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2017 will be the year of recovery for real estate development

2017 should continue to be positive for the Portuguese real estate market, market agents predict, in the belief that real estate development is ready to go forward this year.

Our country continues to be a “safe haven” in a world going through an especially unstable period. Francisco Horta e Costa, director general of CBRE, gave this optimistic view of the market during the presentation of the new report from CBRE “Tendências do Mercado Imobiliário” (Tendencies in the Real Estate Market), at a conference organised in Lisbon last Tuesday in partnership with the Expresso newspaper. He continued, « In spite of some alarm» with the election of Donald Trump in the United States, «the scenario is one of optimism for real estate, with everything keeping as steady as possible.

On the one hand, the consultant predicts that investment in residential urban renewal (for rent) will slow down somewhat, especially due to the lack of the type of product which has been put on the market (prime locations, premium segment), as a large part of the available supply in certain city zones has already been taken up. In compensation, new building is expected this year, also in Lisbon, where there is also a scarcity of supply in the medium segment and for the Portuguese public, especially for first-home buyers.

Still on the topic of residential real estate, it is expected that the number of purchases will go up 150,000, 30.000 more than in 2016. New construction projects, destined for first-time buyers, should gain momentum this year, as demand dictates.

However, it is in the office and logistics sector that the scarcity of new supply is most pronounced, so that CBRE and market agents regard new developments in these areas as good opportunities. With large companies (like BNP Paribas, already installed in our country) “knocking on the door” in search of large, quality office space, or distributors like the Spanish Mercadona, now in our country, in need of adequate logistical infrastructures, speculative building would seem imperative. Even more so as, at present, it is not possible to meet the needs of the many interested, who require new, spacious buildings.

Predictions of rent increases is just one more factor supporting the need for development, which would certainly allow developers to “close their accounts” in a rather more comfortable way.

 

The impact of the growth in tourism felt in all market segments

Whether we look at housing, retail, investment, or even urban renewal (outside of the hotel trade), the impact of growth in tourist activity is being felt right across all market segments.

In their market analysis as mentioned above, the Research Department at CBRE also point out the strong dynamism registered in investment activity in commercial real estate, revealing that business projects for 2016 into 2017 which are ‘in the pipeline’ come to a total of 900 million euros, referring to those which should be finished before the end of the first trimester. Furthermore, CBRE itself is currently involved in a range of projects with a global value of 400 million euros, including «a large portfolio of offices, retail parks and shopping centres».