Government Wants Fiscal Mechanism to Facilitate Urban Renewal Partnerships

28 September 2017

The Government is studying the creation of a new tax mechanism that promises to simplify and facilitate partnerships created for the renovation of degraded urban properties. The Secretary of State for Fiscal Affairs, António Mendonça Mendes, gave the notice at a dinner with real estate industry players held at the Portugal Real Estate Summit, which recently took place in Estoril.

The Portuguese government is in favour of “attracting investors with different profiles” to accelerate its commitment to urban renewal. In that sense, it is “assessing the introduction of Limited Liability Partnerships (LLP)” in Portugal, the Secretary revealed, as reported by Público.

Inspired by the English tradition of LLPs, António Mendonça Mendes’ proposal is based on the creation of a corporate vehicle somewhat like a consortium, where taxation is directed towards the partners and their corresponding participations, the publication reported. Público also noted that LLPs – which have been highly successful in the UK – are corporate structures in which partners limit their liability relative to other members.

The advantage of establishing a company as LLP is mainly fiscal since this type of business is taxed as partnerships, plus the limited liability of each shareholder. Each partners’ responsibility is limited to their participation.

This type of structure may be especially attractive to smallholders who, although interested in renovating their properties, often lack the financial capacity or sufficient knowledge to invest in this type of project. This is the thinking of real estate industry sources cited by the publication.

APPII supports measure

The Portuguese Association of Real Estate Developers and Investors (APPII) supports the bill, as it is competitive on a European and global level.”

According to Hugo Santos Ferreira, secretary general of the association, believes that “we should applaud the creation of new investment mechanisms whose taxation is based on results (as has already been done in other countries for a long time) and each investor.” “Also, it’s important that the measure gives small investors access to major real estate projects,” he said.

And how can a partnership be set up? An LLP is constituted, for example, by a property owner who wishes to have his property renovated and by a construction company that will undertake the renovation, establishing the participation of each partner for taxation purposes. If for example, the property accounts for 30% of the partnership and the construction work for 70%, the owners would be taxed on 30% of the proceeds from the sale based on their current tax regime, while the construction company would face the remaining taxation, again, under their tax regime.

Original Story: Idealista

Translation: Richard Turner

Jerónimo Martins to Launch New Logistics Centre in Poceirão in 2018

27 September 2017

Pedro Soares dos Santos points to “the beginning of the year” as the project’s starting date.

Pedro Soares dos Santos, chairman of Jerónimo Martins, announced today that the group would move forward with the construction of a logistics centre in the region of Poceirão, similar to the one inaugurated today in Alfena, Valongo.

“We bought a plot of land in Poceirão, where we will build a [logistics centre] like [Alfena],” Pedro Soares dos Santos told reporters during the inauguration of the group’s largest and most modern logistics centre – in Portugal and abroad – in an investment of 75 million euros.

Pedro Soares dos Santos points out that the project will start at “the beginning of the year.”

The centre opened today occupies an area of 100,000 square meters and will create 750 jobs, of which 450 are direct, and 300 are indirect.

The new enterprise will concentrate operations that were previously dispersed in other small centres in the northern region.

The Jerónimo Martins group operates in the food distribution sector in Portugal under the brands Pingo Doce (supermarkets) and Recheio (cash & carry).

Original Story: Jornal Econômico – Ricardo Santos Ferreira

Translation: Richard Turner

New €10MM Financing Line for Sustainability in Tourism

27 September 2017

Between October 2017 and December 2018, a new line of financing, with a budget of 10 million euros, will be available to support sustainable tourism projects.

The announcement was made by the Secretary of State for Tourism on Wednesday, according to whom the financing will benefit “companies, public entities and trade associations or residents, as well as entities of a similar nature and purpose that present investment projects that promote social and environmental sustainability in tourism.  Such projects will help to strengthen Portugal’s competitiveness as a tourist destination,” Publituris reported.

The mechanism aims to “achieve the goals and targets set in the framework of ET27 regarding social and environmental sustainability. We want more than 90% of the resident population to consider the effects of tourism on their community to be positive. This is only possible with the involvement of all. This is a method of calling civil society to think, to develop projects that directly benefit them, that promote their quality of life and the healthy coexistence between tourists and residents,” the statement read.

The support can cover up to 80% of the eligible project costs, with a ceiling of 300,000 or 100,000 euros per project, depending on whether the sponsor is a public entity or a company. 50% of the funds can be converted into non-refundable incentives in the case of companies, 80% in the case of public entities or associations.

