The real estate market remains confident for the present year, with an increase in the mortgage loan activity and the Brexit to take into consideration.
The availability of appropriate assets, together with the demand for high yields and profit margins, has produced a demand for certain niche markets, centered on aggregate value and on build-to-core investment strategies.
New asset classes
The market has recently developed new asset classes, such as those brought about by the digital economy or data banks. This emergence is not being absorbed by many investors, given its higher risk rates and complexity. It’s projected that in five years, health and wellness will have a strong impact in the industry’s strategy, requiring much more active asset management and investment operations.
While global investors don’t seem to be concerned with the Brexit, Europeans believe that the United Kingdom will have a reduced capability of attracting international talents. Nevertheless, many still see the United Kingdom as a market opportunity.
The real estate market has turned towards smaller cities and Lisbon has been seeing more notoriety in the international scene, due to both its quality of life and safety.
Linked to the improved Portuguese economy, Lisbon has been attracting foreign companies and investors.
The older Millennials’ generation is the one that will buy the most houses this year, revealing price preferences in the middle to high range, more awareness of the current sector activity and better price knowledge.
‘First time home buyers’ though, will see a larger bill at closing time, given the increase in mortgage and rental rates.
The Sector in Portugal
The real estate sector in Portugal has registered increased investment levels in both the commercial and housing segments, with the majority of capitals originated abroad. An increase in real estate taxes, tighter lending policies, the possibility of a real estate ‘bubble’ and national elections may affect this trend and lead to a reduction in investments; such path can be avoided with increased political and fiscal stability that promote investment, notions that all involved are well aware of.
From the 41 nationalities that have acquired luxurious property in Portugal, Brazilians, English and French top the list in Lisbon, Porto and Cascais.
The majority of offers in the houses for sale portfolio will be originating in the premium segment. Meanwhile, the internal market is also experiencing an economic recovery and is focusing on this sector.
More demand than supply
The new supply will be balancing the demand, with prices following that equilibrium level. Both low and middle segments have been having a particularly high demand, as the average Portuguese homeowner has less means and prefers the peripheries to the city centers.