CBRE’s Results Broke Records For the Third Consecutive Year
- CBRE grew 22% in Portugal compared to 2016
- The new office in Porto, the creation of a new Corporate Finance business, the sale of Tranquilidade’s portfolio and the sale of Silcoge’s income portfolio to one of Explorer Investment’s real estate funds were some of the highlights of the year
- Transactions completed in 2017 exceeded 500,000 square meters equivalent to 50 football stadiums
- The CBRE team grew to 150 professionals, an increase of 15% over the previous year
CBRE announced its 2017 activity results, a 22% increase over 2016 a record performance that the company achieved for the third consecutive year.
This was a particularly positive year, not only in terms of results, but also in terms of solutions presented to clients through a team of 150 highly qualified professionals. In fact, the Portuguese market experienced an extraordinary dynamic, but also new multidisciplinary challenges arose, which CBRE was able to correspond to 100%. During 2017, we reinforced our hotel team with a special focus on transactions and created a Corporate Finance division - Capital Advisors - which aims to support our clients in setting up joint ventures, structured financing and providing consulting services on purchases or sales of non-performing loan portfolios that have real estate as guarantees. Increasingly, CBRE provides integrated solutions to its clients that accompany the entire real estate cycle with proven results.
The new Porto office that now has a team of 8 professionals proved to be the right move. The team has already completed several transactions, along with various projects that are in the pipeline. At the same time, the sale of Tranquilidade’s portfolio composed of 84 properties and the sale of Silcoge's income portfolio to one of Explorer Investment’s real estate funds, which were executed successfully with our support, for a value of more than 150 million euros, are some of the highlights of the year in which we saw the rewards of our efforts and commitment.
CBRE began 2018 with a set of processes that are in advanced phases of negotiation, which should conclude within the next 6 months, at a market value of almost 1000 million euros.
Investment and Development grows 10%
The year of 2017 registered a growth of 10% in the Investment and Development area of CBRE, adding 600 million euros of business in 2017 that were linked to 115 properties that have approximately 300,000 square meters. The Top 3 transactions were led by the aforementioned sale of Silcoge’s portfolio comprised of 13 buildings and Tranquilidade’s portfolio comprised of 84 properties, as well as, the sale of four Caixa Geral de Depósitos’ buildings, three office buildings and one residential. CBRE experts strongly believes that 2018 will mark a new record volume of investments
Offices: a strong dynamic year in the TMT, Consulting and Legal sectors
CBRE maintained its dominant position in the office market by placing 30,000 sq m of offices. Last year, the most dynamic office sectors were TMT - Technology, Media and Telecommunications & Utilities (21%), and Consulting and Legal (17%). In terms of transactions, the office leases that stand out are for 6,000 sq m for a technology company and 4,000 sq m for a pharmaceutical company both in Lagoas Park and also 5,700 sq m for a bank in Torre Oriente Colombo.
The Retail department grew 76% by leasing 25,000 sq m more than in 2016
2017 proved to be a significant year for the Retail Department, whose business totaled approximately 64,000 sq m, distributed to Retail Parks (8,000 sq m), to High-Street Retail (26,500 sq m) and to Shopping Centers (29,500 sq m) the latter two being sectors that registered an impressive increase in square meters compared to 2016. For the Top 3 transactions, CBRE highlights the sale of the space that will become the José de Mello Saúde Group’s Sintra Hospital, the sale of facilities to Brimogal in Aveiro for the opening of Leroy Merlin, as well as the placement of several relevant brands such as Sportzone, Fnac, McDonald's and Fitness Hut in Nosso and Alameda shopping centers, respectively.
The Warehouse and Logistics department achieved market leadership
The 20% of growth in the Warehouse and Logistics department in 2017 has positioned CBRE as a leading player in this market sector. The most significant operations that facilitated these results were the sale of a 5,100 sq m warehouse in Carnaxide, the leasing of a 6,500 sq m warehouse in Aveiro and the leasing of a 14,000 sq m warehouse in Azambuja.
Following the 20 deals completed in 2017 that resulted in a total of 65,000 sq m of warehouses, industrial facilities and land, a new emphasis on market share is forecasted for 2018, as well as a reinforcement in the consultancy area considering the pipeline under negotiation which exceeds 70,000 square meters.
CBRE maintains its leadership status in Valuations
CBRE maintained its leadership status in Valuations in 2017 as an area of expertise, which was secured back in 2016 when it consolidated its activity.