Eligible project types include initiatives to stimulate the economic development of urban spaces, by supporting the valorisation and upgrading of historic shops, among others.

Original Story: Vida Imobiliária – Ana Tavares

Translation: Richard Turner

Public Works: €2 billion, a First Since 2011

22 September 2017

According to AICCOPN ‘s, the Association of Industrial Construction and Public Works, Public Works Barometer, this is the first time since 2011 that public investments have surpassed the two-billion-euro mark. Six years ago, there was a raft of projects that summed €2.73 billion for the year.

However, between 2001 and 2016, average investments amounted to €3.026 billion, which shows that despite current high growth rates, actual investment activity is still far below historical rates.

Finalised contracts that were reported in the Observatory of Public Works, in the scope of public tenders up to the end of August, amounted to 739 million euros, an increase of 69% year-on-year.

The Barometer shows that this development, although positive, falls well short of the total amount of announced investments, and the gap between signed and announced contracts already amounts to 1.369 billion euros.

The contracts signed as a result of Direct Adjustments amounted to €475 million, up 41% compared to 2016. The total number of contracts entered into and reported reached €1.292 billion, a year-on-year increase of 52%.

Original Story: Diário Imobiliário

Translation: Richard Turner

Lisbon Emigration: Why Millennials Are Moving to the Portuguese Capital in Their Droves

As freelancers and digital nomads make the most of being able to work from anywhere, Lisbon is fast becoming the relocation hub of choice for flexible young professionals 

Down the mazelike cobbled streets of Lisbon’s Alfama district – a once impoverished neighbourhood that’s now the heart of its historic district – you might be surprised as fragments of conversation drift past. English, French, German – there’s even the rogue American drawl.

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Alfama has attracted many different nationalities (Getty Images/iStockphoto)

Because here, between the ancient houses that rise from the Tejo Estuary to the majestic Castele de Sao Jorge, you’ll find a community of young people from all around the world who’ve settled in the Portuguese capital and made it their home. The Alfama district is at the centre of Lisbon’s new cultural shift; but not everybody is happy about it.

Lisbon’s been the European city break par excellence for some time now; the new Barcelona, if you will. It’s easy to see why: it enjoys a subtropical climate (the average temperature in December is a sultry 14°C), the cost of living is cheap (you can rent a one-bedroom apartment in a central location for around €800 a month), it’s blessed with a vibrant bar and restaurant scene, and it provides easy access to the beaches of the Algarve.

But young, affluent millennials aren’t just holidaying in The City of Seven Hills. They’re moving here, and they’re doing it en masse. It’s all down to the way we work nowadays. Gone are the stable 9-5 jobs of yore; welcome to the gig economy.

According to one recent report, 60 per cent of 18 to 35-year-olds are actively looking to move abroad. Today’s workers are self-employed and geographically flexible; they’re freelancers who can work anywhere, provided the broadband is fast enough. So why live in a city like London – where rent is eye-wateringly expensive and the weather uniformly grey – when you could halve your living costs and wake up every morning to sunny skies?

“My girlfriend and I moved to Lisbon for a change of scene in 2013,” explains 31-year-old James Cave, who now lives in the up-and-coming Alcântara neighbourhood. “We had just started freelancing, and Lisbon seemed a great place to base ourselves. It was affordable and had great weather.”

Other newcomers to the city come once and love it so much they never leave. “I originally came here for a week for work, because I was producing music for Lisbon Fashion Week,” says Chris Savor, 31, who moved to Lisbon three months ago and lives in the Príncipe Real district in the city centre. “I loved the vibe of the place so much I decided to live here!” Now, Savor spends €800 a month on rent – half of what he paid in the UK. “I love it here,” he enthuses. “The weather is always great, I love the old architecture and cobbled streets, amazing beaches and live music on the streets.”

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Lisbon provides quick access to the beaches of the Algarve (Getty Images/iStockphoto)

But the pace at which people are moving to the city has expanded exponentially in recent years. “In around 2014, Lisbon started winning awards and getting listed as a place to visit. Suddenly, it seemed like everyone was going there,” says Cave. “The expat scene is a lot bigger than a few years ago.” He explains that younger ex-pats tend to stay closer to the city centre and spend their weekends surfing or drinking in the bars of Graça, Cais do Sodre, Bairro Alto and Príncipe Real.

