- The national residential market accounted 24.1 Billion euros in transactions in 2018, 24,4% more than last year;
- Lisbon Metropolitan Area and the North Region accounted for 64,6% of the total number of transactions made in the past year;
- In 2019, the residential market should begin a path of greater stability and price consolidation;
- Renting will remain an option to a very significant percentage of the resident population in Portugal for the current year.
The Real Estate consultant Savills Portugal presents the evolution of the residential market in national grounds.
In 2018, the residential market in Portugal began to notice a very positive growth behaviour. According to the information published by Statistics Portugal, in 2018, 178 691 houses where sold, from which 85,2% correspond to used houses. In comparison with 2017, this result shows a growth of 16,6%. This allowed for a total of 24,1 Billion Euros in transactions in 2918, 24,4% greater than the previous year. Lisbon Metropolitan Area and the north region composed 64,6% of the total number of transactions that happened in 2018.
“Having in mind these numbers, urban rehabilitation represents a significant portion, as well as the purchase of houses to be placed in the rental touristic market, which have been without a doubt the two factors that drive the residential market”, Says Alexandra Gomes, Senior Analyst in the Research Department at Savills Portugal.
However, the purchase and selling of houses for personal consumptions and directed at national buyers remains at modest levels and demonstrate an inadequacy of current offer for the demand profile. “The scarce construction of new houses built for Portuguese families with average income is still one of the main challenges that the market for residential promotion faces today”, she adds.
On the other hand, in Portugal 22,092 buildings were licensed in 2018, in which 5,164 of these buildings are destined for urban rehabilitation and 16,898 destined to new constructions (of which 11,375 were destined to family habitation (67,3%)).
The Lisbon Metropolitan Area represented 15,5% of licensed buildings in 2018, with a total of 2,069 buildings (84,2%) designated for family habitation.
The North Region accounted for 8,580 buildings, of which 23,3% were directed at urban rehabilitation and 70% were new constructions, with family habitation equivalent to 75,4%.
Expectations for the residential market in 2019
“In 2019, the residential market should begin a path of price consolidation and stabilization, directed at the segment of used residential properties. The number of promotion projects directed at the prime segment will remain high, without the expectation of a price adjustment and the expectation that it drives the residential market”, Alexandra Gomes comments.
The introduction of new residential forms and habitational regimes which reflect new lifestyles, begin to bring light to developed habitational models in concepts of shared economy and Co-Living.
While in some European countries these concepts are in a developed and totally induced stage in the residential market, in Portugal, the first steps are taken to implement them and there is a growing number of international investors with interest in the investment in the Portuguese market for the implementation of Co-Living concepts.
The residential market is one of the most permeable sectors to the volatility of socioeconomically factors, to the change in habits and generations that bring with them inevitable changes in the ways of thinking. The revival of the rental market is an example of this change, but also of the current financial incapability of Portuguese families to acquire houses at the current market prices. The rental regime will continue, in 2019, to be one of the most significant options for the resident population in Portugal.
Development in 2018 and 1st Quarter of 2019
Business in Development are changing urban centres of the main cities in the country. In Lisbon, the impact of this segment of investment has brought life to the most antique and degraded zones, promising to drive secondary zones too.
The transactions that are categorized as Development reached values between 5,000€ and 6,000€ per sq.m in two specific cases (Historic centre in the city of Lisbon): the block of Pastelaria Suíça (at a more advanced stage of degradation) and the BPI block, both in Downtown Lisbon and which, together, compose an investment superior to €125 million.
The projects to come in the city of Lisbon promise to modernize and create new hotspots in the Portuguese capita. They all go over 520,000 sq.m and will be developed for almost all market segments (except the logistics/industrial market). It is important to notice the integrated transaction of Entrecampos which will equate to more than 200.000 sq.m designed for habitation (700 properties for accessible renting and 279 to the free market), retail, offices and social equipment, creating a new centrality in the city of Lisbon and making it more modern, greener, ecological and energy efficient. This is the greatest transaction in the city since the rehabilitation of the oriental zone (Parque das Nações).
“In the total number of future projects, more than 2,000 properties are new, still not enough to satisfy existing demand, and are in great majority directed at medium to high income earners”, said Alexandra Gomes.
Other secondary zones in the city of Lisbon, such as Praça de Espanha / Sete Rios, Alcântara, Belém / Ajuda and the river margin between Santa Apolónia and Oriente, will absorb the remaining 320,000 sq.m that were projected, with a special highlight to the development of the creative hub in Beat, currently with 30,000 sq.m and an expansion project up to 100,000 sq.m, and the construction of 600 new properties for habitation in Braço de Prata, with an area of 244,000 sq.m.
“The fusion of various factors such as the great dimension of plots and buildings targeted for intervention, the location of the same together with good accessibilities, the interest which Lisbon continues to gather for investors and the necessity to increase current supply of many segments, give these projects / assets versatility which becomes synonym of fast outflow in the market”, she concludes.
The year of 2019 has also demonstrated positive prospects in development deals during the first quarter. The purchase of the old block that belonged to CGD in Rua do Ouro, in Baixa by Group SANA, was one of the transactions that confirms the maturity of this market and the attractiveness that it will continue to deserve.
The destination of these projects will remain in lie with last year’s projects, with the main destination of assets being taken to residential and hotel segments.