As 2024 draws to a close, WORX Real Estate Consultants is presenting its final conclusions on the real estate market in 2024 and its outlook for 2025.
The first highlight is that the balance sheet for 2024 was positive across all sectors, with the office rental market standing out with more than 204,000 m2 placed in Lisbon, and the €2,300 million invested in the various commercial real estate sectors.
Pedro Rutkowski, CEO of WORX, talks about how real estate was once again able to excel in 2024 and demonstrate its resilience in the face of the economic and financial environment, after a year of weaker activity like 2023. He predicts that “2025 will start on a positive note, with an increasingly favorable financial context and a handful of investment opportunities in Portugal, in whatever sector”.
Positive turnaround in Lisbon’s office market
The office market recorded its fourth best year ever, with occupancy in Greater Lisbon reaching 204,400 m² in 2024. This occupancy figure also represents a remarkable 77% increase in demand compared to 2023.
The biggest deal of the year was Caixa Geral de Depósitos‘ occupation of the entire WellBe building (zone 5), with over 26,700 m². This was followed by Banco de Portugal‘s occupation of the 17,000 m² Álvaro Pais 2 building (zone 3) and the European University’s occupation of the 15,800 m² Oriente Green Campus (zone 5), both advised by WORX’s Agency team.
As a result of these large deals, the Parque das Nações (zone 5) and Emerging Zones (zone 3) areas attracted the highest volumes of take-up, 35% and 23% respectively. However, the CBD (zone 2) came in third place, with 14% of take-up, confirming companies’ appetite for central locations, but where there is generally less availability.
Regarding this analysis, Pedro Rutkowski also points out that “these are signs of a clear recovery in demand for office space, which should continue into 2025. WORX is proud to have participated in the sale of 74,000 m², including in 2 of the 3 largest transactions of the year, with a market share of 36%”.
Looking ahead, adjustments to remote and hybrid working policies in some companies are expected to contribute to modest growth in office demand in 2025. The Pan-European Office Occupier Survey 2024 by BNP Paribas Real Estate, of which WORX is an Alliance Partner, which surveyed 168 companies with a European presence, concluded that 45% of companies intend to reduce the number of remote working days. These expected changes, coupled with the need for offices to be increasingly flexible spaces, should contribute to this increase in demand for offices.
Prime rents are also likely to show a moderate increase in 2025, due to the imminent completion of some new projects in the Prime Zone (zone 2) and the Historic Center (zone 4), offering spaces available at higher rents.
Recovery in commercial real estate investment, with notable deals at the end of the year
Investment in commercial real estate in Portugal amounted to around €2.300 million in 2024, 42% more than in 2023.
The fourth quarter of the year saw the biggest deal of the year, with the acquisition of the Athos Project, comprising several supermarkets and stand-alones from the Os Mosqueteiros group, whose buyer Leadcrest Capital Partners has already acquired a 49% stake for around €250 million. It’s therefore no surprise that the retail sector accounted for the lion’s share of the investment volume, with €1,130 million, having almost doubled compared to 2023 and standing out as the second best year in the last decade.
The hotel and office sectors also accounted for more than a third of the total investment, with 20% and 15% respectively. The sale of the Conrad Algarve at the end of 2024, bought by Quinta do Lago for €150 million, was the most significant operation in the hotel sector. The office sector lost prominence to other sectors, but still had the major operation of the sale of K-Tower to Real IS, totaling close to €345 million.
The recent reductions in interest rates have led to some acceleration in investment activity. However, a reduction in the differences in the negotiation of purchase and sale values is already evident, as financing conditions become more favorable. This is why a more substantial recovery is also expected in 2025.
Looking ahead, significant investment growth is expected in the residential and logistics sectors, along with a continued recovery in the attractiveness of the office sector. Given that further reductions in interest rates are on the horizon, a compression of prime yields is likely.
Pedro Rutkowski concludes that “we closed 2024 with historic results in the sector, and we are looking ahead to 2025 with optimism, hoping to see the new projects that are emerging on the market. Portugal continues to score points as a destination of excellence for investors and multinationals, and we are certain that we will maintain our position.”
January 9, 2025