“My favourite thing about Lisbon is the overall quality of life I have here,” raves 37-year-old Kev Harrison, who lives in the Paco De Arcos area on the outskirts of the city. “It’s incomparable to anywhere else I’ve lived. The availability of fresh food at reasonable prices; the weather conditions; the cost and high standard of public transport – it’s all so much better.”

“My quality of life is great,” agrees Aristote Koen, 25, who recently moved to the Sao Domingo de Benfica area. “I rent a cosy room with weekly cleaning in a flatshare, for €370 a month. The city is multicultural, the food is great, prices are low and locals are friendly. You can also feel the historical and cultural wealth of the city, and there’s entrepreneurs from all over Europe, which is great.”

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Younger ex-pats tend to hang out in the city centre (Getty Images)

 

In particular, there’s a burgeoning nomad community in the city, comprised of freelance workers from all over the world who base themselves in the capital for months or even years at a time. Rosanna Lopes, 33, has been running a meet-up group for freelance workers for two years now. “My goal was to integrate the local startup scene with the digital nomad scene,” she says. Now her nomad community numbers around 150, has taken on a co-working space, and hosts regular networking events.

But not everyone is as delighted with Lisbon’s rapid pace of change. Lisbon residents’ associations have met to discuss what can be done to protect the interests of locals. Already rent is becoming prohibitively high for native-born city dwellers, and increasingly scarce.

“It’s becoming really expensive to find a long-term rental in central Lisbon,” says Agustin Cocola Grant, an expert in gentrification and tourism at the University of Lisbon. “At the same time, demand has grown a lot, as European professionals, locals and international students move to the city. This is terrible for prices.”

And small private landlords are increasingly turning to rental services like Air BnB to make a living, decimating entire neighbourhoods, like the Alfama district. Grant tells me that on one street in Alfama alone there are 230 AirBnB rentals.

Inevitably, this has a corrosive effect on the fabric of Lisbon’s society. “In the last two or three years, locals have begun to complain,” he says. “The facilities and the services they use are disappearing. Traditional stores and bars that would have been cheap meeting places for locals are disappearing and being replaced with expensive cafes for English-speaking foreign students.”

Despite these concerns, Lisbon looks set to continue its relentless progress. And the city authorities are doing much to encourage this change – regulation is loose and taxes on short-term rentals remain low, as the city tries to stimulate the tourism industry to help tackle the still-high unemployment rates.

If there’s one thing for certain, it’s that we can expect many more young, geographically mobile professionals to book flights to Lisbon soon. Whether the city will be able to keep up with the rate of change is another question entirely.

Story: The Independent

Pestana Invests €50MM in New Hotel in Alvor, Algarve

26 September 2017

The Pestana group will build a luxury hotel in Quinta da Amoreira, in Alvor, with a planned investment of 50 million euros. It will be the chain’s seventh hotel in Alvor, in the municipality of Portimão, a source from the group revealed today.

In a statement, the same source said that the new five-star hotel will have a “strong focus on sustainability”, and will be “a pioneering project in Portugal,” designed from the ground up for the “all inclusive” segment.

“The future Pestana Quinta da Amoreira will generate 300 direct jobs in the region, due to an investment of 50 million euros” a note released today stated.

Last year, the group invested six million euros in the renovation of one of the first five-star hotels in the Algarve, Pestana Alvor Praia, which reopened in May 2016, after six months of construction.

Alvor Praia, inaugurated in 1967, has 202 rooms, is located on Três Irmãos beach and has since been open year-round.

In 2015, the group opened Pestana South Beach, also in Alvor, in an investment of eight million euros, after upgrading the unfinished structure of the old Torralta venture, begun in the 1970s.

With a 4-star rating, the Pestana Alvor South Beach has 79 accommodation units, of which 57 are suites, with views of the beach, three outdoor pools, a bar and a restaurant.

Both projects also involved upgrading access to the beach, namely the continuation and completion of the wooden walkway that connects the entire Alvor seafront, for a length of six kilometres.

The pedestrian walkway is the largest in the Algarve region and one of the longest in the south of Portugal, linking the Três Irmãos beach to the Ria de Alvor along the dune strand.

The ceremony that marks the beginning of the construction of the new hotel Pestana Quinta da Amoreira is scheduled for Thursday, September 28.

The Pestana group has 17 hotels in the Algarve, and this will be the seventh in Alvor.

