Iberia is a good case study of how to attract foreign investors by having an open market, implementing the right policies and exploiting its assets, experts agreed at PropertyEU’s Southern Europe Investment Briefing, which was held in London this week.
If Lisbon is now able to position itself as a new tech hub in Europe along the likes of Berlin, it is because Portugal has been successful in attracting foreign capital and putting the country on investors’ map.
‘Portugal has been good at attracting investments with its golden visa system and its favourable tax regime, creating a dynamic business environment,’ said Nuno Ravara, head of commercial real estate and special situations at FinSolutia. ‘The good thing is that it is a stable market, with no peaks or troughs but a sustainable upward trend.’
Offices are in demand from call centres, international IT companies and financial services. ‘Talent is attracted to the city because of the quality of life and businesses are attracted by cheaper rents, so it is a perfect combination,’ he said.
Lease law, which used to protect tenants at the expense of landlords, has been changed and made more flexible, and this ‘has transformed the landscape, making offices an interesting sector’, said Ravara. ‘Landlords can now increase rents for the first time in 15 years.’
Office demand exceeds supply
The problem is that the office sector is finding that demand far exceeds supply, as the financial crisis led to a halt in construction. ‘Our forecast is that demand will remain high for many years, and given the lack of product there are definitely opportunities in development,’ he said. ‘The main problem with Portugal is that it is a very small market, so large funds cannot find the pipeline of deals they want.’
The residential sector has seen the most dramatic impact, Ravara said: ‘The market in Lisbon is positively booming: buildings are being refurbished and prices have shot up because of strong interest from French, Brazilian and Asian buyers. The cost of living is low and quality of life is high, so it is an attractive place for the investment market.’
Portugal is also second to none for successful destination shopping centres, said Marta Cladera de Codina, head of Iberia at TH Real Estate: ‘Centro Colombo in Lisbon is one of the best shopping centres in Southern Europe.’
Tourism is another booming sector, not just in the cities but in destinations like the Algarve, where demand continues to outstrip supply. ‘Tourism has been growing consistently and demand is forecast to remain high for the next 10 years, so investing in a plot of land to be developed in a place like the Algarve would be a good move,’ said Ravara. ‘My advice to investors would be to focus on prime markets and the main city centres. Secondary locations can be risky because there is no market there yet.’
