Spanish Real Estate Companies Eye the Portuguese Market

27 March 2018

Two of the largest listed real estate companies in Spain are planning investments in Portuguese real estate. But they believe that that the country must create a REIT regulatory regime.

The Portuguese real estate market is showing up on the radar of ever more investors. Just next door, two of the largest listed real estate companies in Spain, also known as REITs, are eyeing Portugal’s market. The heads of these companies are mainly focused on office and commercial, as well as hotel and tourism, assets.

Merlin Properties intends to increase its exposure to the Portuguese real estate market, as it already owns several office buildings and a shopping mall. The REIT intends to focus on the retail market. In turn, Hispania intends to commence investing in the country through tourism and hotel real estate. However, while both recognise the potential of the Portuguese market, they emphasise the need for Portugal to create a REIT regime.

Real Estate Investment Trust (REIT) are publicly-traded companies that are dedicated exclusively to real estate assets. Currently, they exist in several countries, including Spain and, industry players in Portugal’s real estate and financial industry are seeking the implementation of a regulatory regime creating REITs. The main advantages of this investment vehicle include transparency, simplification and security, for long-term investments. The sector estimates that the creation of REITs in Portugal would attract investments of between 10 and 15 million euros.

“If Portugal does not legislate REITs, investors will have to invest in our market through other countries, with the associated losses of revenue for Portugal,” Manuel Porta da Costa, of the Portuguese Association of Investment, Pension and Property Funds (APFIPP), said in a statement.

“International investors are keen to invest in Portugal but seek to do so in a format similar to what they have available in other countries. We have to give them this stability because the opportunity cost of not doing so can be enormous,” António Gil Machado, director of Iberian Property, stated at an industry event that took place in Madrid, in which companies discussed their interest in Portugal.

Original Story: Economia Online – Rita Neto

Translation: Richard Turner