Market Pulse - Q3 2018 - English version

2018 Q3

MARKET Pulse

Growth trend maintained through third quarter ● The third quarter had the best performance of the year, with a take-up of 57,454 sq m, reaching a total of 144,273 sq m YTD, 27% above the same period in 2017. This continued growth that has been felt in the last years is supported not only by the expansion of already established companies, but also by the growing perception of Portugal as a viable destination by several multinationals. ● The strong demand that is faced today is mainly towards high quality buildings with large areas, justifying the increase of the average occupied area to 902 sq m in the first 9 months of the year, compared with the 830 sq m registered at the end of 2017. The growing trend of coworking is also an important factor boosting demand in this type of spaces. ● The current vacancy rate is 8%. Vacancy is low and mainly of low quality. However, we see a robust pipeline taking shape, with over 690,000 sq m being added to the market in the next few years, 78,000 sq m of which will come in 2019.

Quarter Analysis Take-up

No of Operations

Average GLA

52

1,105 sq m

No of Operations

Average GLA

160

902 sq m

57,454 sq m Y-o-Y Growth: 62%

YTD Analysis Take-up

144,273 sq m Y-o-Y Growth: 27%

Main Transactions Building

Tenant

Zone

GLA (sq m)

Office Park Carnaxide

Coriant Portugal

6

8,487

Open

Teleperformance

3

7,779

António Pedro, 111

MMC

7

4,897

Torre Zenith

Mapfre

6

3,150

Barata Salgueiro 33

Willis Towers Watson

1

2,785

Source: JLL / LPI

Market Pulse Q3 2018 | 2

Take-up by Zone

Q1-Q3 2018 9%

Zone 1 - Prime CBD

16%

Zone 2 - CBD Zone 3 - New Offices Area 30%

12% Zone 4 - Historic & Riverside Zone

144,273 sq m

Zone 5 - Parque das Nações Zone 6 - Western Corridor 20% 10%

Zone 7 - Other Zones

3%

Vacancy Rate

Q2 2018

Zone 1

4.5%

Zone 2

7.0%

Zone 3

8.1%

6.1%

Zone 4

5.1%

Zone 5

2.4%

Zone 6

19.0%

Prime Rents

Q3 2018

25 21.0 20 € / sq m / month

17.0

17.5 16.0

16.0 14.0

15

10

5

0 Zone 1

Zone 2 Q3 2017

Source: JLL / LPI

Zone 3

Zone 4 Q2 2018

Zone 5

Zone 6

Q3 2018

Market Pulse Q3 2018 | 3

Lisbon Office Zones

Zone 1 - Prime CBD

Zone 2 - CBD

Zone 3 - New Offices Area

Zone 4 - Historic & Riverside Zone

Zone 5 - Parque das Nações

Zona 6 - Western Corridor

New Supply Q1 - Q3 2018

Source: JLL

Total GLA

No. of Buildings

34,193 sq m

8 Market Pulse Q3 2018 | 4

Total Pipeline

691,452 sq m

99,063 sq m

76%

Under Construction

Speculative

Buildings under construction Twin Towers Zone 3 Speculative

10,000 sq m Concl. Year: 2019

Quinta da Alagoa Zone 6 Speculative

6,525 sq m Concl. Year: 2019

Defensores de Chaves, 4 Zone 2 Speculative

4,000 sq m Concl. Year: 2019

Hub Creativo do Beato Zone 7 Speculative

30,000 sq m Concl. Year: 2019

FPM 41 Zone 1 Pre-let: PLMJ; KPMG

18,538 sq m Concl. Year: 2019

Exeo I Zone 5 Speculative

30,000 sq m Concl. Year: 2021

Source: JLL

Market Pulse Q3 2018 | 5

2018 Q3

MARKET Pulse

New experiences for a new consumer ● The existing pipeline of shopping centres maintains the focus on expansions, which often lead to remodelling and renovations of the interior spaces, seeking to increase the variety and quality of supply and revealing the fundamental need to keep up with current trends to provide better experiences to visitors. ● High street retail keeps reflecting a very high demand. Tourism continues to be the great drive, but the new Portuguese lifestyle is taking the locals further and further into the "street", where they can find a different offer from the one they traditionally find in shopping centres. ● Restaurants still dominate the openings in the prime zones, which is in line with the global trend.

