Eyes set on Portugal – investors keep betting on real estate and we Retraite Dorée Au Portugal agree!

It will be a year, one more year, of challenges, but Portugal remains on the radar. Here are the predictions of the real estate developers for 2023 and palsul-grupo!
The search has not stop, the problem is even in the lack of housing.!

Portugal is on the real estate investment radar". "Portugal is a haven for real estate investors." These are some of the ideas that several players in the industry, including mediators, consultants and promoters, have creased over the past few years. And the truth is that the country seems to remain a desirable destination, both from a particular investment perspective, through the purchase of homes, for example, or from an institutional perspective, with funds that are particularly attentive to real estate business on national soil. Will this continue to be a trend, in troubled times such as those living, marked in particular by high inflation and rising interest rates? The answer to this and other questions is given by those who walk on the ground, real estate developers. 

The idealist/news x-rays the real estate promotion market and gives voice to those who invest and are behind the curtain to develop real estate projects, namely residential developments that often take a long time to get out of the paper. The theme of housing is, in fact, on the agenda, with the Government taking the stage and promising that it will not stand idly by with a view to increasing the supply of housing, particularly with more affordable homes. 

António Costa revealed, moreover, that there will be a new housing law, to be presented in the Council of Ministers on February 16. According to the Prime Minister, the new diploma will bring more  land to build houses and tax benefits for real estate developers, and the main goal is that the state, in partnership with the private sector, start putting more homes in the residential market. An idea also long advocated by the real estate developers themselves. 

Will Portugal remain on the radar of investors?

That was one of the questions we asked the various real estate developers we listened to. In addition to the following:

• Are there any new investors eyeing the country? Who are they? 
• Will the Portuguese continue to be the main buyers in many of the projects that come to market?

The answers are below, but these are the ideas to retain:

• Is Portugal still a desirable destination? Yes, but there are challenges to be taken into account;
• Yes, the Portuguese will continue to buy houses; 
• Who are the most active foreign investors? U.S . weight gains momentum;
• Luxury segment will continue to attract customers/buyers/investors; 

 

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"Portugal will remain on the radar of investors, we are a desirable destination, but it is important to create a way for our country to be a desirable destination for investors who are focused on building houses for the middle class or exploring the rental market. It may be part of the solution to the housing problem in Portugal," says Hugo Santos Ferreira, president of the Portuguese Association of Real Estate Developers and Investors (APPII).

Pedro Vicente has the same opinion, pointing out that "Portugal remains on the radar of investors and new non-national residents". The CEO of Overseas, a promoter born last year, believes that "the Portuguese, after all, should remain the overwhelming majority of demand." "Higher interest rates, inflation and delay in licensing will continue to be the main obstacle to the normal functioning of the market and the necessary increase in supply," he warns. 

"Portugal will remain on the radar of investors, we are a desirable destination, but it is important to create a way for our country to be a desirable destination for investors who are focused on building houses for the middle class or exploring the rental market. There may be part of the solution to the housing problem in Portugal"
Hugo Santos Ferreira, President of APPII

According to Aniceto Viegas, CEO Avenue, "the market remains capitalized and there is bank financing to promote new projects", and "Portugal continues to be considered an attractive country/market for both Portuguese and international investors". "The market already registers several classes of investors – private equities, institutional and family offices – that need to preserve and consolidate," he recalls. 

With regard to the nationality of buyers, the person responsible says that each segment has its type of audience: "While the middle segment captures mainly Portuguese and some Europeans, the high segment attracts Portuguese, Brazilians and other nationalities outside the European space". 

Portuguese will continue to buy houses 

Frederico Pedro Nunes, COO of Bondstone, says he has no doubt that "the Portuguese will continue to be the main buyers of the projects that will be marketed in 2023, representing until the third quarter of 2022 more than 85% of the transactions made". "But Portugal has given sufficient evidence that it is a safe destination for foreign investors, due to quality of life, climate and safety," he notes, stressing that among these, interest from the UK, Brazil and the USA is growing.  

This is, in essence, a virtually consensual view among real estate developers. "Fortunately we can continue to attract a lot of international investment, because the global product we offer is very attractive, however, the Portuguese will continue to be the vast majority of buyers of the projects," says Fernando Vasco Costa, managing director of Nexity Portugal. 

"The Portuguese will continue to be the main buyers of the projects that will be marketed in 2023, having represented until the third quarter of 2022 more than 85% of the transactions made"
Frederico Pedro Nunes, COO da Bondstone

"The real estate Portuguese is a good opportunity for international investors. International groups that have been working in Portugal for some years have gained confidence in the market and are increasing the volume of investment, which helps to capture the interest of new investors for our market. The Portuguese continue to be the main client of our projects, both in the market of buying for own housing or for rental", explains Severino Ponte, CEO of the Vila Maior Constructions Group (CVM).

