In Five Years, International Buyers Acquired More Than 70,000 Homes in Portugal

30 October 2018

Foreign investment “encouraged” and boosted the recovery of the Portuguese real estate market in recent years. The figures leave no room for doubt: in the five years between 2012 and 2017, international buyers acquired 70,700 homes in Portugal, for a total of 11.1 billion euros.

According to the Association of Construction, Public Works and Service Industries (AECOPS), non-residents invested around 800 million euros in real estate in the Portuguese market in 2012. That figure more than tripled by 2017, when investments reached a total of  €2.8 billion.

2014 was the year in which the relative weight of international buyers in the total amount of transactions reached a peak (15.7% of the total), declining since then to 11.5% in 2017. “A significant part of the acquisitions” in 2014 went to properties worth over 500,000 euros, accounting almost 44% of purchases. This representativeness declined, however: by 2017, properties exceeding this amount represented just 36.3% of acquisitions.

The Algarve is still the preferred region for foreign investors. The area accounts for 43% of the acquisitions in 2017, followed by Lisbon and the Alentejo (37%) and North/Center (17%). Almost half of the total amount transacted by non-residents in the last five years corresponded to purchases made by residents from the United Kingdom (18.3%), France (17.9%) and China (12.7%).

Original Story: Idealista

Translation: Richard Turner

Risk of Real Estate Bubble in Portugal is “Minimal”, Says Faria de Oliveira

30 October 2018

Is there a risk of a real estate bubble in Portugal? The president of the Portuguese Banking Association (APB), Fernando Faria de Oliveira, says no, stating that the probability of a serious risk in Portugal “is minimal.”

“We have reflected a lot on this subject regarding the banking system as a whole, and we believe that, at the moment, the banks are rigorously complying with regards to the concession of housing loans. We are quite serene, “said the president of APB, quoted by Lusa, about the possibility of a real estate bubble in Portugal.

The official admitted that “there would be a need for some readjustment of the domestic supply” and that “prices must be monitored,” adding that “the probability that this constitutes a serious risk is minimal.”

“If we compare the current situation with the one that existed before the crisis began, the volume of lending is considerably lower. The banking system is acting with prudence,” said Faria de Oliveira during the conference “The Future of Money”, organised by Dinheiro Vivo, TSF and EY.

Original Story: Idealista

Translation: Richard Turner

Prices of Homes Within Resorts Rise by 9.6%

29 October 2018

The price of homes integrated into resorts rose by 9.6% in the first semester of 2018 compared to the previous six months. Year-on-year, the increase reached 4%. The data was included in Confidencial Imobiliário’s (Ci) Resort Housing Price Index, in the scope of SIR-Resorts.

The semi-annual rise “reversed the downward trajectory of the two previous semesters, both with semi-annual devaluations of around 5%,” Ci said in a statement.

“The relative stabilisation of the British pound and the perception that English demand has remained active, along with the strengthening of demand based on the diversification of issuing markets, with buyers from Asian countries, Brazil and others carrying out high-value purchases, are underpinning the recovery of prices,” Ricardo Guimarães, director of Ci, explained.

Original Story: Idealista

Photo: Wikimedia Commons

Translation: Richard Turner

Porto: 70% of Local Accommodations Located in the Historic Centre

29 October 2018

The market for rental homes for tourists is on the upswing in Porto, and 70% of the Local Accommodations are in the city’s historic centre. The growth in tourism is driving the phenomenon. One and two-bedroom properties are the most sought after, according to a study by Predibisa, a real estate consultancy that specialises in the north of the country.

According to the report, which analyses the housing market, including university residences, hotels and local accommodations in Porto, there has been a significant amount of public and private investment in urban rehabilitation, revitalising the real estate market in the city.

“Most of the recently sold buildings in the centre of Porto were acquired for use in the local accommodations market. Serviced apartments stand out, a concept that combines short-term/medium-term rentals twinned with the provision of services, whose target groups are leisure and business tourists, as well as students and researchers, “the consultancy said in a statement.

Student housing is scarce

Another of the study’s conclusions concerns the scare supply of student housing. Perhaps that is why there are more and more investors – particularly foreigners – interested in the sector and the city of Porto.

According to the study, ​​per room rents for private university residences vary between 190 euros and 300 euros per month while apartments/studios can range between 260 euros and 460 euros per month. “Rooms in flats rented by individuals go from 100 euros to 350 euros, while flats for rent, usually studios and one-bedroom apartments, have rents starting at 370 euros,” Predibisa said.

