One Down by the river
The azure blue River Tagus – the longest on the Iberian Peninsula – meanders through Spain and Portugal before opening up into the Atlantic just north of Lisbon. It is one of the city’s most stunning attributes, but major riverside development has been held back by swathes of port-owned land.
Now the tide is turning, making this a district ripe for investment. One catalyst for change will be the new Museum of Art, Architecture and Technology – a 410,000 sq ft space designed by British architect Amanda Levete, set to open on the waterfront in October (see p78).
“The city has historically faced away from the river,” says Filipa Sanchez, head of public relations for the museum. “But developments are starting to turn towards it now.”
Local agent Worx says an increase in requests for riverside buildings forecasts a riverside renaissance over the next year.
Two Restoration, restoration, restoration
At first glance, it does not look like finding office space in Lisbon should be a problem. The city has plenty of commercial buildings – up to 2.2m sq ft of available space in certain zones. But this does not paint the full picture. The majority of these vacant offices are old, so need refurbishment and modernisation, according to research by Worx. Office space that is available and fit for purpose is almost non-existent and vacancy rates can be as low as 4%.
“Investment in new office buildings and restoring old ones will be a major trend in the next few years,” says Worx’s head of capital markets, Pedro Valente. “This will have a big impact on the development pattern and economy. It is the ideal time to go ahead with the development of new buildings as there is a good chance of big prelets.”
Three International influx
The overseas investment trend is not showing any signs of letting up over the next 12 months. Around 90% of the record €2bn (£1.7bn) of investment into the city in 2015 was made up of international money. And Lisbon is on track to attract even more this year.
In the first half of 2016, 120,000 of property has been transacted, more than 80% of which were funded by overseas investors. The high levels are expected to hold throughout 2017, as foreign investors are attracted by tax breaks and low prices in both the commercial and residential sectors.
“Real estate in Portugal is changing,” says Karin van den Hemel, general manager of local residential agent Pine Cliffs Real Estate. “We’ve always had English, Irish and German buyers. But now we have had our first Chinese buyers, Scandinavians, French and other non-Europeans, including South Africans, too.”
Four Retail or leisure?
Retail and leisure trends vary depending on where in the city investors are looking to spend. In central Lisbon, as with the commercial and residential sectors, there is a huge focus on restoring and modernising existing stock. This is likely to see old shops being redeveloped and refurbished to make way for more leisure assets such as food markets, bars and restaurant quarters. This trend will exacerbate an already scarce supply of retail in prime zones, and see retail and leisure occupiers and operators moving into up-and-coming parts of the city.
Worx advises investors to keep a close eye on the neighbouring districts of Baixa (downtown) and Cais do Sodre as two key emerging areas ripe for opportunity, with greater Lisbon reaching prime retail rents of €95 per sq m a month and Avenida da Liberdade, the city’s equivalent of the Champs-Élysées, hitting rents of /€110 a month.
Five Logistics for the long term
Growth in Lisbon’s logistics and industrial sectors has not been on a par with the rest of the city’s commercial growth so far. Take up fell in 2015 by around 504,000 sq ft – the lowest level in eight years.
But that could all be about to change. American investors have been busy acquiring industrial portfolios previously held by Portuguese financial institutions and the hope is that this overseas interest could result in an eventual adjustment upwards of rents.
This, twinned with the fact that Portugal’s e-commerce usage is expected to grow from a European record low of 22.6% in 2015 to 35% in 2017, is expected to bolster the sector to make it a longer-term investment option.
The country’s overall logistics stock rose slightly, to hit nearly 5m sq m in 2015 – 60% of which is located in greater Lisbon.