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72 // iberian.propery / 2017
dossier// ISSUE: TOP IBERIAN Investors
The Portuguese and Spanish real estate mar-
ket has shown a good performance in the last
two to three years, in both income return and
capital growth, driven by the overall economic
recovery. The challenge faced by investors is
to ascertainwhether a neweconomic cycle has
effectively arisen in the aftermath of the global
financial crisis, and knowing the right time to
leave. Yield compression has taken a significant
role in capital growth, indicating consistency in
the newupward cycle and favouring a buy/hold
strategy, though this would naturally depend
on individual circumstances. The preceding
financial crisis has resulted in Portuguese banks
accumulating significant real estate, which will
likely be transferred to investors in the short-
run and represent an opportunity to non-core/
value added investment profiles.
The first step to facilitate the process of a
pan-Iberian strategy is to approach the Iberian
market as a single regional market, rather than
a dual, Spain-Portugal sequenced destination
for international property investments. Investors
who adopted this approach in recent years
looked at the Portuguese market beforehand,
thus proving their strategy correct.
Spain and Portugal are indeed two different
countries with two different political agendas.
Notwithstanding, these two countries are not only
geographically and historically bound, but also
economically intertwined in such away that they
effectively represent a single real estatemarket.
Jorge Marrão
Deloitte
Portugal
Partner & Real
Estate Leader
Recovering from the global financial crisis that
spread through Portugal and Spain and the re-
vival of the real estate market in both countries,
as evidenced by the number of transactions and
increasing prices mainly in the residential and
commercial market there are still opportunities
namely in the office sector. It is expectable that
investment in the Iberian Peninsulawill continue
to grow, especially foreign investment. These
investors seek to take advantage of the syn-
ergies from neighboring countries, leveraging
the most competitive solutions that generate
economies of scale.
Some of the toughest challenges to these inves-
tors will be the dichotomies of the two countries
and excessive tax and legal complexity. There-
fore, the main concern of the sector should be
to provide confidence and stability in an efficient
and transparent tax system.
Additionally, the elimination of dichotomies
would allow the creation of significant benefits
from an Iberian perspective. As an example,
the implementation of REITs has been largely
discussed in Portugal but never implemented,
whereby in Spain the SOCIMIs can be regarded
as the equivalent form of a REIT. Tax legislation
is a fundamental factor when deciding for a
specific form of investment structure in any
country and special attention should be taken in
the real estate market to anti-abuse rules related
to Base Erosion and Profit Shifting (BEPS), which,
will naturallymake investors extremely cautious
when determining an investment structure.
Luís Miguel
Rosado
EY
Partner | Assurance
| Cluster Leader:
Real Estate,
Hospitality,
Construction
«The first step to facilitate the
process of a pan-Iberian strategy
is to approach the Iberian market
as a single regional market»