“When Real Estate Grows, the Economy Grows”

Geopolitics and International Relations: how is it expected that the current balance of power between the US, Russia, and China shaping Europe’s strategic options over the next decade?

The first thing I want to underline is that, despite political or geoeconomic tensions, real estate remains decisive for Portugal. Our main issue was a lack of supply over the last 20 years. That’s why we need you, and we need the Portugal Real Estate Summit to keep investing and developing.

Now, regarding the state of the world, here are some key trends that help us understand what we’re witnessing:

1. Shift from alliances to power politics – We see an attempt to replace a system of alliances, traditionally based on rules and treaties, with a system of sheer power.
2. Russia’s artificial “superpower” status – Russia has been elevated to the condition of superpower, but in reality, it doesn’t deserve that role. It excels only in nuclear capabilities. If you look at the figures, its economy isn’t even in the world’s top 10.
3. The US–Russia–China triangle – The United States believed that befriending Russia would decouple it from China, reminiscent of Nixon’s policy in the 1970s. But that didn’t happen. Instead, it has created enormous anxiety on both sides of the Northern Hemisphere. Even the traditional US–Europe alliance has diverged on how to act regarding Ukraine.
4. Contradictions between geopolitics and geoeconomics – Let me ask a democratic question: do you make friends with tariffs? That’s what happened with India, which is now the world’s fourth-largest economy. Next year it will surpass the UK and is already overtaking Germany. This should have been the moment to strengthen complicity between Europe and the United States. Why? Because China is finally facing domestic economic troubles: slower GDP growth (down from double digits to around 5%), rising debt, declining FDI, and youth unemployment. To contain China, the two strongest economies—the US and Europe—needed a much closer relationship.
5. Technology and resources at the core of US–China competition – The main battlefield is high-sensitive technologies, rare earths, and critical minerals. This is the “penthouse” of the tension. Recall that when the US–China trade war escalated, it only lasted nine days before China threatened to restrict exports of six rare earths, which would have seriously damaged the US digital economy. If you look at it positively, these tensions also create stabilizers in the relationship. Still, this presents a huge dilemma for Europe.

Security and Defence: given recent conflicts and NATO’s evolving role, what should Portugal prioritise to ensure its national security in the coming years?

At the NATO summit in Cardiff in 2014—before Russia’s invasion of Ukraine—the members committed to spending 2% of GDP on defence. Let’s be clear: it was Russia that invaded Ukraine, though we sometimes hear strange narratives about it. Before the war, only nine NATO countries met the 2% threshold; now, 31 do. Even countries like Italy, Spain, and Portugal, traditionally well below the mark, are making progress.

Let me share an important detail: today, the largest defence budget (as a share of GDP) is not in the US, but in Poland—4.2%. Why? Because they have “the bear” right in front of them, and they remember being divided between Nazis and Communists in the 20th century.

Europe’s mistake was believing in the illusion of “peace without defence.” One reason Putin invaded Ukraine was his certainty that Europe was defenceless, leaving the path open.

Now, the situation is changing:

1. Sweden and Finland are no longer neutral; they are NATO members.
2. Germany made an impressive U-turn with a €500 billion defence fund. Before the war, 35% of its armed forces were non-operational; now, Germany is rising fast.
3. An informal nuclear coalition may be forming. Europe has two nuclear powers: the UK (post-Brexit) and France. The German Chancellor suggested building a collective system around these two, providing a nuclear umbrella for the EU. It’s not easy, but it’s the right direction, because Putin only respects strength.

Rearming Europe requires major investment. But how can we invest more in defence without cutting welfare? The answer is growth—Europe’s most critical economic challenge.

Finally, cooperation is key. The US operates with two main tank models, while Europe has 40—our defence industry is too fragmented. We need to consolidate. Countries like Germany, France, Italy, Spain, Sweden, and the UK have strong defence industries; they must collaborate. As a concrete example, Portugal recently signed a contract to sell drones to France—a positive step.

