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24 New Houses are Coming on the Market per Day (with some studios starting at €200,000)
12 November 2017
Real estate boom in sight?
After three years in which the centres of the cities of Lisbon and Porto have been taken over by a frenzy of urban rehabilitation, a growing number of projects are starting to be built in emergent areas which still have a more significant constructive capacity. These changes are a result of the consolidation of demand and the need for a greater area of construction to meet that demand.
According to data from the Portuguese Confederation of Construction and Real Estate (CPCI), in the first eight months of this year, a total of 12,347 homes were licensed, of which 8,392 are new builds. Of these, 5,809 were for family housing. That is a daily average of 24 new building units.
“The total licensing of works [between public and private] in the first eight months of the year grew 13.4% over the same period of last year. And the growth of licenses for new construction works was, in the same period, 20.1%. There is undoubtedly a large increase in new construction for family housing,” Reis Campos, president of CPCI, confirmed to Expresso.
At Engel & Völkers, a consultancy specialising in the luxury residential segment, the increased demand for land in the last year is seen as a reflection of demand for the construction of small luxury condominiums.
“Right now, there is a lot of interest in buying land to do projects, and there are already several them under development, even though sales may not have begun yet. But in the next year they will start to emerge in several areas, not only in Lisbon but also in Estoril, Oeiras and Cascais,” Manuel Neto, who is responsible for several Engel & Völkers agencies, namely in Parque das Nações, Restelo, Cascais, Estoril and Comporta, stated.
For the executive, there is no doubt that 2018 will be a turning point for new projects that go beyond rehabilitation. “There will be a new construction boom. There is a lot of demand for the higher segment, but it is also a generalised trend for middle segment projects. Land is being bought. Some already have projects ready, others have projects that were approved six years ago, still in the pre-crisis period, and which now have to be reformulated,” Mr Neto stated.
Real Estate Boom in Sight
Will the increasing amount of real estate that is coming on the market act as a restraint on rising prices? “Prices will accompany the rise of the market. The new builds will, for now, accompany this rise,” the executive at Engel & Völkers responded.
In Lisbon, Rafael Ascenso, director of Front Door/Christie’s, talks about real estate expansion in neighbourhoods like Santos, Santa Apolónia, Graça, Campo de Ourique and Campolide: “These are areas that will absorb existing demand. The reality is that this dynamic is expanding out of the central areas. It’s still possible to find empty land to develop in these locations.”
This was done by the real estate development group FFA Real Estate, of Lebanese origin, which formally presented its first project in Portugal this week – the Prateato, which will be developed in Marvila.
Representing a group of mainly Middle Eastern investors, though also including some Europeans and Brazilians, FFA Real Estate has already acquired ten properties around the Avenida da Liberdade and on the riverside, next to the Cruise Terminal.
“We started hearing about Portugal in several foreign media outlets, and by the end of 2015, we came looking for opportunities. We fell in love with Lisbon from the outset and are now very committed to developing various residential and hospitality projects, with a total value of just under €100 million,” Georges Abu Jaoude, CEO of FFA Real Estate, said.
The Marvila project, which accounted for €16 million of the total investment, was the first to move forward. Hopes are that within a year the 51 lofts will be finalised, most of them studios and one-bedroom homes (starting at €200,000), with access to jogging tracks, self-service laundry, solar energy, community gardens and a co-working space, features designed to “promote interaction between residents and a return to the concept of community.”
400 meters away from the future Beato Creative Hub, funded by the Lisbon city council, which will receive its first occupants by the end of next year, Prateato will be the first of several projects by the Lebanese group in the area.
“We are currently negotiating two more assets, as we firmly believe in this area of the city, located between the historic area of Lisbon, the Expo and the airport. There will be a real estate boom in the next few years,” said the FFA official, noting that there is a lot of “appetite” nowadays from various types of investors, from golden visas to local accommodations, and the Portuguese who are looking to move back into the city.
The Portuguese Also Pay in Cash
With Portugal on the route of a growing number of foreigners who want to buy a house in the country and with the Portuguese returning to the market as well, the sector’s future seems bright.
With an average transaction value of €780,000, Front Door now has clients from all over the world, some of whom are starting to arrive from countries that still appear infrequently in Portugal, as is the case with the Americans. “But the largest groups are the Portuguese and Brazilians, each with a share of 33% of our sales volume [which by the end of the year is expected to close at €270 million].”
The Portuguese, now running even with the Brazilians, accounted for less than 20% of Front Door’s revenues just two years ago. Whether it’s the Portuguese or foreign nationals, money is not lacking: “95% of our transactions are made without recourse to loans.”
The number of paying customers is also evident in the speed with which homes that a put on the market are sold out. “Three months ago, we launched the Theatre building in the centre of Cascais, and of the 21 flats, only four remain unsold.” The Ocean Residence luxury condominium on Monte Estoril, facing the sea, is expected to be completed by the end of the year but has already sold out, despite prices reaching €3.5 million, Rafael Ascenso referenced.
Original Story: Expresso – Marisa Antunes
Translation: Richard Turner