José Carvalho, CEO of The Omega Group, also considers that Portugal will remain on the radar of investors, "because although there are attractive negative factors, the positive snow will still have greater weight at the time of decisions". And will the Portuguese continue to be the main buyers in many of the projects that come to the market? "Our experience in The Great Port tells us yes," he replies. 

 

Photo by Mylo Kaye at Unsplash

There is a "huge interest in investing in Portugal"

"In the residential sector, where Habitat Invest has the greatest performance, we continue to feel a huge interest in investing in Portugal, although with several aspects to be negatively weighed on investment analyses, namely licensing times, which cause enormous uncertainty in the analysis and remove investor confidence in the domestic market", comments Luís Corrêa de Barros.

The CEO of promoter Habitat Invest believes that there are still many opportunities in Portugal to invest and reveals that "more and more investors who had no contact with the national market, such as  the most core investment funds and the American market", begin to analyze and invest" in the country. 

"Real estate profitability rates in Portugal are still above most other markets, so international investors looking for assets for income are expected to start to have a bigger size in buying apartments for more affordable segments"
Luís Corrêa de Barros, CEO of Habitat Invest

Luís Corrêa de Barros also points out that "the rates of real estate returns in Portugal are still above most of the remaining markets, so international investors looking  for assets for income  are expected to start to have a bigger dimension in the purchase of apartments for more affordable segments". 

Optimistic on this subject is also Gonçalo Cadete, Managing Partner of SOLYD Property Developers: "Our perception is that, for foreign investors, Portugal continues to be seen as a safe investment destination, and housing is generally considered as one of the most resilient asset classes in the real estate sector." 

Based on the projects marketed by the real estate developer, the responsible indicates that the Portuguese are and will continue to be the main customers of the company, with a market share of 95%. 

On the solid sentinel side, the feeling is similar. "We found that demand , whether by investors or end customers, continues to increase. Portugal continues to be in vogue and its attractiveness has not stopped increasing since 2014, quite the contrary. If For a long time Portugal remained an unknown destination, it has been revealing its full potential and those who visit it do not cease to disclose it", attests Alain Gross, CEO of the company.

"We found that demand, whether by investors or end customers, continues to increase. Portugal continues to be in vogue and its attractiveness has not stopped increasing since 2014, quite the contrary. If for a long time Portugal remained an unknown destination, it has been revealing its full potential and those who visit it do not cease to disclose it"
Alain Gross, CEO of Solid Sentinel

And who are these investors who keep Portugal on the radar? "Traditional investors continue to be close neighbors, but more and more the country is chosen by people from the Middle East, Asia, Brazil and the U.S.," he says, noting that "the Portuguese will continue to aspire to buy their own houses or apartments." 

 

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Portugal is "a safe option to invest in real estate"

For João Sousa, CEO of JPS Group, there is no doubt, Portugal remains very attractive to real estate investors, both Portuguese and foreign. "It continues to meet excellent conditions to attract investors and remains a safe option to invest in real estate," he stresses, stressing that "real estate promotion is attractive." Regarding the final customer, it remains mainly national: "The vast majority of houses sold in Portugal are for Portuguese, whether for first or second housing, or for investment". 

"The vast majority of houses sold in Portugal are for Portuguese, whether for first or second housing, or for investment"
João Sousa, CEO of JPS Group

João de Sousa Alves, director general of JMSA, signs underneath, considering that the country "continues and will continue to be attractive to foreign investors for all known reasons", such as climate and security. He also notes that investment of international origin "will continue to emerge mainly in the high segment, with French, Americans and Brazilians leading." "In this segment it is already notorious that the Portuguese are not the main buyers", concludes. 

Luxury residential segment will continue to rise

The luxury residential segment is , in fact, what most interest arouses foreign investors, especially individuals who have a view to buying a house in Portugal. 

"Portugal has definitely entered the radar of international investors and will continue," says Miguel Cabrita Matias, Board Member of Mexto Property Investment. "The last ones to reach the market are mostly Americans, who have already surpassed other nationalities such as French, Chinese and Brazilians, this is due to the exceptional conditions that Portugal offers to live," he explains, noting that the country also has the geographical advantage of being further away from the war in Ukraine. 

"The market targeting the upper and upper middle classes is expected to be further driven by increased demand from buyers from countries outside Europe, such as the US, a trend that has been trending since the beginning of 2022"
Paula Fernandes, RAR Real Estate

Paula Fernandes, CEO of RAR Imobiliária, perspective that in the coming months the residential segment of buying and selling can be "marked by the continued entry into the product market more directed to the upper and upper middle classes, to the detriment of product development for the medium and medium-low segment". In this way, he says, "the market imbalance is expected to increase, exacerbating the widespread lack of housing supply."

