International investors will continue to invest in Portugal
The glut of liquidity floating around the international markets, continued low interest rates and competitive yields offered by the Portuguese market will continue to be important positive factors for attracting overseas investors in real estate and real estate funds.
Portugal’s real estate developers continue to be confident that overseas investors will continue to want to invest, buy property, do business and live in Portugal, despite changes to the Golden Visa regime and the economic crisis caused by the Covid-19 pandemic.
In an interview with Jornal Económico, José Cardoso Botelho, CEO of Vanguard properties points to low interest rates, high liquidity and low inflation as the main factors. “Without a shadow of a doubt real estate continues to be seen as a refuge for money and there is certainly not a property bubble in Portugal given that yields continue to be high and inflation and interest rates are low.”
“There is a growing number of foreigners who want to live in Portugal, mostly because of the quality of the lifestyle and its safety and low crime rate record,” he says.
The CEO of Vanguard properties stresses that the price of property is not high in Portugal, rather the problem is that the salaries are low. The vice-president of the Portuguese Association of Real Estate Investors and Developers (APPII) explains that the many high taxes on property in Portugal mean that 40% of the cost of homes is down to these taxes, which added to high construction and building materials costs make it difficult for developers to build affordable housing without running a loss.
He also calls the government’s policy on rents “regrettable and unfortunate” because developers can’t build apartment blocks for the middle class without losing money.
Vanguard Properties is the largest private real estate developer in Portugal, with over €1Bn applied in two dozen projects, mostly in the super-luxury segments in Lisbon, Oeiras, Algarve and Comporta in the Alentejo.
José Cardoso Botelho (pictured right with business partner Claude Berda) has said that Vanguard would like to invest in the Portuguese build-to-rent market in Portugal because the company has so much experience in Switzerland where it has built 50 apartments blocks, mostly for the middle classes.
“The problem is that whereas in Switzerland a waiter in a restaurant can earn up to €5,000 per month and the average rents are €2-3,000, the rents in Portugal are €300-€400 while average salaries are low”. (€740 after tax).
He also points out that Portuguese banks don’t have the capacity to lend for long-term build-to-rent projects. “They will lend to individuals for mortgages spread over 40 years, but will not lend to developers.”