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The Portuguese Real Estate Market in August 2021

Although August usually proceeds at a slower pace, with fewer investments and a lull in the news, last month saw a continuation in the ongoing in the real estate sector in terms of transactions and investments.

As might be deemed fitting for the traditional holiday month, the largest transactions came in the logistics and hotel sectors. Tourism has been rebounding since the Portuguese government announced that it would gradually lift measures imposed to combat the pandemic, and statistical data has revealed August as one of the months with the most significant growth.

Residential Bank Valuations Hit 1,221 Euros in August

Portugal’s National Statistical Institute (INE) reported that average residential bank valuations rose by six euros to 1,221 euros per square meter. Year on year, the increase reached 8.3% (vs 8.6% in July). The number of bank evaluations considered rose to around 30,000, 53.6% more than in the same period of the previous year

Banks’ average valuation, carried out within the scope of mortgage applications, stood at 1,221 euros per square metre, increasing 0.5% m-o-m (1,215 euros/m2). Compared to the previous month, the largest increase was in the Algarve (2.1%), with the Autonomous Region of Madeira showing the sharpest decline (-0.4%). In yearly terms, the highest regional increase was in the Lisbon Metropolitan Area (8.1%) and the lowest in the Alentejo (2.4%).

In August, the median value of bank appraisals of flats reached 1,350 euros/m2, up 9.8% compared to August 2020. The highest value was in the Lisbon Metropolitan Area (1,606 euros/m2) and the lowest in Alentejo (863 euros/m2). According to the data, the Lisbon Metropolitan Area showed the most expressive year-on-year growth (8.5%), with the Autonomous Region of the Azores showing the only reduction (-2.2%).

Compared to the previous month, the assessment value rose 0.8%, with the Algarve showing the largest increase (2.4%) and the Autonomous Region of the Azores registering the smallest rise (0.3%).

The median value of a two-bedroom flat rose by 14 euros to 1,367 euros/m2, with the price of three-bedroom apartments also increasing by 14 euros to 1,214 euros/m2. These size homes accounted for 80.8% of the total in the period under review.

Regarding houses, bank valuations stood at an average of 998 euros/m2 in August, an increase of 3.5% compared to the same month of 2020. The highest prices were observed in the Algarve (€1,628/m2) and in the Lisbon Metropolitan Area (€1,612/m2), with the Centre registering the lowest value (€824/m2). According to the INE, the Lisbon Metropolitan Area showed the highest year-on-year growth (6.5%) and the lowest occurred in the Centre (1.0%). In comparison to the previous month, the assessed value decreased 0.3%. The Autonomous Region of the Azores presented the sharpest increase (1.6%), and the largest decrease occurred in the Autonomous Region of Madeira (-2.5%). Compared to June, the values of 2, 3 and 4 bedroom dwellings, the sizes responsible for 88.4% of the valuations, reached 939/m2 (-10 euros), 988/m2 (down 1 euro) and 1,050/m2 (-22 euros).

Golden Visa Investment Down 60% In August

Funds raised through the golden visa programme fell by 60% in August compared to the same month of 2020, to 22.1 million euros, according to Lusa and the Foreigners and Borders Service (SEF).

The Jornal Económico reported that investment resulting from the Residence Permit for Investment programme reached 22,197,726.03 euros In August, down 60% year-on-year (56 million euros) and a 39% drop compared to June (36.4 million euros).

Portugal granted 41 ARIs in August, 35 of which were for the acquisition of real estate (11 for urban rehabilitation) and six for capital transfers.

Last month, real estate purchases totalled about 20 million euros. 3.9 million euros were destined towards urban rehabilitation, while capital transfers added up to 2.1 million euros.

Ten gold visas were granted to China, five to the United States, five to Russia, four to Brazil and three to Turkey.

In the first eight months of the year, Portugal granted 486 golden visas, including 48 in January, 87 in February, 64 in March, 88 in April, 45 in May, 60 in June, 53 in July and 41 in August.

Between January and August, total investments raised through the programme amounted to 259.8 million euros, a drop of over 40% compared to the 439 million euros in the first eight months of 2020.

So far this year, 9,265 visas were granted for real estate purchases, including 885 for urban rehabilitation. Visas were granted for capital transfers totalling 590 and 20 for job creation.

Chinese nationals have received the most visas (4,953), followed by Brazil (1,028), Turkey (470), South Africa (409) and Russia (388).

Since the start of the programme in 2012, 16,762 residence permits have been granted to reunited family members, including 712 this year.

Home Sales In Lisbon’s Urban Rehabilitation Area Increase 24%

According to data on Urban Rehabilitation from SIR-Sistema de Informação Residencial, between

May and July 2021, home sales in the Lisbon Urban Rehabilitation Area (ARU) grew by 24% q-o-q.

The statistical report is based on the notification of sales within the framework of the Lisbon municipality’s pre-emption rights. In the capital, the SIR-RU monitors the 17 central parishes covered by the ARU.

Around 1,400 housing transactions were reported in the Lisbon Urban Rehabilitation Area during the three months. That compares with approximately 1,130 in the previous three months.

According to the SIR, the parishes of Arroios and Avenidas Novas, with 13% and 10% of sales, respectively, were the main focus of demand. The report also highlights the parishes of Santo António and Estrela, with an 8%, and Penha de França and Campo de Ourique (7%).

The average home sales price in the Lisbon Urban Rehabilitation Area reached €3,961/m2. Avenidas Novas and Santo António were the most expensive, with sales in this period at €5,722/m2 and €5,314 €/m2, respectively.

Euribor Rates Unchanged at Six Months, Up at Three and 12

The six-month Euribor rate remained unchanged today and rose at three and 12 months compared to Friday. The most used rate in Portugal for mortgages, the six month Euribor rate, stayed fixed today at -0.529%.

The most used rate in Portugal in mortgages, the six-month Euribor rate, remained at -0.529% today, compared to the current low of -0.534% on January 28, according to an article in the newspaper Jornal Económico.

The three-month Euribor rose 0.001 points to -0.549% compared to Friday, versus its all-time low of -0.553% on May 18.

The Euribor 12-month rate rose 0.002 points compared to Friday to -0.500%, compared to a low of -0.515% on February 2.

Construction of “Dubai in Madeira” Begins in Investment of €250 Million

The Dubai in Madeira development on Estrada Monumental will cost 250 million euros. It’s the biggest private investment ever in the region, according to Jornal Económico. The project is also the first investment in Madeira that unites the two construction companies AFA and Socicorreia, which own Varino Investimentos Imobiliários.

The project is divided into nine lots for housing, retail and services and construction is expected to last six years. A 35,000 square metre plot of land is divided into nine lots, with a building in each. They will be constructed above ground and surrounded by lots of green spaces and public walks for residents and the general public. Each of the buildings will also have a separate garden.

Custódio Correia, Chairman of the Socicorreia Group, told Jornal Económico in an interview that “Dubai is one of the countries worldwide that arouses curiosity and we thought of doing something different, something that would arouse the curiosity not only of Madeirans but internationally, to build something that would attract investment.”

Construction will be done in phases, and work has already begun on the first building, called Varino 5. The apartment block will have eight floors, 34 one-to-three bedroom flats and three stores. The complex will also boast pedestrian areas, public gardens, a leisure and sports centre, and a high number of parking spaces.

Dubai in Madeira is intended for wealthy buyers and is especially aimed at attracting an international clientele to Madeira. Hope are that the development will attract new families to the region and boost the local economy.

Sources: INE / Confidencial Imobiliário / Jornal Económico / SEF / LUSA

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