As it does every year, Worx Real Estate Consultants is anticipating the launch of WMarket 2023-2024, the annual publication that analyses the behaviour of the different commercial real estate sectors in Portugal over the past year, with a summary of the main conclusions and trends for the current year.
Compared to last year, when the total volume of investment in commercial real estate in Portugal fell by 45% (51% in European terms), the retail sector proved to be the most resilient and was the only one to record an increase in the volume of investment compared to the previous year. In fact, this sector raised more than 500 million euros in 2023, the highest figure since 2020.
In terms of asset type, supermarkets attracted more than 40% of the volume invested in the sector, followed by shopping centres (30%) and finally retail parks (18%).
Among the main transactions of the year were the Amália Project involving the acquisition of 49 supermarkets by LCN Capital Partners for 150 million euros, the portfolio of five retail parks acquired by a Partner Group fund and the sale of the La Vie Porto shopping centre by Caixa Geral de Depósitos.
On the European scene, after the hotel sector, retail was also one of the sectors least sensitive to variations in the macro-financial environment, although with a drop of 40 per cent. Nevertheless, all the main European markets saw a decompression in prime yields and Lisbon was no exception with an increase of 50 bp.
According to the Report on the European context published by BNP Paribas Real Estate, WORX‘s partner in the BNP PARIBAS Real Estate Alliance Network, the evolution of rents showed an asymmetrical behaviour in the different markets, with cities such as Helsinki and Rome recording the biggest increases in prime rents and Oslo, Madrid and Barcelona showing the sharpest decreases.
In terms of results in Portugal, the context of high inflation led to a slowdown in private consumption, albeit with positive growth of 1% in the retail turnover index. This dynamic is slightly more favourable than the Euro Zone average which, according to Eurostat data, points to a drop of 1%.
Despite this slowdown, shopping centres are showing remarkable operating results, with, according to data released by the APCC (Portuguese Shopping Centre Association), a 7% increase in turnover over the last year, which proves the attractiveness of this type of asset.
On the other hand, the luxury segment boosted the dynamics of high street commerce with the entry of international brands into the Portuguese market, namely the opening of the French brands Dior and Isabel Marant on Avenida da Liberdade.
In turn, e-commerce continued its upward trajectory with growth in 2023 of 5 per cent compared to the previous year. However, bearing in mind that Portugal still has one of the lowest e-commerce penetration rates in Europe, it is natural that the importance of the physical shop for the Portuguese consumer will continue, although this does not hinder the growth potential of e-commerce in the coming years. It should be noted that the large retail groups are increasingly opting to adopt multichannel strategies rather than focusing exclusively on online commerce, with the integration of click & collect systems in their shops.
In view of the economic climate, a moderate dynamic in the behaviour of retail trade is expected for 2024, probably similar to last year, with inflation still above 2% limiting household disposable income and, consequently, private consumption, which is projected to grow by 1% in 2024 and accelerate slightly to 1.7% in 2025.
Published in Magazine Imobiliário on 15th February 2024.