Porto promotes 620 affordable homes in partnership with private companies

Porto promotes 620 affordable homes in partnership with private companies

The Porto municipality is going to launch a tender to contract partnerships with private entities to carry out the construction of up to 620 dwellings in Monte Pedral and Monte da Bela. The proposal, which has already been approved at a meeting of the Executive, stipulates that the transfer of the right of superficies will amount to five million euros; will have a term of 90 years, ensuring that there will be no disposal of municipal assets, the municipality said in a statement.

In Monte Pedral, on municipal land, the Municipal Policy for the Promotion of Affordable Housing will include a plot consisting of six plots: four for housing, with commerce and services; one for commerce and services; and one for a future student residence. The urbanization works have an estimated cost of around 4.3 million euros. The tender should be launched in January 2024.

In concrete terms, up to 388 dwellings will be created, in a rare opportunity for urban transformation according to a multifunctional, coherent and integrated project, taking into account the historical process of growth in that part of the city; the rich process of growth in that part of the city, argues the councillor for Urban Planning and Public Space and Housing, Pedro Baganha, who signed the proposal.

According to the Porto city council, for Monte da Bela, a construction potential of 232 new homes has been defined, distributed over 12 plots. A third plot in that area in Campanh will be used for services, commerce and equipment, but it is not part of the tender and will remain in the full ownership of the municipality.

Lease guaranteed for 30 years

In the concession contract there is a guarantee that the City Council will ensure, for a period of 30 years (which can be renewed), the full lease of all the units, to be made available on the market at affordable prices. To guarantee the rental of the houses in Monte da Bela, Porto City Council will have to bear a cost of almost 62 million euros, balanced by the 58.9 million collected in affordable rent over time.

The option for public-private partnerships to respond to the city's housing needs was based on a cost-benefit analysis which concludes that this model of concessions is the best option for the city; It allows the risk to be shared between the municipality and the investor, as well as bringing efficiency gains compared to a traditional contracting solution, stresses Pedro Baganha.

In this way a viable compromise solution that corresponds to the objectives of the Porto City Council, without alienating its assets, and is also expected to be attractive to a large number of potential investors.

Iberian Property logoIberinmo logo
Iberian Property is the best platform for investment in Spain & Portugal. Created for those who seek reliable information about players and deals happening in Iberia. Through updated database, reports, market indicators and daily news, we report “Who’s Who” in Iberian Real Estate!. Iberian Property is also proud to organize the most important international real estate investors’ meeting in Iberia - Portugal Real Estate Summit!