FCGM - Soc. de Med. Imob., S.A. AMI 5086 Realtors - Med. Imob., Lda. AMI 5070 www. s iimgroup. p t OCTOBER2018
National Statistics Institute (INE) publishes first data on the Investment in Real Estate (Summary 2017) by non-residents - and there are plenty of surprises. NUTS III Region no. of buildings traded of buildings traded of buildings acquired by non-residents Value of the buildings acquired by non-residents % of the of the buildings acquired by non- residents, of the total of buildings Portugal 226 617 24 334 399 17 388 2 789 156 11,5 This is the first time that this information has become available and there were a number of surprises in the results. With the caveat that in the case of New Construction (more present in the Metropolitan Areas of Lisbon and Porto) many of the transactions under a promissory sale contract and awaiting the deed of sale were not included in these statistics. Buildings acquired by non-residents, by unit bracket, in Portugal (2012 to 2017) Year buildings acquired by non-residents Buildings acquired by non-residents, with unit 500,000 and of buildings with unit 500,000 in the total of buildings acquired by non-residents and of acquisitions by non-residents in the country total 2012 6.902 798.689 115.689 205 219.515 1.070.807 3,0 27,5 4,9 8,4 2013 7.926 1.137.532 143.519 528 410.014 776.542 6,7 36,0 5,6 10,7 2014 10.814 1.907.432 176.385 1.128 827.938 733.988 10,4 43,4 7,3 15,7 2015 13.104 2.176.454 186.091 1.043 864.392 828.756 8,0 39,7 7,5 14,4 2016 14.592 2.275.494 155.941 908 824.266 907.782 6,2 36,2 7,3 12,5 2017 17.388 2.789.156 160.407 1.185 1.012.039 854.041 6,8 36,3 7,7 11,5 Source: Directorate-General for Justice Policy of the Ministry of Justice 01
This information refutes a number of myths: 1st Myth Most property acquisitions are by Foreigners and this is increasing. This is not true. In the total for the country, the percentage of the number of transactions of non-residents has remained practically the same since 2014. In, after peaking in 2014, the percentage has come down every year, reaching 11.5% in 2017 Evolution of the number of buildings traded and acquired by non-residents (2012-2017) N % Evolution of the of buildings traded - and acquired by non-residents (2012-2017) 10 3 Euro % 250 000 10,0 25 000 000 18,0 200 000 8,0 20 000 000 16,0 14,0 150 000 6,0 15 000 000 12,0 10,0 100 000 4,0 10 000 000 8,0 6,0 50 000 2,0 5 000 000 4,0 2,0 0 2012 2013 2014 2015 2016 2017 0,0 0 2012 2013 2014 2015 2016 2017 0,0 Non-residents Importance of non-residents in the total Non-residents Importance of non-residents in the total 2nd Myth - Foreigners only buy in urban centres and at high prices While is true that Confidencial Imobiliário s studies showed that the percentage of Foreigners in Lisbon in the area covered by the SIR-RU information tool is around 25%, increasing as we go up the range of prices (reaching > 50% in the high-end), buildings of over 500,000 Euros (which in Lisbon are no longer considered high-end in most typologies) only represent one third of the total. On the other hand non-residents are generally present in urban, rustic or mixed buildings, in coastal areas and in the interior, in the North, Centre and South. Buildings acquired by non-residents according to type of building Type of building 2016 2017 Variation 2017/2016 (%) Importance of non-residents in the total - 2016 Importance of non-residents in the total - 2017 14 592 2 275 494 155 941 17 388 2 789 156 160 407 19,2 22,6 2,9 7,3 12,5 7,7 11,5 Urban 11 716 2 146 317 183 195 14 101 2 627 753 186 352 20,4 22,4 1,7 8,1 12,5 8,4 11,4 Horizontal 6 985 1 268 555 181 611 8 565 1 552 907 181 308 22,6 22,4-0,2 7,6 12,7 7,9 12,9 Rustic 2 439 51 703 21 199 2 723 49 920 18 333 11,6-3,4-13,5 4,6 7,0 5,0 5,8 Mixed 437 77 473 177 284 564 111 483 197 664 29,1 43,9 11,5 16,9 21,3 19,2 22,3 Source: Directorate-General for Justice Policy of the Ministry of Justice 02
3rd Myth: It is around Lisbon and Porto and in the Algarve that the presence of Foreigners is most important This is confirmed regarding the Algarve, where almost half of the transactions were with Foreigners in 2017. But in the Metropolitan Areas of Lisbon (8%) and Porto (4.5%), it is well below the national average (11.5%). Other regions are surprising, as is the case of the West and the Alentejo Coastal areas or Alto Minho and Alto Tâmega Algarve West Alentejo Coastal areas R.A Madeira PORTUGAL Portugal Alto Minho Alto Tâmega Mid Tagus Beiras e S. Estrela Lisbon Metropolitan Area Douro Viseu Dão Lafões Coimbra Region R.A. Açores Tâmega e Sousa Leiria Region Central Alentejo Aveiro Region Cávado Beira Baixa Porto Metropolitan Area Alto Alentejo Lezíria do Tejo Ave T. Trás-os-Montes Baixo Alentejo 0 10 20 30 40 % % Territorial limits NUTS III ] 11,5 ; 40,9 ] ] 8 ; 11,5 ] ] 5 ; 8 ] [ 2,4 ; 5 ] NUTS II thousands 1 193 862 596 931 298 466 Frequencies NUTS III 37 4 52 5 59 10 0 50 km 52 6 Globally we can conclude that the Investment by Non-Residents in Portugal is important without being dominant and has very diversified sources: - Purpose (Non-habitual residents; Golden Visa; Diversification; Investment; - 1st / 2nd / 3rd generation emigrants); - Geographic origin (see table - in 2014 there was a high concentration in one country of origin, but the following years show greater dispersion); - Geographic Destination and Financial Capacity of the purchasers Main countries of residence of non-resident purchasers, in traded (and total % of acquisitions by non-residents) - 2012 to 2017 Order 2012 2013 2014 2015 2016 2017 1st United Kingdom (23.7%) China (18.9%) China (29.4%) United Kingdom (20.6%) France (19.6%) France (19.6%) 2nd France (14.9%) United Kingdom (17.9%) France (16.6%) France (17.9%) United Kingdom (19.3%) United Kingdom (16.2%) 3rd Germany (7.1%) France (14.2%) United Kingdom (15.3%) China (14.4%) China (6.3%) Brazil (6.9%) 4th Switzerland (5.7%) Switzerland (4.7%) Brazil (4.2%) Brazil (4.2%) Spain (6.2%) China (6.3%) 5th Angola (4.9%) Germany (4.5%) Switzerland (3.9%) Switzerland (5.1%) Switzerland (4.9%) Switzerland (5.5%) of the 5 main ones 56.3% 60.3% 69.3% 64.2% 56.4% 54.5% Source: Directorate-General for Justice Policy of the Ministry of Justice 03