The consultancy reveals that, due to the high level of demand, four new private student residences are planned for Porto, mainly for international students. “1,500 new rooms are in the works, and they will have an average monthly rent of 600 euros”, it stated, emphasising that other potential investments are under analysis.

Original Story: Idealista – Frederico Gonçalves

Photo: Everaldo Coelho / Unsplash

Translation: Richard Turner

French Discover New Investment in Portugal: Student Residences

26 October 2018

Student residences are the latest target of foreign investors who are fishing for real estate deals in Portugal. At least five such projects will be completed by 2022, three in Lisbon and two in Porto. A French family office is investing roughly 70 million euros, the consultancy Essentia revealed. The firm is also planning a co-living project, on the Portugália block of Avenida Almirante Reis, in Lisbon.

In Porto, the student housing projects are in the Asprela area and downtown, said Jose Gil, CEO of Essentia, during a breakfast with reporters. The executive declined to give any additional details regarding the properties in Lisbon, stating that negotiations are currently taking place and that they are in areas near the metro line.

José Gil stated that the investment is guaranteed success, given the huge influx of young people who choose to pursue their studies in Portugal, particularly in Lisbon and Porto. A lot has also changed in the last few years. In 2002, when SPRU – University Residences, at Rua dos Sapateiros, in Lisbon, was already functioning, “the problem was guaranteeing the safety of students after 6 pm.” “The Lisbon’s historic centre was deserted,” he said.

Portugália to be rehabilitated

It could turn out to be one of the most “vibrant” real estate projects in Lisbon, the rehabilitation of the historic city block of Portugália, at the intersection of Avenida Almirante Reis, Rua Marques da Silva, Rua António Pedro and Rua Pascoal de Melo.

“It was part of a portfolio called the Fundo Sete Colina (Seven Hills Fund – FSC), which was acquired by a foreign investor, a German pension fund, who is our client. The project was paralysed, and we decided to remodel the project,” José Gil explained.

According to the executive, FSC is active and has a single owner, the aforementioned German pension fund, which bought the fund.

The architect José Mateus, who founded ARX Portugal architectural studio with his brother Nuno Mateus, revealed that the project “contributes to the idea of a neighbourhood.” “It’s a multi-use development: it has offices, housing, co-living and will restore the existing factory,” he said.

Stating that their goal is to make the interior of the privately-owned block a public space, the architect said that they had changed the project into one with a lower construction area than previously planned but a higher floor area. “There is an idea of the neighbourhood there; this is a side that the city needs…” The rehabilitation project is currently under negotiation, and is being discussed, he revealed, without providing further details.

Original Story: Idealista – Frederico Gonçalves

Photo: Gtres

Translation: Richard Turner

The Beautique Hotels Bets on Assisted Living

29 October 2018

After launching the Figueira Beautique Hotel and the WC Beautique Hotel, the group is investing in the first space to provide services catering to the well-being and quality of life for senior citizens.

The Plenus Assisted Residences, located in the centre of Lisbon, has 15 rooms (singles and doubles) and will cater to the well-being and quality of life of senior citizens, whether temporary or permanent. The facility will have a highly qualified and specialised multi-disciplinary team, composed of physicians, nurses, physiotherapists, geriatric assistants and socio-cultural entertainers, to provide care, experiences and a better quality of life to its residents.

Original Story: Diário Imobiliário

Translation: Richard Turner

Turkish Firm OYAK Acquires Cimpor and InterCement

26 October 2018

The Turkish OYAK Group (Ordu Yardımlaşma Kurumu) signed a contract with Cimpor and InterCement to acquire all of the two group’s assets included in their Portugal and Cape Verde Business Unit.

In a statement, the two companies announced that the transaction is part of InterCement (formerly Camargo Corrêa Cimentos) and Cimpor’s publicly announced debt reduction plan, which the firm created in response to adverse conditions in South America, especially Brazil.

The Turkish OYAK Group is Turkey’s first and largest pension fund, founded in 1961, and the leading investor in such profitable sectors growth industries as cement and concrete, mining and metallurgy, automobiles, energy and the chemical sector, agriculture, logistics, finance and specialised aluminium.

The group currently employs around 30,000 people in 19 countries, had a turnover of USD 10.2 billion in 2017 and operates in a range of industries (cement and concrete, mining and metallurgy, automotive, energy and chemical) and services (financial and logistics). Its subsidiary OYAK Cement has seven integrated cement plants and three mills with an annual production capacity of 12 million tons per year, 45 concrete plants and one paper bag factory.

The market leader in Turkey, OYAK Cement is a reference in the development of innovative solutions for the use of cement based on efficiency, creativity and profitability, as well as by its sustainability and dedication to the environment and community.