Source: JLL

Chiado

Av. da Liberdade

Baixa

Príncipe Real

Cais do Sodré

Castilho Market Pulse Q3 2018 | 6

Prime Rents

Q3 2018

160 135

140

130

125

€ / sq m / month

120 100

85

80 60

45

40

45

30

20

11

0 Shopping Centres

Retail Parks

Chiado

Av. Rua Castilho Liberdade

Q3 2017

Q2 2018

Baixa

Principe Real

Cais do Sodré

Q3 2018

Shopping Centres

Q3 2018

Pipeline 2018 - 2019

Shopping Centres Stock

50,000 sq m

3,743,502 sq m

Main openings

Q3 2018

High Street Retail - Lisbon

Chiado Mano a Mano Degrau Carte d'Or H3 Go Natural Paleteria

Source: JLL

Cais do Sodré Sala de Corte Cantina Peruana

Principe Real Clube Lisboeta Steve Madden Sumaya

Baixa L'Eclair

Market Pulse Q3 2018 | 7

2018 T3

MARKET Pulse

Commercial real estate consolidation ● The investment in commercial real estate continues to register record levels having exceeded € 2.5Bn at the end of the 3rd Quarter, contributing to a y-o-y growth over 80%. The retail sector remains the most important sector of investment, followed by office and mixed-use developments. ● The investment volume has been driven by a diverse and increasing number of investors of different nationalities and profiles. During this year we have witnessed a market transition, which started at the end of the crisis with a more opportunistic profile and now takes a core and value-add profile. This trend comes from the consolidation of the market and the consequent perception of lower risk. ● Real estate investment is also more diversified, with more opportunities to invest in alternative sectors such as senior and student housing, hospitals, clinics, PRS and logistics. Parallel to the volume of commercial real estate investment, with strong dynamism, are the transactions of large real estate and NPL portfolios held by banks that have to comply with the European guidelines for reducing the ratio of these assets in their balance sheets.

Investment Volume Evolution 3,000 2,538 2,500 1,905

€M

2,000

1,764

1,500

1,305 927

845

1,000 704 393

500

318 188

127

2011

2012

0 2008

2009

2010

National

Source: JLL

2013

2014

2015

2016

2017

Q1 - Q3 2018

International

Market Pulse Q3 2018 | 8

Q3 2018

Top 3 Transactions Fidelidade Portfolio

Almada Forum

Quinta da Fonte

Buyer: Apollo Price: > € 410 M GLA: 255,000 sq m Sector: Office, Retail, Residential

Buyer: Merlin Properties Price: € 407 M GLA: 60,000 sq m Sector: Retail

Buyer: Signal Capital Price: € 50 M GLA: n.d.

Sector: Office

Investment Volume by Sector

Q1 - Q3 2018

22%

24%

Office

Retail 4% I&L

Others 50%

Prime Yields Evolution 9.50 9.00 8.00

8.00

%

7.50

6.25

6.00

6.50

6.75 6.25

5.50 4.50

Office

5.00 4.75 4.25

Shopping Centres

2007 - Min

Source: JLL

Retail Parks

2012 - Max

High Street Retail Lisbon

Industrial & Logistics

Q3 2018

Market Pulse Q3 2018 | 9

2018 Q3

MARKET Pulse

Another quarter with growth activity ● In the 3rd quarter the residential market kept the growth trend with very positive numbers and new projects coming to the market, with the pipeline showing no sign of slowing down. Despite the new supply, the house prices in the 3rd quarter continued to grow in Lisbon with emphasis in the prime zones of Avenida da Liberdade, Riverside and Campo de Ourique. ● Some developments should be highlighted, such as The Bivart Residences, which has recently sold the last unit with all apartments sold in just 7 months, and the new launch of D.Luís Praça, in the Riverside Zone which will have 37 apartments. ● Once again, the quarter registered further diversification of nationalities buying home in Lisbon, such as Turkey and Switzerland. Brazilian, English and French buyers remain the main buyers.

TOP 3 Foreign Buyers

1º Brazil (25%) 2º United Kingdom (15%) 57% International

3º France (13%)

39 Nationalities

Evolution of Apartments Sold Lisbon Metropolitan Area 53,662 44,311

42,751 37,679

35,317 30,879 27,546 21,352

2009

2010

2011

2012

24,251

2013 Used

Source: JLL

26,938

2014

2015

2016

2017

S1 2018

New Market Pulse Q3 2018 | 10

TOP 3 Developments

Q3 2018

POP Saldanha

The Bivart Residences

Douradores 168

Zone: Avenidas Novas Developer: OISE - Civilria 64 Apartments 98% sold in 6 Months

Zone: Avenidas Novas Developer: OISE - Invest. e Gestão 31 Apartments 100% sold in 7 Months

Zone: Baixa Developer: Cais d'Espirais 12 Apartments 92% sold in 7 Months

Prime Residential Zones in Lisbon

Q3 2018

Prime Value

Source: JLL

Chiado

€ 6,500 - 9,500

Avenida da Liberdade

€ 7,500 - 10,000

Príncipe Real

€ 6,500 - 8,000

Historic Zone

€ 5,000 - 7,000

Lapa / Estrela

€ 5,000 - 6,500

Riverside Zone

€ 5,000 - 6,500

C. Ourique / Amoreiras

€ 4,500 - 6,000

Avenidas Novas

€ 5,000 - 6,500

Colina de Santana

€ 4,000 - 5,500

Restelo / Belém

€ 4,500 - 6,000

Parque das Nações

€ 3,500 - 5,500

Estoril / Cascais

€ 5,000 - 12,000 Market Pulse Q3 2018 | 11