Hugo Santos Ferreira, Executive Vice President of the Portuguese Association of Property Developers and Investors (APPII), comments on recent real estate market developments and their impact on the growth of Portugal.
How did the Portuguese real estate market evolved in 2017?
Portugal is in vogue with investors, tourists and expats. The current challenge is to make this attractiveness sustainable. In 2017, real estate investment amounted to 21.7 billion euros, representing a growth of 20%. Measured on a cumulative basis since 2014, it is around 70%. Currently, real estate accounts for 11% of Portugal’s GDP and half of the country’s total investment has been realized through real estate assets. As for the price per square meter, it rose by 5.3%.
What is the impact of the real estate investment on the trade balance and GDP?
In Portugal, the sale of a building to a foreigner is not technically considered an export. This is the best that can be achieved, since the asset remains on the national territory. Now real estate and tourism far outweigh traditional export sectors such as footwear and textiles, and account for 30% of GDP. Foreign investment has become an engine of growth.
But isnt’there a price problem, especially in Lisbon?
The market should stabilize and avoid a real estate bubble. Today, supply is insufficient to meet the very strong market demand. Our role as an association is to work to increase this offer, by promoting a housing program, like Spain and its Housing Plan. As part of the Portugal 2020 program, we already have a € 1.4 billion financing line for urban renovation. With an increase in supply, we will achieve lower prices.
What motivates so many foreigners to settle in Portugal?
Two factors have particularly contributed to this appeal. Tax benefits were offered to non-usual residents and a number of international stars chose recently to live Portugal, such as Madonna, Philippe Stark or Scarlett Johansson. Not to mention peace of mind and hospitable manner that are found here. Previously, when an investor was interested in the Iberian Peninsula, he would look to Madrid or Barcelona, he now also looks to Lisbon and Porto.