OYAK Cement identified the potential to integrate Cimpor Portugal and Cape Verde into its portfolio of assets, in particular by highlighting its know-how, potential operational, scale, geographic positioning and export capacity.

The transaction is subject to approval by the competent Competition Entities.

The acquisition will allow OYAK to add the three factories and two cement grinding mills, the 20 quarries and 46 concrete plants located in Portugal and Cape Verde to its portfolio.

The current management structures for Cimpor’s production areas and central services in Portugal and Cape Verde will remain in place.

Original Story: Diário Imobiliário

Translation: Richard Turner

Tax Authorities Fail to Readjust IMI

29 October 2018

The value of real estate construction set by the government fell, but, according to the ANP, the Treasury failed to update tax deductions. The government responded that there “has been no refusal” to make the correction.

The National Association of Property Owners (ANP) stated that the Portuguese Treasury has failed to update one of the principal factors determining the value of the Municipal Property Tax (IMI), the Correio da Manhã reported. That factor is the value of real estate construction per square meter declared in building tax certificates.

According to the decree published by the Secretary of State for Fiscal Affairs, the value of construction is set at 603 euros per square meter. The ANP argues, however, that thousands of taxpayers pay the IMI based on the previous amount of 615 euros per square meter, “resulting in a higher tax bill.”

According to the association, when some property owners attempted to update the value of construction in their properties, the Treasury requested the architectural plans and the consequent revaluation of the building’s Taxable Asset Value (VPT). “In situations where the owners wish to update the VPT, for whatever reason, [the government] must carry out a new evaluation, and not just update the VPT according to the alteration of one of the elements”, the government explained, in response to ANP’s complaint.

The association insists, however, that “the matter has nothing to do with a revaluation, it is just a financial error that should be corrected,” and that property owners’ rights are being infringed.

“There has been no refusal.”

In response to the ANP’s complaint, the Ministry of Finance clarified that “the regulatory framework makes it clear that there has been no refusal on the part of the Tax and Customs Authority to correct the IMI regarding the average value of construction per square meter set for the year 2018.”

The Government emphasised that the average value of construction per square meter was set by Centeno’s ministry on January 1, 2018, and applies to all “urban buildings whose model 1 declarations are delivered” from that date.

“The effects of the claims and of the corrections promoted by the head of competent finance services carried out on any of the grounds provided for in this article shall only occur in liquidation in respect to the year in which the application is filed or rectified, meaning that any corrections are not, under the terms of the law, retroactive,” said the statement.

Original Story: Economia Online

Translation: Richard Turner

80% of the Offer of Local Accommodations in Lisbon May Lapse With Sale of Property

27 October 2018

An expansion of the containment areas under consideration by Medina’s city council will oblige most property owners to hold onto their properties for life to avoid a loss in value.

Owners who want to maintain their property as local accommodations in the containment zones set by the Lisbon city council may have to hold on to the property for the rest of their lives since once the asset is sold or leased its commercial value drops to zero. According to the new law that came into force this week, local tourist accommodation registrations automatically expire in case of a change in ownership. In other words, the owners may sell the property as a real estate asset but not as a business based on local accommodations. The person acquiring the property would have to apply for a new license, which the local authority may not grant in Lisbon’s areas of containment.

Essentially forcing the owner to hold onto the business for life “is a major restriction, and one that is especially critical for buyers who acquired and renovated properties specifically for use in the local tourist accommodation market, “says Eduardo Miranda, the president of the Portuguese Association of Local Accommodations (ALEP). “If the owner needs to sell their property due to some difficulty in life, everything they have accomplished to increase the value of the property is lost.”

The law’s restrictions do not stop there, existing registrations also expire when a company owns them, and the firm sells more than 50% of its equity. “Imagine what this can mean in a divorce or a fight between partners,” the president of ALEP warned. “The only exception they included… was in the event of the owner’s death. Otherwise, [the law] is completely absurd.”

The issue is becoming even more critical given that the Lisbon city council, the first of its kind to impose containment zones for local accommodations, announced that it is considering extending the restrictions to other areas of the capital. In addition to Alfama, Mouraria, Castelo, Bairro Alto and Madragoa,  the council is evaluating the imposition of limits on Graça, Colina de Santana, Ajuda, Lapa and Estrela, along with Avenida da Liberdade, Avenida da República and Avenida Almirante Reis. “If they all become zones of containment, they will cover more than 80% of the currently registered local accommodations in Lisbon,” says Eduardo Miranda.

Containment “does not solve the housing problem.”

According to the law, the city council can immediately suspend new registrations of local tourist accommodations in areas where it plans to create new contention zones. The suspension can last up to one year.