Last year, valuations totaled 200 million square meters, a value of more than 10 billion euros, that covered 30,000 properties. In addition, around 20 consulting projects stand out, especially for market analysis and product definition studies, strategic analysis and Due Diligence.
Asset Services reached a historic number of 1.15 million square meters
In 2016, Asset Services had registered 100% growth and in 2017 the department achieved a new level of growth at around 30% and is now responsible for the management of approximately 1.15 million square meters of 71 assets. Of the 25 new assets that were acquired in 2017, the ones that stand out are the Explorer I Real Estate Fund Portfolio (which includes the Liberty building at Avenida Fontes Pereira de Melo among others), the Álvaro Pais and Santa Maria buildings, as well as the Sintra Business Park. Most of the assets managed by CBRE are Logistics (705,000 sq m), followed by Shopping Centers (225,000 sq m), Offices (220,000 sq m) and finally by 8,000 sq m of mixed-use buildings. In terms of rent, revenues increased by 31% compared to 2016, totaling 73 million euros.
Building Consultancy activity almost tripled
Building Consultancy has been one of CBRE’s high-growth business units, for the last two years, and in 2017 it set a new growth record at around 160%. Last year, CBRE was responsible for 46 contracts in the areas of Project Management, Project, Supervision and Due Diligence. These projects represent a total volume of constructions of approximately 33 million euros for around 450,000 square meters of retail and offices.
The Project and Project Management of the common spaces of the Alma, Nosso and Alameda Shopping Centers for Deutsche Asset Management and the new headquarters of a reference law firm in the Iberian market, located in Marquês de Pombal in Lisbon, are some of the highlights of this department.
CBRE was also responsible for the study of Workplace Strategy, Project, Project Management, Change Management and Leed Certification of the new headquarters of a reputable pharmaceutical company in Lagoas Park.
Global Workplace Solutions grew 5%
In 2017, Global Workplace Solutions managed 36 facilities that had 3,000 occupants and a total of 56,000 sq m, especially in Information Technology. Highlights of the year included three new offices under management: Syngenta, DXC (formerly HP) and Hostelworld, another world-wide technology company investing in Porto to inaugurate its facilities in Portugal, also advised by CBRE.
Neoturis highlights new projects and new investor nationalities
Neoturis - a company that is affiliated to the CBRE group - closed 2017 with more than 30 projects for clients and investors from Portugal, Spain, the UK and North America, this year there were also investors from Belgium and Turkey. The six most notable new project highlights from last year were: Turismo de Lisboa, Associação de Promoção da Madeira, Vilamoura World, BCP, Discovery and FOSUN. In regards to the main services rendered, neoturis provided support for the transactions for tourist enterprises, market studies and economic-financial viability, the search for management entities for existing or future hotel assets, the definition of best use for the development of touristic assets and as well as providing support to international investors through the Brazilian office, which increased significantly.
For 2018, neoturis predicts the completion of the transactions what were prepared over the year in 2017, as well as, an increase in the number of international clients looking for consulting services in Portugal. The main global hotel brands will keep up the pressure on the Portuguese market, seeking to strengthen their presence. It is also interesting to observe several investment processes for existing hotels regarding their requalification and/ or improvement of management indicators. Beyond groups such as Pestana or Vila Galé, 2018 could be the year for the announcement of new internationalization processes for Portuguese hospitality.
Real Estate Market Trends 2018
CBRE will present the main trends in the real estate market for 2018 on January 18th, at 08h30, in Centro Cultural de Belém, Lisbon. Francisco Horta e Costa will unveil a little of what this year could be.
Except for political or geo-strategic "earthquakes", the prospects for this year are very good, as long as the fiscal framework remains unchanged, we should not see a rise in interest rates yet. The traditional sectors should continue to perform at high levels with the help of incremental bank investments, now that the Portuguese financial system has become more stabilized. I foresee that the number of investors coming to Portugal will increase, as well as companies wanting to stablish here big centers of research excellence, back-offices, near-shoring, etc.
We believe there will be tremendous growth in flexible workspaces, such as, co-works and expanded spaces or business accelerators/ incubators because of the expansion of the digital economy based on mobile phones and technological evolution in general. Large companies are increasingly following the start-up model on how workspaces are laid out and occupied, as this is a requirement of the "millennial" generation, which is no longer satisfied with a conventional office and is available to exchange better financial conditions for a more attractive office. And to conclude, this disruption is permanent and has come to stay.