Portugal will be the next European country to introduce REITs, the government has announced.
On Sept 18, at a real estate summit in the resort town of Cascais, west of Lisbon, Pedro Siza Vieira, a minister within the Socialist government of António Costa, said tax-efficient, listed REITs will be established in the country via a special decree. ‘These are companies that will attract savings which they invest in real estate,’ the minister said, adding that he aims to launch the regime ‘in the very short term’, possibly before the end of the year. He said the REITs will own properties long-term and assets must be earmarked for rent.
Investors in Portugal said it was a very important initiative for the country which has strongly been targeted by international investors in the past 12-24 months, much of it opportunistic capital. According to market experts, a REIT regime would allow the development of a sophisticated, well-capitalised domestic property company sector which could replace some of the more opportunistic capital in the future.
Norfin, the domestic real estate fund with €1.5 bn of assets in the country, could be a potential candidate to convert to the regime, as well as local group Square Asset Management, according to market sources. A number of SOCIMIs (the Spanish REITs) including Merlin Properties which is already active in the country, are also expected to jump at the opportunity .
‘A REIT structure would definitely enlarge investors’ interest in the Portuguese market particularly if the Portuguese REITs will be a replication of the Spanish ones, which are investor-friendly structures. The regime would also be highly beneficial for the investment market as a whole, boosting transactional volumes and making it easier for everyone to invest directly in real estate,’ commented Francisco Horta e Costa, head of Portugal at agent CBRE.
Industry body European Public Real Estate Association (EPRA) welcomed the news. Speaking to PropertyEU, EPRA director of public affairs Tobias Steinmann (pictured) said EPRA has been watching developments closely in view of the benefits that improvements to Spanish REITs have brought to Portugal. 'A sound legislative framework is key for making it fly and we are confident that the Portuguese government is undertaking the necessary steps.'
Portugal would become the 14th country to introduce a REIT regime within the EU. Poland has also been considering these structures, with the launch of a regime anticipated for next year.
