Portugal will end up with slums and shanty towns if it doesn’t solve the housing problem

 In Hotel, Housing, ICPT, News

Text: Chris Graeme Photo: ICPT Fernando Bento

Portugal could solve its chronic housing problem if it had earmarked more funding from the Recovery and Resilience Fund and reached agreements with the banks to finance housing projects according to the President of the hotel chain group Vila Galé.

Speaking on the sidelines of a lunch organised by the International Club of Portugal at Lisbon’s Sheraton & Spa hotel on Wednesday (October 2), Jorge Rebelo de Almeida told Essential Business: “There’s plenty of money, in the RRP for example. This talk of there not being enough money to solve the housing crisis is an excuse. There’s money and the banks have never been so flush with capital as they are now.

“The banks today in Portugal have enough money to finance any type of project, but it’s not done because there are no ideas and no willingness to solve the problem, and that’s it”, said the hotelier.

As for the notion that developers weren’t interested in building social and affordable housing for the middle classes, because there wasn’t any profit in it for them, he called it “theatre”.

“There’s space for everything; for luxury housing – and thank goodness there are many Americans and Brazilians coming to live here and they are welcome – but we also shouldn’t forget those with more limited means and the poor. We need social housing for the poor and to build housing for the middle classes, and this has to be resolved with a Land Policy (Politica de Solos) and for that you need an integrated plan which there doesn’t seem to be,” said Jorge Rebelo de Almeida.

By this the entrepreneur meant that Portugal needed a serious Emergency Plan to solve the housing question involving all the different bodies because it couldn’t be done in isolation.

“If we don’t, we will end up with a country that once again has shanty towns and slums and we don’t want that,” he warned.

On the current contentious issue of cutting IRC corporation tax, Jorge Rebelo de Almeida said: “Reducing iRC would be nice, but today the country, its governments have little capacity to intervene in the economy. I don’t think they should cut taxes for business across the board, but one thing they could do in taxation is offer tax offsets to companies that do more in the interest of the State, such as reinvesting profits, investing in the interior of the country (which suffers from a lack of population). Why should the main beneficiaries of a lower IRC get it for doing nothing?

“If companies don’t offer something in return, the State will gain nothing from a general corporation tax cut because the companies will benefit without lifting a finger,” he said, also calling into question the government’s policy to reduce taxes for young people (IRS Jovem) as a way of retaining talent and preventing it from going overseas where jobs are better paid and career opportunities more abundant. He said he doubted this would stop them at all.

“They argue about these things (in parliament) because they (the MPs) have got nothing better to do than let them (the motions) fall and put them off for another day. Because they are not important questions (for them), it is easy for any one of them to let it fall”.

Instead, the entrepreneur said that the tax cuts measures, which have fiercely divided the government and the opposition PS party (Partido Socialista) in negotiations for the State Budget 2025, should instead be directed toward companies that reinvest profits (and not just hand them all out to shareholders), or do something for the country, such as attracting more investors and investment to Portugal.

“It is my conviction and life experience that more people would come to Portugal if the public administration functions effectively and efficiently, and is agile and less complicated when resolving problems than by simply knocking one or two percentage points of the IRC”.

And added: “It’s a lot more important for a company to either have their projects approved or not (I’m not saying it should be approved automatically), but they should give businesses a decision as quickly as possible.

On the issue of social pact agreements, the hotelier said that anything agreed over social cooperation was “a good thing”.

“I think the country should be managed with a consensus. Today, for the salvation of the country, the parties should forget their party differences and get together with the president of the Republic and instead of talking about everything and nothing should concentrate on this and get the parties to reach a political consensus, and take the decisions on measures that the country needs, as could have happened under the previous PS government of António Costa.”

During his presentation, Jorge Rebelo de Almeida also touched on the subject of Local Accommodation, which has been blamed, in part, for taking properties off the market for locals to rent, and for housing for the middle classes, driving up prices, and pushing locals out of traditional neighbourhoods and de-characterising the traditional cultural environment that had previously existed, turning properties into short-term lets for tourists and digital nomads.

However, he said Local Accommodation had brought benefits by doing up run-down buildings in Portugal’s city centres, particularly Lisbon, and added that Local Accommodation did not compete with hotels but rather complemented the existing offer.

The entrepreneur also talked about the increase in the tourist tax from €2 to €4 and slammed it as “improper” and regretted that it had been turned into a complementary way of financing municipal councils.

The former CEO of the Vila Galé Group, Gonçalo Rebelo de Almeida, who stood down as the group’s CEO in 2023 over strategic differences with his father, spoke of the group’s position in the Portuguese, Brazilian, and Spanish markets to Essential Business after the event.

“Although we have a couple of five-star hotels, our position in the market in Portugal is the four-star hotel segment but in reality the differences lie in the products we offer. We are very linked to restoring historical architectural heritage and these buildings converted into hotels are part of our Vila Galé Collection while the others are our normal hotels,” he said.

Gonçalo Rebelo de Almeida said that the Brazilian market was going well for Vila Galé where the group has 10 hotels (5-star Vila Galé Marés, 5-star Vila Galé Alagoas, Hotel Vila Galé Eco Resort de Angra, four-star Vila Galé Salvador, among others.) and which mostly attract Brazilian tourists (85%) and Portuguese and tourists from other parts of the world.

“We’re expending into Spain (Vila Galé Isla Canela was the first to open) and have a hotel in Cuba but for now our focus will remain on expanding in Portugal,” he said.

However, the company is looking into expanding in Portuguese-speaking Africa, more specifically Mozambique but the problem of the Islamic Insurgency in the north of the country close to Cabo Delgado had placed these ambitions on the back burner, for now.

Additionally, the hotel group has been looking into opening hotels in Cape Verde but the costs are much higher than in Brazil and other locations. As for Angola, Jorge Rebelo de Almeida has already said in the past that the country is still too complicated despite having potential.

The group’s premium hotels Vila Galé Collection has 32 hotels including the “all included” resort hotel in Cuba, Vila Galé Cayo Paredón. All told, the group has 44 hotels in the four markets.

The Vila Galé Group posted total revenues of €275 million in 2023, an increase of 20% on 2022, achieving its best year ever in both Portugal and Spain. In 2023 Vila Galé enjoyed results of €158 million in Portugal and €117 million in Brazil and operational results of €100 million. .