"In addition, the market targeting the upper and upper middle classes is expected to be further driven by increased demand from buyers from countries outside Europe, such as the US, a trend that has been seen since the beginning of 2022," Adds. 

VIC Properties also says it is noticing "an increase in demand from foreign investors, greatly leveraged by the devaluation of the euro against the dollar , which creates an extra incentive for U.S . investors, who have been gaining more and more expression in our market." 

"[There is] an increase in demand from foreign investors, greatly leveraged by the devaluation of the euro against the dollar, which creates an extra incentive for U.S. investors, who have been gaining more and more expression in our market"
Telmo Silva, Chief Financial Officer, VIC Properties

For the financial director of the promoter, Telmo Silva, "Portugal will continue to be an 'appetizing' market for foreign investors, not only for the lower values compared to other countries in Europe, but also for the stability, security and climate it offers." 

 

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Opportunities? Yes. But there are old unresolved problems

The delay in licensing processes is one of the problems long identified by the various players in the industry. José Cardoso Botelho, CEO of Vanguard Properties, recalls that this is a drawer that has not yet been closed. He comments, however, that "Portugal is still an investment destination", and that there is "more capital available than opportunities". 

"The complexity and difficulty of understanding the licensing process that diverges in each of the 308 municipalities does not help Portugal stay on the radar because, for many, the dimensions of most opportunities are too small for large and capacity international investors," Regrets.

On the nationality of buyers, he also points out that "U.S. citizens are becoming the most active on the market." However, he stresses, investors from other geographies are blinking their eyes at Portugal: "We will continue to see investors and families from Brazil, Mexico, Chile, France, Switzerland, the United Kingdom, South Africa, the USA, among others, and it is likely that there may be some contraction in the lower segments, the percentage weight of foreigners may increase in 2023." 

"U.S. citizens are becoming the most active on the market. We will continue to see the arrival of investors and families from Brazil, Mexico, Chile, France, Switzerland, the United Kingdom, South Africa, usa, among others, and it is likely that, with some contraction in the lower segments, the percentage weight of foreigners may increase in 2023"
José Cardoso Botelho, CEO of Vanguard Properties

Wait and see. Cecile Gonçalves, Board Member of The Libertas Group, is more expectant and says he feels that "the Portuguese, the largest base of buyers, have a more prudent approach to buying", and their investment capacity has been decreasing. "But don't believe that prices will go down, contrary to what was thought in the last months of 2022," he warns. 

According to the official, "buyers realize that supply is too scarce and that construction costs and the administrative and fiscal burden of real estate projects generate a rational new residential market price." 

"In addition, real estate developers have a much higher financial robustness than they had 10 years ago and can expect the market to resume the pace of sales of recent years," he says, reiterating that Portugal's "attractiveness as a new country of residence or as an investment remains strong and on the radar of investors." 

 

Photo by Lisha Riabinina at Unsplash

What now, government and banks?

Elad Dror, CEO of Grupo Fortera, throws barbs at António Costa's Socialist Executive, considering that he is not "helping". "Investors have other options, given that the world is itself a major investor in search of stability, particularly in terms of regulation. It is possible that, with the current political scenario that is living in Portugal, there may be less investment in the country", warns. 

The same person points out, however, that Portugal is, in general, "an investment market" and that it "needs to continue to be so". Elad Dror says she expects, in this sense, "that the people who lead" the country "continue the good work" that has been done "in the last decade." 

Carlos Vasconcellos, a founding partner of Albatross-Quantico, reports a scenario that could gain expression in 2023, related to the increase in low-risk credit.  

"In all market situations there are opportunities for certain investment profiles. It is expected that it will increase the number of assets that, under financial pressure from its holders, will end up in the hands of the banks, and that they intend to sell them. In this type of business, and whenever there is volume, it is to be considered that large international investors buy portfolios of assets"
Carlos Vasconcellos, founding partner of Albatross-Quantico

"In all market situations there are opportunities for certain investment profiles. It is expected that it will increase the number of assets that, under financial pressure from its holders, will end up in the hands of the banks, and that they intend to sell them. In this type of business, and whenever there is volume, it is to be considered that large international investors buy portfolios of assets", explains the responsible, noting that "in Portugal there is little 'equity', so are usually large foreign funds and investors to carry out these operations". 

In conclusion, Carlos Vasconcellos considers that "it is to be admitted that with the current climate of higher interest rates some of the Portuguese buyers who typically resort to credit are more limited". Therefore, he adds, "it will be normal for the higher segment to see a higher percentage of foreign buyers."