a total take-up of 168,546 sq m, marking the second-highest figure ever, surpassed only by 2022, a year of exceptional results. By the end of September, 130 transactions had been closed, a 16% increase compared to the same period in 2023. The Parque das Nações area accounted for 32% of this take-up, totalling 19 transactions, followed by the New Office Zone (25%) and the Western Corridor (14%), with 18 and 34 deals, respectively.

In Porto, total take-up from January to September 2024 exceeded 58,652 sq m, reflecting the best results ever recorded. This represents a 56% increase compared to the average take-up volume from 2019 to 2023. By the end of September, 55 deals had been completed, a 15% rise compared to the same period in 2023. The Out of Town area accounted for 39% of total take-up, with 17 transactions, followed by CBD Boavista (37%) and CBD Downtown (16%), with 23 and 7 deals, respectively.

In terms of take-up volume by business sector, TMTs & Utilities led with 37% of the total volume during the first three quarters of the year, completing 21 transactions, followed by Consultants & Legal Advisors (28%) and Financial Services (13%).

Frederico Leitão de Sousa, Head of Offices at Savills, highlights: “The performance of the office sector in 2024 has been marked by strong occupational market dynamism, with robust and stable activity, showcasing remarkable resilience. On the other hand, the office investment market, while facing challenges since the pandemic, is now showing clear signs of recovery and increasing investor interest. Savills is proud to have contributed to this positive momentum, having sold two significant office assets this year, reinforcing its position as a trusted strategic partner in this transforming sector.”

Graça Ribeiro da Cunha, Offices Associate at Savills, adds: “In Porto, take-up nearly doubled compared to the same period in 2023, offering optimistic prospects for the rest of 2024. Porto is expected to remain an attractive destination for both national and international companies.”

Industrial & Logistics

In Q3 2024, the industrial and logistics sector in Portugal remained dynamic, with operators, landlords, and developers driving new projects.

In Greater Lisbon, cumulative take-up volume reached 217,370 sq m by the end of Q3 2024, a 3% increase compared to the same period in 2023, with the logistics market accounting for 78% of this absorption. The supply-demand imbalance is most pronounced in the Castanheira-Azambuja axis, with no available spaces and demand exceeding 230,000 sq m.

By the end of September, the Benavente Logistics Park, spanning 90,000 sq m, was completed in Greater Lisbon, with an immediate occupancy rate of approximately 90%.

Four additional projects are expected by the end of the year, with 87% of the new GLA already pre-let, totalling around 200,000 sq m. Over the next two years, 355,000 sq m of new logistics GLA is anticipated, with 30% already reserved through pre-leases and owner-occupant agreements.

Currently, the national logistics park has a total stock of 4.5 million sq m, with a minimal availability rate of 2.65%.

Logistics demand remains high, surpassing 800,000 sq m. Considering the total available GLA, including unoccupied pipeline, the supply gap stands at approximately 422,000 sq m, underscoring the urgent need for more logistics projects.

Pedro Figueiras, Head of I&L at Savills, remarks: “The national industrial & logistics market has demonstrated an impressive performance in the first nine months of the year. However, challenges persist, with the pace of new product development not aligning with urgent demand, requiring immediate attention. We anticipate an acceleration in occupational activity by year-end, potentially bringing us close to or even surpassing the record set in 2021.”

Retail

In Q3 2024, the retail market in Portugal showed resilience, with a stable business volume index of 5.2% in September, despite recent economic challenges. The consumer confidence index rose, driven by low inflation and job stability, though it experienced a slight decline at the end of the quarter.

Demand for quality spaces in prestigious areas of Lisbon and Porto remains high. However, a shortage of supply on high streets limits growth, especially for businesses reliant on tourism. The most dynamic sectors were food & beverage, supermarkets, low-cost gyms, and fashion & accessories, with special emphasis on Lisbon’s Baixa-Chiado and Porto’s city centre.

José Galvão, Head of Retail at Savills, states: “In recent months, we have seen slight growth in retail activity. The shortage of supply will keep rents stable, favoring landlords and delaying the entry of some retailers into the market. Overall, the sector shows growth potential, although the limited availability of spaces constrains expansion.”

Residential

In Q3 2024, the residential market showed stability in housing loan approvals, with a slight drop of €38 million compared to August. Interest rates fell for the 11th consecutive month, with further reductions expected by year-end.

Housing sales in Portugal rose by 7% quarter-on-quarter and 16% year-on-year. Lisbon accounted for 20.7% of the homes sold in Greater Lisbon, while Porto represented 27.5% of sales in Greater Porto. In Lisbon, sale prices increased between 4.4% and 6.1%, while in Porto, growth reached 10.6%. In the rental market, Porto saw a 5% drop in contracts, whereas Lisbon has shown positive performance since the start of 2024, with annual rent increases of up to 5.7%.

Ana Jordão, Residential Business Development Director at Savills, comments: “The Lisbon market has seen an increase in contracts compared to the previous year, reflecting growing investor confidence, with 55% of pipeline properties sold. In Porto, despite a slight decline in contracts, price growth underscores the city’s attractiveness for mid- to high-end segments, sustaining sector dynamism and investor interest.”