Developers invest, but cautiously

The impact of the pandemic on Portugal’s real estate market is still unclear, but has not paralysed the market. Real estate developers are retaining their intentions to invest, cautiously.

The Belgian investor Krest Real Estate, for example, confirms that there are “many groups investing in a positive way in Portugal and long-term rental is one area”.

“I don’t see the real estate market in Portugal dying at all,” says Claude Kandiyoti, in statements to Jornal Económico (JE) when asked when the sector was likely to start being (adversely) affected by the Covid-19 crisis.
The CEO of Krest Real Estate says he cannot see the future, but confirms that at present “there is still quite a lot of money around and many groups investing in a huge way in Portugal.”
The problem for the investor lies in the banking system which does not seem willing to make large financial investments to develop the sector but, on the other hand, is providing loans for people who want to buy a house or invest in real estate, but not to develop projects from scratch.
“We have to find a balance, but I don’t quite know how this is going to be achieved,” he stressed.
An example of overseas real estate investment in Portugal apart from Krest and Vanguard Properties which have poured millions into luxury residential and resort developments since 2017, is the French company Nexity which is to invest €120 million in real estate projects in Portugal.
One particular project is a residential development called Flower Tower in Leça da Palmeira in an investment worth €24 million.
According to the Paris stock market listed company, this development will comprise over 100 apartments “designed to cater for Portuguese families” in what will be the company’s first major development in Portugal.
Construction is slated to begin in November this year and planning permission has already been granted by Matosinhos Municipal Council.
The project consists of building a 21 floor residential tower with 108 apartments ranging from studio flats to three-bedroom properties +1 duplex and with private areas of between 40 and 165 m2.
The sale prices will start at €112,500 for a studio +1 in a development within a “residential area of Leça da Palmeira, next to schools, shopping areas, transport, parks and hospitals.”
Nexity is also developing other projects in Lisbon and the Algarve, also in the residential and senior segments, with an investment value of around €120 million.
At an international level, apart from France, where it is a market leader in residential development, it is developing another 20 projects in countries such as Poland, Italy, Belgium and Germany where it also has a strong presence in these markets.
At this year’s edition of the Portuguese Property Fair – SIL, Luís Gamboa, COO of VIC Properties, who took part in the panel “The impact of Covid-19, Challenges and Opportunities,” said that in prime locations there would not be an adjustment in prices which in fact even could go up.
He said that Portugal was in the “first line for the post-pandemic economic relaunch”and applauded Portugal’s positive reaction to the health and economic crisis which was something that invests valued.
In Knight Frank’s report on the impact of the Covid-19 pandemic on the luxury real estate market in the 20 major cities around the world, Lisbon was placed as one of only four markets that would actually see a growth in the level of prices in this segment in 2020.
And according to the COO of VIC Properties, developments which offer light, spacious exteriors, verandas and offices, important now for home buyers in times of Covid, will be at a premium in terms of demand, something that the developer has been careful to provide in its developments such as Prata Riverside Village in east riverside Lisbon.
Another Portuguese-French development company, Vanguard Properties, is also investing €25 million in a prime location property offering stunning views over Lisbon and the Tagus River at Graça.
Terraços do Monte will be the first new build construction project from Vanguard Properties in the centre of Lisbon’s historic traditional neighbourhoods. It will have a 6,000 m2 total construction area, spread over 5 floors, containing 24 apartments, ranging from one-four bed properties with verandas and large glass windows with views from the Santo André Hill. The project will be developed by ARX Portugal Architects.