IP03

2017 / iberian.propery // 79

ISSUE: TOP IBERIAN cities //dossier

The question posed is extremely relevant because the

Oporto property market is undergoing profound change.

Evidence of this lies, in my opinion, in two facts:

1. Oporto entering foreign markets;

2. Demand in every real estate sector – residential, retail and

services.

These two factors make a huge difference and are very

reassuring for real estate developers and investors. The first

because it finally places us on a much greater stage, with

great purchasing power. The second because it creates

investment alternatives, slowing down market saturation and

diversifying customers and portfolios. This diversification is

very attractive to owners of real estate portfolios who can

have, in a single investment territory, assets aimed for offices,

hotels, retail spaces and even housing under a rental regime.

The reasonswhywe got here are numerous, but the existence

of a quality international airport like Francisco Sá Carneiro and

the beautification the city has undergone over the past 15

years, were undeniablya great help. Oporto iswell prepared to

receive tourists and foreign university students who, seeing a

competitive alternative to other destinations that have become

saturated andmassified, embraced and disseminated our city

extensively. In the past five years, hotel developers have had

the greatest growth, with increasingly higher rents and lower

yields (among the lowest in the country, in some cases 5.0%),

alongwith investors in LocalLodging. Thevitalitynewhotels and

Local Lodging brought to the Baixa district drove demand for

housing, initiallyon theMouzinho da Silveira – Flores axis, now

stretching to Sá da Bandeira, Aliados and Cedofeita. Purchase

and sale prices doubled in twoyears, with some offers around

5000 €/m

, a value that is moderate in the European sphere

but unprecedented in Oporto. Where there are people, there

is retail, therefore therewas an increase in demand for spaces

for shops and a subsequent rise in rents.

We must also mention the office segment. There has been

much talk about great demand for large spaces, around 2000

m2 to 10 000m

, which is not unusual considering the scenario

described above. However, that demand is still considerably

limited by low prices, which explains why supply stills falls

short, in other words, the real estate equation does not im-

press developers yet. Nonetheless, I believe that equationwill

inevitably be resolved by a rise in rents of approximately 20%.

To conclude, there is demand for spaces for new hotels,

housing, shops and offices in Oporto. That demand has driven

prices upwards, both in buildings for regeneration and units

that have already been regenerated, as well in market rents.

Professional, national and foreign investors are purchasing

well leased assets. And there is great anticipation regarding

expansion, by approximately 50%, of Sá Carneiro airport,

which is driving developers’ willingness to invest.

Rui Ávila

Grupo Ferreira

Administrator

“As we all know, Portugal suffered a grave financial crisis,

leading to stagnation of the construction sector which, in

turn, disrupted the development of the real estate market.

Seeing signs of the economy’s recovery, many developers

decided to turn to construction as away to guarantee buyers

a secure investment. At the same time, many foreigners began

to emerge with a will to invest in the country through real

estate. In Portugal, aside from construction and the labour it

employs still being considered cheap, the country presents

unique conditions in comparison with the rest of Europe,

namely a strategic location, quality of life and, above all, safety.

Oporto is a ‘jewel’ recently discovered by investors, andwhich

has been growing at an excellent rate. Receiving the distinc-

tion of “Best European Destination 2017” by the organisation

European Best Destinations brought the cityworldwide rec-

ognition, while tourism in Oporto has been growing expo-

nentially for a number of years, opening up new investment

opportunities. Urban regeneration in the city centre, which is

intricately connected to the residential sector, but also retail,

hotels and development, displayed robust growth in 2016.

The strong potential of tourismand local lodgingwere factors

that contributed to this momentum in transactions.

It is still possible to obtain affordable prices per m

in Oporto

comparedwith other similar European cities, and purchasing

a real estate asset always represents acquiring a physical

asset with a low likelihood of loss, while also offering the

possibility of some return.”

João Nuno

Magalhães

Predibisa

General Manager