Original Story: Diário de Notícias / Lusa

Translation: Richard Turner

IMT Shoots Up by 24%, Lifted by a Rise in the Sale of Homes

26 September 2017

Tax revenues on real estate transactions yielded 565 million euros in just eight months. IMI receipts also increase, but by less

More home sales at higher prices. This is the “secret” to the municipal tax on transactions success, where revenues grew by 24% up to August.  Put into actual numbers: IMT revenues for the first eight months of the year stood at 564.6 million euros. That’s €109 million more than in the same period of 2016.

The growing dynamism of the real estate market is translating into a source of tax revenues that, as far as the IMT is concerned, threatens to exceed expectations. In the Portuguese state budget for this year, the government estimated that the tax that levied on real estate transactions would yield 649 million euros. But four months before 2017 is over, the figures which were released yesterday in the Budget Execution Synthesis indicate that the successor to the old Sisa (transfer of property) tax should easily surpass the forecast.

Luís Lima, president of the Portuguese Association of Realtors and Real Estate Agents (APEMIP), sees IMT’s revenue growth as a sign of the “opportune moment” that the market is experiencing. “These data show how the real estate market is moving,” he told DN/Dinheiro Vivo, adding that the revenue increase should also act as a warning to those wishing to change the rules of Local Accommodation or the regime of non-habitual residents. Changes to these programs could end up having an adverse impact on potential investors.

Nuno Gomes, one of the realtors at Remax with the highest volume of sales, is not surprised by the IMT’s record receipts. “There has been an exponential increase in sales, and the value of transactions has also been increasing,” he says. But he states that one of the parts of this equation (the rise in value) will tend to stabilise due to the expected growth in the supply of new homes.

This effect, he emphasises, will not make a big dent in tax revenues because the number of transactions will continue to rise. Luís Lima adds that the government and municipalities should take advantage of the moment and the increase in taxes that the IMT is generating to solve the problem of homelessness that afflicts many people.

IMT revenues were stricken during the crisis years, and saw revenues fall sharply in 2012 and 2013 – when it fell below 400 million euros – but recent trends consolidated its position as the second most relevant tax for municipalities. This overview does not include Lisbon, since the IMT has been the primary tax in the capital since 2014, bringing more money into the city council’s coffers than the IMI.

While IMI is paid annually based on the property’s taxable value (VPT), municipalities levy the IMT on the value of the sale or the VPT, whichever is greater. And only houses that exchange hands for less than €92,000 are exempt.

In the case of IMI and after last year revenues registered a year-on-year fall for the first time, data released yesterday by the General Directorate of the Budget show that this tax was growing by 1.3% up to August. In total, including July’s payments, the tax generated a revenue of €1.018 billion.

Deficit improves

Public debt reached 2.034 billion euros up to August, an improvement of 1.901 billion compared to the same period of 2016. A 4.3% increase in revenues and a stabilisation of expenditure – which registered a year-on-year increase of 0.4%, contributed to this result. But this trend will not sustain itself for the end of the year due to the payment of the Christmas subsidy to retirees and the civil servants, and because of the PERES (the fiscal pardon that at the end of the last year that brought in once-off revenues).

In a statement, the Ministry of Finance underlines that the trend of improving public accounts “gives confidence in the achievement of the budgetary targets set for 2017.” At the same time, it will be possible to “accommodate the impact of the factors which will result in a slowing of the pace of deficit reduction in the fourth quarter”, i.e. the payment of 50% of the Christmas subsidy and the lack of PERES-related receipts.

Original Story: Diário de Notícias – Lucília Tiago

Translation: Richard Turner

Spanish Bank Creates Real Estate Vehicle to Invest €50 Million in Portugal

26 September 2017

Andbank España, a financial institution that specialises in private banking, has just launched a real estate investment vehicle, whose objective is to invest fifty million euros in the Portuguese market, especially in prime assets in the Lisbon area. Albatross Iberian Re Renovation Fund I aims to achieve 12% returns within six years, with the possibility of extending it for another two and is aimed at qualified investors, requiring a minimum investment of 250,000 euros.

The Spanish bank said in a statement that it formed a partnership with Quantico, “a Portuguese real estate company founded by Carlos Vasconcellos – which has a extensive portfolio of building renovation projects in Portugal – and Albatross, the investment management company led by Carlos Mallo, with vast experience in the generation, execution and administration of investments throughout the Iberian Peninsula, over the last 20 years,” for the development of the vehicle.

Who is Andbank and why did it choose Portugal now?

Andbank justifies its bet on the Portuguese real estate market by citing the country’s tax incentives in urban renovation, stable investment regimes after the last reform of the lease law, along with the vast supply of buildings that are suitable for renovation and the high demand of both domestic and foreign buyers.

