Spanish Investors in the Race for Portuguese Real Estate

29 September 2017

In recent times, Spanish developers have come to the Portuguese real estate market in force. Just this month, Vía Célere, a real estate company specialising in the development, construction and management of residential properties, announced that it is expecting to develop some 46,500 square meters of residential and commercial area in the Oeiras area, with the construction of 276 apartments.

The land where the project will be executed in Oeiras belonged to the Spanish company Dospuntos, which merged with Vía Célere as both companies belong to the same fund: Värde Partners. According to Juan Antonio Gómez-Pintado, president of Vía Célere, “this is the right moment to move forward with the development of new projects in Portugal. Given its sustained economic growth and growing consumer confidence and purchasing power, as well as an environment of greater access to finance and low-interest rates, the Portuguese market represents an opportunity for real estate investment. ”

Also, this month, Andbank Spain launched a real estate investment product – the Albatross Iberian Re Renovation Fund I – with the objective of raising 50 million euros to invest in Portugal and achieve profitability on the order of 12%, the institution announced in a statement. The fund, open to qualified investors willing to subscribe a minimum amount of 250,000 euros, is intended for investment in prime residential real estate in Lisbon. Andbank joined the Portuguese real estate company Quantico and the investment manager Albatross for the operation.

An Iberian real estate market

In fact, Portugal is on the radar of Spanish, and other international, investors. Hugo Santos Ferreira, the secretary general of the Portuguese Association of Real Estate Developers and Investors – APPII, reveals that more than 30% of its associates are foreign investors. They include significant real estate investment funds or institutional investors who might invest hundreds of millions in Portugal, small companies with lower investment tickets and even individual investors such as the French, Brazilians, etc. The official confirms, however, the growing interest of Spanish developers. “We have the honour, for example, of having one of the main Spanish SOCIMIs (Spanish REITs, i.e. listed real estate companies), or even with one of the leading Spanish real estate developers, as a member of APPII,” he explained.

Hugo Santos Ferreira also points out that APPII has always spoken of an Iberian real estate market and “therefore we have been closer to our Spanish counterparts, entities to which we are very close and have an intense dialogue these days. We have been focusing on Madrid and Barcelona, cities where we’ve promoted our real estate market to attract new investors. ”

APPII’s secretary-general emphasizes his contentment with the current dynamic, recalling that past periods have already experienced the arrival of interested foreigner investors, from the Swedese to the Brazilians, etc., “but the strength of the market today, and the extent of the interest we are seeing from investors from all over the world, is a first for us. The real estate industry is, in fact, living a very positive moment. ”

First-line investment destination

In the opinion of Hugo Santos Ferreira: “we are on the right path; moving from being an alternative destination and second choice of medium-sized cities in Spain to become a top investment destination. I think that today our main challenge is regarding raising investment. So, we must continue to provide the conditions that investors need to continue to invest with us, with political and fiscal stability and predictability being very important, and now more recently importing commonly accepted and used investment structures from around the world, such as REITs (American Real Estate Investment Trusts), which are also already used in Spain, and Anglo-Saxon inspired Limited Liability Partnerships (LLPs). ”

The official is not worried about the growing arrival of foreign developers and even believes that this fact has encouraged the appearance of many local developers. He also says that this is happening both at the level of the professionals – while in 2014 and 2015 the market was almost made mostly by foreign companies and where there was still no domestic demand, by 2016, Portuguese companies had relaunched a series of important projects – as well as the level of buyers or final consumers, where at first the large majority of buyers were foreign, and now there has been a great contagion effect on the Portuguese, who are coming back to the real estate market, and where bank financing for housing has grown every day.

“The fact that more developers can put more supply on the market will have a positive effect in that it will help to cool down prices in the more ‘heated’ areas. That way even more developers will come to the Portuguese market, and there will be more projects aimed at the middle class, both inside and outside the centres of the major cities, “he concludes.

Original Story: Diário Imobiliário

Translation: Richard Turner