“The suspensive measure is the most extreme and can cause significant panic in the market if it is not well managed by the city council,” the president of ALEP warned, noting that “the suspension covers everything, even construction. The biggest effect will be on any renovations that are underway, and the people who will be the most penalised are the owners who strictly followed the rules since construction permits can last for nine or ten months.”

ALEP approved of the mayor of Lisbon speaking this week about “the issues affecting local accommodations and the containment areas, though it was not clear what areas would be suspended, and the impact here can be immense.”

The association also approved of the monitoring of indices tracking neighbourhoods that are most or less affecting by the local housing market, permitting “a healthier and more balanced relationship” between inhabitants and tourists. “But we are talking about issues affecting five or six parishes, when there are 1,800 in the country,” Mr Miranda stressed. “We were always against immediate suspensions; it was preferable to start with regulations whose rules were understood by all.”

The executive also warned that “the only objective here is to encourage housing,” while the restrictions generated by the suspensions “will not solve the problem of housing at all… it is an illusion, and local tourist accommodations have become a scapegoat. When you stop local accommodations you then get Erasmus students or foreigners who are moving here; there are any number of investments today that are more attractive than renting for €100 or €200.

According to Eduardo Miranda, the “housing problem is structural and needs aggressive measures to encourage traditional long-term rentals, with tax benefits being the most effective way forward.”

The association still believes that local housing has room to grow, there is room for growth of local housing, especially considering the stock of available real estate. “Lisbon has 50,000 vacant properties, in addition to 35,000 second homes, which means 85,000 properties that are not used for permanent housing, while there are 16,000 local accommodations,” the official noted.

“Local accommodations are not just a fad, they have come to stay,  and people who fail to understand this are out of touch with reality,” Miranda concluded. “We are talking about a fundamental part of [Portugal’s] tourism market, one which already accounts for a third of overnight stays and 70% in the interior. It’s not about low cost, because some of the most expensive places to stay in the country are local accommodations.”

Growing

78,739 – the number of local accommodations registered since 2014. Last year, the number of registrations stood at 54,349, an increase of 44.8%.

214 – the number of small parishes in the interior of the country where at least one local tourist accommodation has been registered since the beginning of this year.

1,200 – the number of new registrations in Lisbon between October 11 and last Saturday, because of the new law. Most were made by residents in the containment areas.

IRS – Personal income tax

Hidden Benefit

The president of ALEP, Eduardo Miranda, believes that suspending the registration of new local accommodations will not solve the housing problem in Lisbon. A solution would require tax incentives and more information for investors. Mr Miranda stated that the government altered a tax benefit for owners who place their property on the long-term rental market in the 2018 State Budget, but that is little used since its existence is largely unknown. The benefit reduces IRS payments to just 5% on any rents received in cases where the owner invest more than 25% of the original property price in renovations. Once the renovation is confirmed by the local authority, the owner would receive the benefit. Before the change, the local authority would have had to check the property twice, once before and once after the construction. “The value of assets in historic centres is very low, so renovations worth €10,000 to €15,000 are often enough to receive the benefit,” he concluded.

Original Story: Jornal Expresso – Conceição Antunes / Ana Baptista

Photo: Inês Duque

Translation: Richard Turner

Housing Prices Reach New High

29 October 2018

The INE’s monthly survey of Portugal’s banks for the month of September showed an increase of nine euros compared to the previous month and 70 euros compared to last year.

The average value of bank valuations, which financial institutions conduct when home buyers are applying for mortgages, reached 1,205 euros per square meter in September. The report, which was released Monday by the National Statistics Institute, revealed that prices increased by nine euros compared to August and by 70 euros compared to September of last year.

According to the INE, the increase was more significant for flats than for houses. Compared with the previous month, the value per square meter for apartments increased by 12 euros to 1,264 euros, while the average valuation for houses rose by nine euros to 1,111 euros per square meter.

Year-on-year, the average increased reached 6.2% (70 euros per square meter), with apartments and houses rising by 6% and 5.7%, respectively.

The INE’s statistics show that the Algarve had the highest valuation per square meter for apartments (1,584 euros per square meter) and Alentejo had the lowest (1,029 euros per square meter).

Compared to August, the Autonomous Region of the Azores saw the highest increase (3.2%). The Autonomous Region of Madeira was the only region that saw a decrease (-2.8%). Year-on-year, the Algarve recorded the most significant growth (12.4%), and the Autonomous Region of the Azores had the lowest (1.1%).

Original Story: Público – Luísa Pinto

Photo: Paulo Pimenta

Translation: Richard Turner