Recently, SpaceShapers went on a trip to Portugal to review development potential with our clients.
In that occasion, we spent a week looking at the situation of the Construction in Portugal on the ground.
We travelled from Lisbon, through Cascais, Estoril and Sintra, on to Porto and back through the Costa de Prata, the Silver Coast.
The results are very exciting and we are now looking at a number of residential and hotel opportunities with our clients.
The Portuguese economy has been climbing steadily in the last 4-5 years.
In fact, the Central Government incentives hugely the development and investment in the Country. A series of fiscal policy and tax incentives help both internal and foreign investment. The growth in the past year of 2.7% (GDP) is the highest of the decade. Estimates for the coming years point to a continuation of this good economic performance. According to Oxford Economics, GDP will grow by another 1.9% in 2019.
0% income tax incentives for foreign investors and reduced tax rates for domestic investors keep investment high. Also, the Government backs up low or no interest loans and grants for rehabilitation projects.
This is bringing the foreigners in by the droves.
The urban landscapes in numerous cities are dramatically changing: many old properties are now being renovated and brought back into use. The market is now becoming much more mature and able to handle luxury product investment.
The main credit rating agencies recognise the improvement in the economic situation.
Standard & Poors and Fitch classified Portuguese debt at investment grade level at the end of 2017. As such, investment levels for 2019 are predicted to increase by 3.9-4.4%. A vast proportion of investors remain from Europe. However, the largest investors are the Chinese who have an added incentive of the golden visa offered.
Last year was another very good year for the tourism sector, too.
It maintained the growth trajectory which began 4 years ago. The main tourism indicators continue to rise. In fact, the number of guests and overnight stays, but also the revenues are recording double-digit growth.
The growth of institutional investors in the property market has reinforced the potential of hotel assets as investment products.
The number of guests in Portugal last year reached 20.6 million with annual growth at 8.9%. Total revenues from the hotel industry exceeded 3.39 billion Euros in December (16.6% increase from the year before).
As a result, SpaceShapers currently have a number of hotel project proposals we are looking at in Lisbon, Sintra and Cascais for clients.
The residential market continues to increase in transaction volumes.
Market values maintained throughout 2018 also thanks to foreign buyers who find Portugal a good base state for investing. The focus in foreign high-end luxury investors is in Lisbon and Cascais.
However, demand from middle-class Portuguese families has been increasing. In fact, movement outside the city centres towards inner suburbs has pushed demand for property beyond supply. Although some developers started last year to look at these areas, it is still an underestimated niche with a massive lack of housing supply for local clients.
SpaceShapers are now looking at various development opportunities for clients where land is still relatively cheap and build costs low.
The additional focus of all property development to be carbon neutral or negative is also a very attractive benefit in terms of tax savings.
The IMT tax (Stamp Duty) on property is returnable at ~6.5% of purchase price if energy certification is improved upon through development. This incentive allows SpaceShapers to assist clients to achieve energy-neutral buildings in any development project in the country, through guaranteed financial returns.
Check our Sustainable Building Design Services here.
If you are a developer or investor and wish to look into the feasibility of a project in the Country, please contact us and we will be able to tell you more about what we are doing in the region.