With 85 years of experience in the integral management of large assets, Andbank has increasingly bet on the real estate market. Since 2013, through three real estate funds, AKM Inversión Inmobiliaria was able to raise 100 million euros from 150 investors to acquire devalued residential buildings in the centres of Madrid and Barcelona for later renovation.

Original Story: Idealista

Translation: Richard Turner

Sea Porto Hotel. Naval Traditions Inspire €5MM Investment

23 September 2017

The new four-star hotel in Matosinhos is a 57-room Portuguese project.

The Sea Porto Hotel is the newest hotel in Greater Porto. With a creative concept based on the sea and the naval and port tradition of Leixões and Matosinhos, Sea Porto Hotel represents an investment of about five million euros, using 100% Portuguese capital.

The new establishment has 57 rooms, including triples, and five meeting rooms, with a 560-seat auditorium. The hotel also offers the “Deck Bar” with terrace and a cultural program of its own. Environmental issues were a concern in the design of the new unit, which has LED lighting and ecologically responsible materials, “investing in the optimisation of resources through recycling and awareness of the importance of water and energy conservation,” it said in a statement. Also, Sea Porto Hotel also offers recharging points for electric vehicles in its private garage.

In operation since August 7, the new hotel in Matosinhos reached its maximum occupancy in the second week, with reservations already made for 2018. With an average occupancy rate of 75% from the beginning, Sea Porto Hotel hired, a new director: Pedro Castilho has a degree in hotel management from the School of Hospitality and Tourism of Porto, with a bachelor’s in tourism and leisure by the School of Technology and Management of Viana do Castelo. He previously held the position of director of the Hotel Torre de Gomariz Wine & SPA and was nominated for the category of Young Hotel Director by the Association of Hotel Managers of Portugal in 2017.

Original Story: Dinheiro Vivo

Translation: Richard Turner

Lisbon Retail: Prime Rents Up 70% in Five Years

25 September 2017

Prime rents for street retail shops in Lisbon have been constantly increasing since 2012. In five years, rents went up by 70%, so a shop that cost around 75 euros per square meter per month in 2012, would now cost on average around 130 euros per month. The consultancy JLL says the “principal cause” of this rampant rise is the reformulated urban lease law. The increase in tourism in Lisbon, urban rehabilitation and changes in habits of consumption and lifestyle are other factors that have led to the increase in rents.

The rise in prices of high-end commercial space is one of the major findings of the study released by JLL during the discussion session promoted by the consultancy at the Real Estate Summit, an event that brought together more than three hundred Portuguese and international professionals in Estoril last week.

Prime retail sparked investors’ interest in 2012

In the last five years, the rents of stores located in the centre of the capital grew at a runaway pace, a situation caused by changes to the urban lease law, according to real estate consultancy JLL.

“The 2012 amendment to the Urban Lease Act was one of the main reasons why this area of the retail sector began to arouse the interest of retailers. It is also why it emerged as a principal option in brands’ strategies for developing the market in Portugal,” said JLL’s Head of Retail, Patrícia Araújo, in a statement.

JLL’s most recent market report, Market 360, shows that the prime rentals for street retail in Chiado reached 130 euros/m2/month in the first half of 2017, reflecting a growth of about 8.5% versus the same period in 2016 (120 euros/m2/month).

In Baixa, the increase was slightly more pronounced (around 10%, from 90 euros / m2 / month to 100 euros / m2 / month), while in other shopping destinations, rents remained stable. Avenida da Liberdade maintained the reference value at 90 euros / m2 / month, Príncipe Real at 40 euros / m2 / month, Cais do Sodré at 35 euros / m2 / month and Rua Castilho at 30 euros / m2 / month.

Demand for space easily outstrips supply, study concludes

The study also reveals that the pressure of the rise in rents felt in Chiado and Baixa results from a need for spaces that is far superior to existing supply. Nevertheless, because of the exit of some retailers and the complete renovation of several buildings, new stores are expected to open in these two locations.

On Avenida da Liberdade, JLL points out that there are spaces available, although they are mainly designed for medium and large stores, which often does not match the current demand, more directed to smaller spaces.

JLL director Pedro Lancastre talks about the importance of maintaining conditions “for the street retail to remain attractive, especially legal stability,” hoping that “the recently approved amendments to the urban lease law will not have a very negative impact on the growing trend in street commerce,” he added.

Original Story: Idealista

Translation: Richard Turner