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Pedro Vicente – ‘Lisbon is still a fantastic opportunity’
Pedro Vicente, board member of Portuguese developer Habitat Invest, discusses supply and demand dynamics in Portugal.
3 MIN READMarch 01, 2019
Pedro Vicente, board member of Portuguese developer Habitat Invest, explains how rising prices in Portugal’s residential and commercial real estate have been driven by simple supply and demand mechanics. Lisbon, he believes, still offers fantastic opportunities for real estate investors and developers, while a lack of supply also provides opportunities in build to rent.

Is there a real estate bubble in Portugal?

“Some years ago, in 2015/2016, there was the perception of a bubble. It was completely wrong. What happened was a lack of supply – the lack of offer, of opportunities to buy, because the market had been completely destroyed by the financial crisis. We hadn’t built anything at all, I would say, since 2012 or maybe even since 2010. With an increase in tourism from 2012, there were a lot of people looking for a house in Portugal, but they didn’t have any kind of supply and of what existed, the prices went up by 45% a year. The so-called bubble was a simple thing of supply and demand – and they didn’t match for some time. Now, things are levelling out and fortunately top prices – for high level products in central Lisbon – have been going down by 22% this year already. Why? Is the market going down? No  – the market is finally levelling itself, between demand and supply, which is very positive.”

That’s the case for residential assets - what about other asset classes?

“There’s a lack of offices, a dramatic lack of offices, in Lisbon. There are plans to build more and, again, prices are going up. But in one or two years, prices and the market will level themselves again, as we wish it to be. So I’m not worried at all - there’s no bubble or anything like that.”

There seems to be a division between foreign and local perceptions of Portugal’s real estate market  – is that the case?

“Consider Baixa  – downtown Lisbon – which was abandoned I’d say for 20 years. Nobody wanted to live there, because it was an impossible place to live: nothing to do, everything closed, the buildings damaged, etc. With investment coming into Portugal, there were a lot of renovation works. Suddenly, the Portuguese realised that it was incredible, in fact, to live close to the river. And they might have thought, why didn’t we buy something here some years ago, when it was possible to buy? But of course, in any city now, if I buy an apartment in a place like that, it will be expensive. And if I buy it outside the city, it will be a different price. It’s obvious, it’s maths!”

How great is the opportunity in build to rent (BTR) in Portugal ?

“BTR is probably the best opportunity that we have right now. It’s very, very difficult to find a house in Lisbon and the rents are very expensive. Why? Again, it’s the lack of supply, the lack of offer – you just don’t have any.”

Has Lisbon run its course and are better opportunities to be found elsewhere in Portugal?

“Lisbon is still a fantastic opportunity – the market is indeed hot and you have a lot of competitors there, but with a lot of areas of expansion out of the city. The market in Porto is dramatically different from Lisbon, but it is a place where you have a bigger margin to grow. And in other cities, there are real opportunities in build to rent for the middle class.” 

What about Habitat Invest – what are you busy doing in Portugal?

“At present, we are developing €250 million of projects in Lisbon, Cascais and Estoril, and will soon extend our activity to Porto, where we have already been, and the Azores Islands -  –  so until 2020, we estimate that we’ll have projects under development to the value of €500 million.”

The real estate market and investment opportunities in Portugal will be discussed further at Portugal GRI 2019 on 21-22 May in Lisbon. 
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