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Avenue’s Investments May Reach €150 million Over the Next Two Years

4 March 2018

The real estate developer spent €100 million on seven properties, one of which was the former headquarters of the Diário de Notícias newspaper and will now start a new round of acquisitions.

When you head down the right side of Lisbon’s Avenida da Liberdade and look at the property on the corner of Rua Rosa Araújo, it is difficult to remember what had been there before. What was left of the previous construction, which was in ruins – was rehabilitated and transformed into a building with 44 luxury homes and nine street-facing stores. Further down, on the left side of the street, next to the Holmes Place gym, where there was once an outdated office building, the construction of yet another luxury housing property, smaller this time, with 16 apartments, is in the process of finalisation. Further up, just at the beginning of the avenue, on the left side of whoever is heading down the street, stands the former headquarters of the Diário de Notícias (DN) newspaper, which will give way to another 32 high-end flats and a ground-floor store.

The name of the developer which led all these projects is Avenue, which is far from being a coincidence. It was precisely on the Avenida da Liberdade that the company, created in 2015, began its business of buying real estate for subsequent rehabilitation and transformation into housing. In the following two years, it expanded its area of activity to Chiado, also in Lisbon, and then to Porto. It currently has seven projects in different stages of development.

The company has no intention of resting on its laurels. Just the opposite. “This was the company’s first investment phase. We spent €100 million on these seven properties, and now we are going to enter a second phase of acquisition, which last from 2018 to 2020, and for which we have an estimated budget for investment of €100 million to €150 million,” the Avenue’s director, Aniceto Viegas, told Expresso.

But this time they want to extend their area of intervention even further, moving away from the centre of the capital and the most expensive zones and, consequently, diversifying the focus of their investments. “In 2015 we felt that the time was right to make build housing for the high-end segment, now we are taking a look at the office market. It is a segment that the company understands well and in which we expect demand to grow because at the moment there are no offerings. In recent years, developers have focused more on housing because it is a more profitable product. Also, we would also like to take a position in the mid-priced housing market, as we understand that the Portuguese are looking for houses at more affordable prices,” he explained.

“We Want to Pay People Well”

Avenue may boost and diversify the type of investments it will make over the next two years, but there is one thing that will not change: the size of the projects they intend to pursue. “Our investment profile does not include small-sized projects, which has less to do with buying prices than potential profitability. We have a highly qualified team, and we like to pay our people well. Larger projects are more profitable,” he argued.

This will be the principal challenge for Avenue during its second phase of investment, as it looks to invest in alternatives to luxury housing. “A property’s acquisition cost weighs heavily in this business, and now, sellers who ask for too much are at risk of losing out on potential sales. The price per square meter of these buildings depends on many factors, such as its state of conservation, whether it has a concrete structure, whether it has a view or whether there are shops on the ground floor,” he added.

In fact, most of the seven projects under development all had a purchase price above €10 million. For example, the property on Avenida da Liberdade and the corner of Rua Rosa Araújo – its first investment – cost €32 million. 40 Liberdade, near Holmes Place, cost €11 million and the former headquarters of the DN was acquired for €20 million. “To attain profitability at these prices, we had to develop high-end homes,” the executive stated.

But Mr Viegas is confident that he will find additional assets to develop because, he says, “Lisbon is a large city and there is still plenty to do. There are many buildings in poor condition and even buildings that are in use are an option, as the occupancy can change. Regardless, not everything has to be high-end.”

Original Story: Expresso – Ana Baptista

Photo: João Carlos Santos

Translation: Richard Turner