This was one of the main conclusions from the webinar “What’s Next - Private Rented Sector – Investment Opportunity?”, organised by Cushman & Wakefield, which took place this Wednesday morning and had the presence of Portuguese Secretary of State for Housing Ana Pinho.
In terms of legislation, Ana Pinho recalled that there are programs and incentives to invest in this market currently in the place. Besides the affordable housing program, Ana Pinho remarked that the 6% VAT for construction in the middle segment has been in place for more than a year, a regime which updated the controlled cost housing law from 1996. She further advanced that the real right to long-lasting housing, which aims to promote «long term investment, with mid yields and low-risk», while seeking at the same time « to meet the stability and security needs in terms of housing occupancy», will soon be included in this regime.
Along with the tax incentives for investment, the low-interest rates of the Portuguese banking system should, according to Pedro Coelho, Executive Administrator at Square Asset Management, «remain low for a lot longer». In his opinion, this factor may even «increase the capital allocated to the housing rental market by international investors, which until not long ago was close to 0%». According to him, this will be «a growing trend».
On the other hand, an «increase on the offer generated by the transfer of assets from local accommodation to long term rental» is expected, highlighted Rafael Ascenso, Porta da Frente General Manager, who further added that «the offer increase will naturally result in a housing price decrease». According to him, «from now on, this market will be more viable with the arrival of these assets».
The potential offer increase may help balance the clear imbalance currently exists in Portugal within this market, which shows a high demand for the existing offer. But it should be noted that it still has margin to grow, since one of the effects of the pandemic should be reflected precisely on «families’ appetite increase for the rental market», given the job instability it created, mentioned Pedro Coelho, who also recalled that «historically the Portuguese like to be owners».
But there is still margin for improvement…
Despite the «good» political bases in terms of housing, we need to «keep creating projects which can attract investment», mentioned Fernando Vasco Costa, General Manager at Nexity Portugal. And he explained that «the rental market is not a consolidated market and, so, the data we have is not reliable». It is for that reason, in his opinion, «that it is important to set fixed rents so that we know what we can count on in terms of revenues. This would be important to diminish the risk and lower the yields, so as to attract more investors. We live at a time when the market is very interested in investing in rental, now we must capitalize on that interest», he concluded.
For Pedro Coelho, the real estate sector, right now, needs more legal stability, wherefore, in his opinion, «it should not be allowed to change the laws for the next 30 years». This point of view is shared by Rafael Ascenso, who further added that «the worst we saw from foreign investors was their concern with the possibility of legal changes during the process». And he exemplified that «taxes such as the IMI and the IMT (Portuguese Real Estate municipal taxes) had a very large variation over the last few years. The freezing of the tax law is a fantastic idea», he concluded.
Although there is a margin for improvement, Rafael Ascenso believes that right now «we are moving towards a good moment within the Portuguese rental market».