Urbania plans investment of more than €100M in Portugal

Urbania plans investment of more than €100M in Portugal

Urbania, Spanish developer, investor and real estate project manager, opened an office in Portugal during this year’s first quarter and is here to stay with an investment plan that should reach 100 million euro within the next three years.

The one who says so is Nuno Torcato, the company’s director in Portugal, in an interview to Vida Imobiliária during which he explained that «Urbania had been looking towards the Portuguese market for some time. Portugal was always an obvious extension for our operations and we felt the time had come to have a stronger presence in the country».

According to him, «we have excellent prospects, not only in the housing segment, where we believe there is a great potential to develop projects where the Portuguese may and will want to live in, but also within the alternative segments, which include student residences for example, built-to-rent and co-living which we believe are still taking their first steps in Portugal where there are still opportunities which are lacking in other, much more consolidated European countries», he explained.

The most advanced project Urbania currently has in Portugal (still at the licensing stage) is a mixed project at Avenida da República, in Vila Nova de Gaia, with a housing component of around 50 apartments, «whose sales will start soon», a student residence with 413 rooms and a retail area. Nuno Torcato believes this is a «fantastic area, perfectly consolidated in terms of housing and lifestyle and which is only a 10 minute walk from Porto’s Ribeira area through D.Luis I bridge».

Urbania also has «at the initial licensing stage» another student residence with 450 rooms in Lisbon. Nuno revealed that «we are also analysing another project in Lisbon with the potential to build 200.000 sqm for a mixed use of co-living, student residence and housing».

In terms of developing and planning within large terrains, one of Urbania’s main lines of business, the company is currently «looking at several projects in Oeiras, Amadora and Almada», all of them, «large projects, with more than 100.000 sqm for construction. Our goal is to develop hybrid spaces and projects which are also flexible, where the boundaries that separate home, work and leisure dissipate and mix», he explained.

Affordable housing is «one of the priorities»

Nuno Torcato stated that «one of the priorities we have for Portugal is to develop affordable housing projects for the Portuguese». He believes the «built to rent» and the development for rental may be solutions for the lack of housing in Portugal: «I believe there is a strong demand, not only from potential buyers, but also from international investors, who are seeking projects with scope to invest in Portugal», he guaranteed. «But for that there should be the political willingness to create the conditions to channel more projects for the built-to-rent or co-living segments, which could reach the Portuguese with rents as low as possible».

Urbania’s director pointed out several obstacles, the impossibility of deducting construction VAT or the requirement to have underground parking, «which increases the projects’ costs to a level that leads to a rent which is not affordable by the Portuguese». He also highlighted the fact that banks are more focused on housing credits, «the opposite of their unwillingness to support investors who want to develop built-to-rent or co-living projects».

On the other hand, housing projects for sale continue providing «higher returns than rental projects, which makes many projects initially conceived for rental be directed towards sale».

«These constraints have a direct impact, not only on price increases but also on the pace at which these buildings arrive on the market from the municipal licensing stage (which leads some investors to stop wanting to develop projects in certain cities), moving through all the unstable bureaucracy and regulation, all the way to the construction costs increase». He completed: «it is clear that it is in the hands of the State the creation of the necessary conditions for a strong investment in housing for the younger population and for the middle class both for rental and for sale».

He further added that «Urbania is, as are other investors, trying to define the projects and the business model which will allow it to develop the first projects within this segment in Portugal».

Student volume should return to pre-pandemic levels

Nuno Torcato remarked that Portugal is only now taking the first steps in the student residence segment, and he believes that the arrival of foreign students can keep increasing in the next few years, once the pandemic is gone: «the same way that tourists will come back to our country in large numbers, so will international students, motivated not only by the prestigious courses in English they can find in our country, but also by the food, climate, security and lifestyle».

He finished with «we continue having in Portugal some of the lowest «provision rates» in Europe, which shows that the offer of student residences has all the conditions to continue growing, not just in Lisbon and Porto, but also in the secondary cities».

A new «co-investment» fund

One other priority area for Urbania in Portugal is «a co-investment fund which we manage and for which we are actively seeking good projects developed by experienced developers». This fund «will be able to look into different financing structures, from a more traditional debt to more alternative types of financing, such as subordinated debt, mezzanine, equity among others».

«We would like for Portuguese developers to look at us as a support they may have when they need liquidity to carry their projects forward. In this fund we will always assume a more passive role of a purely financial partner, leaving for our partner the responsibility of executing the project», he concluded.

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