Migration and Domestic Policy: do European countries need to adopt urgent migration measures, or is social cohesion and security being exacerbated by mediatic focus? And can/should we keep relying on foreign workforce to tackle the labour shortage in construction?

Let’s reflect on some facts: the average European is 44 years old, the average Portuguese 47. We are the second-oldest society in Europe, after Italy. Demographers say the minimum fertility rate to replace generations is two children per woman—yet no European country meets that. The last was France, thanks to a very strong pro-family tax policy.

So, the critical question is: can we reduce, fix, or reverse demographic decline? Reversing is very difficult. It requires time, commitment, and consistency—things our digital society lacks patience for. Results in demographics take decades. Chancellor Merkel worked on this throughout her tenure, contributing to a modest rise in Germany’s fertility rate (from 1.4 to 1.6, including immigration).

For Portugal, the challenge is the same. To fix demographics, we need a coherent mix of housing policies, tax policies, labour policies, and migration policies—applied consistently over 20 years. Constant policy changes with every election will get us nowhere.

That brings us to migration. A “zero migration” scenario is unrealistic and bizarre given our history. We face a choice: regulated or unregulated migration. Just think: what would happen to construction, hotels, restaurants, agriculture, or logistics without migrants? Our economy would collapse.

We do need migrants—but in a regulated way. Sudden inflows of one million people, as seen in some cases, can disrupt societies and fuel conflict. But with an aging population, we cannot live without them. At 47 years of age on average, Portugal is not exactly a “young” society.

Global Economy and Fiscal Policy (1): where does Portugal position itself in relation to global economic shifts? Are we on the right track to avoid the pitfalls of high deficits and unsustainable fiscal policies? And most important…what are the great opportunities for the investors in this room?

We can’t expect strong Eurozone growth when Germany stagnates, France struggles, and Italy grows modestly. Each faces different crises:

• Germany – not a debt problem, but a model problem. For years, Germany thrived on a “triple constellation”: selling cars to China, buying energy from Russia, and relying on US security. All three collapsed in 2022. Reshaping will take time, but I believe Germany, with its strong leadership, will succeed. Still, growth will be modest for now.
• France – faces an unsustainable debt crisis. Its finance minister recently warned that without reform, the IMF could one day intervene. At the same time, French politics are unstable, with frequent changes of prime ministers and the rise of far-right and far-left forces that offer no serious economic solutions.
• Italy – has a talented prime minister but continues to struggle with competitiveness. Growth under 1% is not enough.

By contrast, Portugal and Greece have reduced debt significantly. Portugal went from 138% of GDP ten years ago to about 88% today—below the EU average. Greece dropped from 210% to 147%. Meanwhile, France and Italy remain above 115% and 138%, respectively.

This is why Portugal stands out. Despite inflation, which ironically helped reduce debt, we managed to balance fiscal discipline with growth. That creates opportunities for investors.

Global Economy and Fiscal Policy (2): how do you see global investment flows evolving between different blocks – in other words what will the money be attracted to? Is Portugal in the “path of the money”?

There are strong reasons to invest in Portugal, and I say this not out of optimism, but comparison. In one decade, Portugal solved a severe financial crisis. Today, there’s broad consensus—across political parties—for stable, balanced budgets and lower debt.

The results are visible:

• Debt reduced by 40 percentage points.
• Ratings upgraded by Moody’s, Fitch, and S&P.
• Political consensus around fiscal responsibility.
• Growth above the Eurozone average: in 2023, Portugal grew 2.3% (Spain 3%), compared to the Eurozone’s 0.5–0.8%. This year, forecasts remain at 2–2.2%.

Of course, we face challenges. Housing supply is far below demand after two decades of underbuilding. We must simplify permits, cut bureaucracy, and reduce taxes. Local elections in October may bring political debates, but there’s awareness in town halls that housing permits must accelerate.

Despite global turbulence, Portugal remains an attractive destination: a safe, stable, and moderate country with a constructive approach to fiscal policy. And remember: real estate is decisive. When real estate and construction grow, the economy grows. When they stagnate, the whole economy suffers. That’s why I am confident about Portugal’s future—and the opportunities for your sector.