There is good news on the Portuguese housing market. Real estate developers have regained confidence and are determined to strengthen investment in the residential segment. Last year, these investors submitted 19,530 new housing projects for municipal permits, including the construction of 43,800 homes, according to statistics provided by Confidencial Imobiliário to DN/Dinheiro Vivo. These figures reflect a 20% growth in the number of developments compared to 2021 and 17% in residential properties. However, this volume of housing, which is still in the approval process of the respective municipal councils, only meets a quarter of the market’s annual needs.
What is certain is that the pace of investment in housing has picked up momentum again. After the impact of the pandemic, which was felt in the contraction of new projects in 2021 – projects for only 37,430 homes were submitted that year, making it necessary to go back to 2017 to find a smaller volume -, show promoters show signs of finding an opportunity in a more than recognized shortage of supply. This is despite the increase in construction costs (last year they rose by 11.9%), the expected slowdown in demand due to the rise in the cost of living and the rise in interest rates. As Ricardo Guimarães, director of Confidencial Imobiliário, says, “promoters will adapt their strategies” to the current context, “without necessarily canceling projects”.
Still, the market has yet to return to pre-pandemic levels. The promoters have licensed 490 more projects compared to 2019, but they include 3350 fewer homes, that is, they are focusing on smaller developments. It should be noted that the year before the pandemic, in terms of launching new homes, was the best since the troika crisis (2011-2014). But the pace of new projects is below market demand. Ricardo Guimarães recalls that “the most recent data from the SIR Housing Information System shows that an average of 40,000 homes will be sold per quarter in 2022, which means that demand could absorb the annual pipeline in just three months”. As the president of AICCOPN (construction association), Reis Campos, also warned a few days ago, the pace of housing construction over the past decade has fallen far short of meeting needs, creating the deficit the country is facing today.
Bet on the edge
The initiators’ focus shifted to the suburbs of Lisbon and Porto, but also to the medium-sized cities near these metropolitan areas. According to data from Confidencial Imobiliário, the permit procedures that entered the Chamber of Lisbon last year foresee the construction of 2117 houses, a decrease of 16% compared to 2021. In Porto, the reality is even clearer: applications were submitted for approvals for 1654 houses, 23% less. The analysis of metropolitan areas reveals a different reality. In AMLisboa there was an increase of 14% in the number of homes placed for approval, to a total of 10,570. In AMPorto, there was an increase of 8%, to 8,266 homes.
By municipality, Vila Nova de Gaia is the top destination for residential investment projected in 2022. This municipality in the Porto region has 2800 new homes under license, an increase of 29% compared to 2021. ) appears in Oeiras, Matosinhos, Guimarães and Braga , all with a portfolio of more than a thousand homes for approval. For the first time, Oeiras and Guimarães observe pipelines of more than a thousand homes.
It’s also worth noting investor interest in nearly two dozen other cities across the country, which have portfolios of more than 500 homes. In AMLisboa, these are the cases of Seixal, Loures, Cascais, Almada, Mafra, Setúbal, Palmela and Sintra. In AMPorto, Maia and Vila do Conde are included. In the north, municipalities such as Famalicão and Barcelos are also on the list. In the Center region, Aveiro, Viseu and Leiria also have a pipeline of more than 500 homes up for approval. In the Algarve, where building plans for 3408 homes have been submitted, 22% more, the focus was on Loulé and Portimão.
The pipeline data submitted for permitting is based on pre-energy certificates issued by ADENE – Agência para a Energia, mandatory documents in these work processes.
Source: DN
