Although 2009 was one of the worst ever years on record for Portugal’s commercial real estate market, by the end of the year it had started to adapt, according to Jones Lang LaSalle (JLL).

A fall of -50% in the annual take-up of office space as many companies opted to renegotiate their office space rents meant that demand levels did not match supply so there was a surplus which resulted in a vacancy rate of 9.71% (422,447sqm) of Portugal’s total office stock. The office investment market was the most active and saw volumes of €227m giving an increase of +6% compared to 2008.

There was a steep fall in the investment market with transactions of €393m, which was -44% less than in 2008, with 65% of these deals occurring in the second half of the year. The retail sector saw the largest fall in volumes in 2009 compared to previous years where it was the most dynamic sector and proved extremely attractive for foreign investors.

The outlook for 2010 has some positive signs with a slow recovery expected by JLL, as demand should continue at the same pace as the second half of 2009, with improved access to finance and the return of foreign investors to the market.

The retail sector will be boosted as retailers look to resume their expansion plans albeit at a more modest pace, however the outlook for the office sector is less optimistic as both take-up levels and rents will remain the same as in 2009.

Manuel Puig, managing director of JLL Portugal, said: “As we moved into 2009, expectations could not have been worse for the property market, with the economy in recession and the investment and occupation markets shrinking. However, by the end of 2009 the extremely pessimistic forecasts did not materialise and the market adapted itself to the new circumstances, which in turn is leading to a return of confidence.

“The real estate market is not set for a complete recovery in 2010, but the year has started with increasing positive sentiment and all the signs suggest that some sectors will put in a better performance this year compared to last year.”