Draft law of the State Budget for 2019 and how it affects Real Estate Two legislative authorizations with significant impact on the sector are contemplated: Authorization to change the rules for the classification of urban buildings or building units as unclaimed or vacant, introducing the concept of urban pressure zone. In this regard, it is anticipated that municipalities can increase the rate of Municipal Property Tax (IMI) applicable to urban buildings or building units that are vacant or unclaimed for more than two years, located in urban pressure zone, by up to six times, also allowing an increase of 10% in each following year, with a maximum limit of 12 times. Authorization to change the Legal Regime governing Urban Development and Construction, which approves the Legal Regime on Urban Renewal, regarding a subpoena for the enforcement of maintenance, rehabilitation or demolition works and their coercive execution Authorization for the creation of a new municipal contribution for civil protection, this time embracing the case law of the Constitutional Court. This contribution will apply to natural persons or collective owners of urban and rustic buildings whose activity determines any of the following risks: urban, forest and agricultural, industry, road transport or technological. Home loans head for new record (Bank of Portugal) In August 2018 new home loans amounted to 810 million Euros (ME), reaching an accumulated annual total of 6.5 ME. In July and August there was a slight drop compared to previous months, as a result of the Bank of Portugal s recommendations to the banking sector for the implementation of more prudent analyses, but which was still higher than the previous year Vote for new changes to the Rental Urban Regime delayed once again and Coordinator resigns On 23 October, the Socialist Party requested the suspension of the vote on the Government s three draft bills on housing, which were discussed in the working group on urban rental, proposing it be scheduled for December (after discussion of the State Budget for 2019). The Proposals provide for rental contracts for habitation in cities again having a minimum duration set at law, which would be at least one year and a maximum of 30, there being a requirement of automatic renewal during a minimum of three years. Or rather, tenants could terminate the contract at any time, giving prior notice to the landlord, but the landlord could only terminate the contract at the end of at least three years. It is feared that if these proposals are approved they could cause another reduction in the number of houses available for rental. 04
Largest housing real estate projects in Lisbon has new owner The Renzo Piano Project, which was initially promoted by Obriverca / Jardins de Braço de Prata and which was later held by a real estate fund managed by Norfin called Prata Living - with 600 homes (28 already built) was acquired by an Austrian Investor for 150 million Euros. The new purchaser (VIC Properties) intends to expand its operations in Portugal, concentrating its investments in new construction. The Brazilian group Incortel will invest a total of 6 million Euros in a new luxury residential project in Lisbon, the new Camillo 25 The project, situated in no. 25, Rua Camilo Castelo Branco, near the Avenida da Liberdade, will result in 11 different apartments, T1 and T2 and two duplex. The project is the result of the rehabilitation of a previously vacant Art Nouveau palace. Three basement floors will be built for parking. The prices of the fractions vary between 580,000 Euros and 1.2 million Euros. The works should start this year still, with a deadline for completion of 18 months. Incortel has two more projects under development in the historic centre of Lisbon and another outside of the city. Promissory sale contract for the Comporta Estate already signed On 25 October the consortium comprised by Paula Amorim, Port Noir and Vanguard Properties signed the promissory purchase and sale agreement of the main assets of the Comporta real estate fund, including two areas of land for construction in Grândola and Alcácer do Sal. RE/MAX Portugal considered the best in 6 of 10 categories RE/MAX Portugal was the country of Europe that won the most awards in the last RE/MAX Europe Convention held this October in Amsterdam, winning 6 prizes out of a total of 10 awarded by RE/MAX Europe in the Convention attended by more than 20 countries with offices representative of the brand which sells the most buildings in the world. The most outstanding of the 6 prizes was the prize for the best region of Europe consecutively in the 10 last years, also receiving prizes for the Best Agency in of Agents in the last 10 years, Best Agency in Turnover in the last 10 years, Best Vendor of Franchises in the last 10 years, Best Recruiter in the last 10 years and Best Agent in Invoicing in the last 10 years. 05