Hugo Santos Ferreira, the Executive Vice President of the Association of Real Estate Developers and Investors (APPII), talks about his optimism for the Portuguese economy and international presence in the post-Covid-19 era in an interview with Newsweek (Country Reports).
In the interview Hugo Santos Ferreira says that Portugal’s real estate sector has been able to learn from other European countries that were affected by the pandemic first. This, he says, enabled Portugal to mitigate the worst effects of the pandemic using rapid consolidated measures. This proactive approach also revealed Portugal’s political stability and agility.
“We have continued construction activity and selling properties throughout the pandemic. The real estate sector in Portugal today represents 15 percent of total GDP, making us a strategic sector for the economy. To provide an insightful perspective, tourism before the pandemic accounted for 15 percent of total GDP. If we combine the construction and real estate sectors, we contribute to 17.4 percent of total GDP. All the measures that were once available in Portugal for investors are still up and running, especially the Golden Visa programme. Investors can expect a good return on their assets here as we have been growing as a sector, non-stop since the economic crisis,” says Hugo Santos Ferreira.
The APPII executive vice president then discusses the ‘relaunch programme’ with the aim of trying to convince the government that the Portuguese real estate sector is a strategic sector worth investing in.
“We are ready as a sector to help relaunch the economy. The Prime Minister and the Minister of Economy are behind our initiative, with the Prime Minister going as far as stating that: ‘Attracting foreign investment right now is more important than ever’” says Hugo Santos Ferreira.
In fact, the Prime Minister, António Costa has already acknowledging that the real estate sector is the one that brings in a large amount of foreign exchange and has been proving to do so for decades.
Santos Ferreira says that there are nine measures in its ‘Relaunch Programme’ manifesto, one of which was the fact that many administrative processes that once required face to face interaction can now be done virtually, speeding up the administrative processes associated with real estate purchases.
Hugo Santos Ferreira points out the important of Portugal’s Golden Visa scheme to the Portuguese economy, the government and the real estate sector in bringing in overseas investment.
“Within these nine measures we picked four vital measures, one of which is the relaunch of the Golden Visa programme. To clarify the importance of this programme, since its inception it has garnered more than €5Bn of real estate investment. In 2019, it reached €700 million of investment and €85 million for the government,”
The real estate sector has, he says, attracted over €130Bn in investments since the end of the last economic crisis which hit Portugal hard between 2007 and 2014 and resulted in the intervention of a troika of institutional international lenders from 2011 which effectively managed Portugal’s economy.
“Since the end of the economic crisis the sector has grown more than 20 percent per year continually. Foreign investments since 2014 have reached as much as EUR 30 billion in the real estate sector,” he says.
However, Hugo Santos Ferreira stresses that all the Government’s foreign investment incentive programmes need a makeover to reflect current times and the market as it is today. They need to be realigned with Pan-European initiatives like the European Green Deal and the Europe Next Generation initiative, which is one of the main initiatives “we are going to do before the relaunching of the Golden Visa programme.”
“We also want to see how we can use these programmes to steer investment into other sectors of the economy, because as it stands, 90 to 97 percent of investment through the Golden Visa programme is earmarked for real estate. There is an opportunity for this to spread across our economy,” Hugo Santos Ferreira explains.
The President of APPII, Henrique Polignac de Barros pointed out during Portugal’s recent Urban Rehabilitation Week in Lisbon that, ‘The market will need massive investments, and that there is a lot of liquidity worldwide, which will be invested in countries that find the most intelligent solutions to attract that investment’.
Polignac de Barros points out that compared to many countries in Europe, Portugal has an enviable political stability. He believes that in terms of capital, equity and investors this is the most important aspect when thinking about investing anywhere.
“In 2020, you will not find a safer country in Europe, since Portugal is ranked the third safest country in the world, according to the Global Peace Index. We are living in a global economic crisis; however, we know that liquidity still exists across the globe and it will soon be time where the major jurisdictions across the world will be competing to get the largest share. Our government and city officials from Porto and Lisbon want to make it clear that we are gearing up to create an environment that streamlines all of the previous bureaucracy that investors faced, to be able to compete with the other global jurisdictions,” he tells Newsweek.
Polignac de Barros says that sustainable construction is no longer just a flag, but a necessity and a condition for doing more and better business. He points out that energy efficient designs and higher quality construction are becoming requirements and a condition for doing business in the sector.
“We are very much aware of the new standard across Europe and want to adhere to measures outlined in the European Green Deal. One of the measures we want to implement in the new Golden Visa programme is to link real estate and energy efficiency via new technology.
“We want the Golden Visa to be a SMART Visa, attracting investments towards the efforts being made to decarbonise the country. This is a very specific and concrete example of how the construction and real estate sector are aligning to tackle these pertinent challenges. A sizeable majority of new projects being put forward in all asset classes have measures to significantly mitigate the carbon footprint and further protect the environment,” explains the APPII president.
The APPII is one of the main gateways for foreign investment in Portugal and, since 1991, one of its objectives has been to facilitate foreign direct investment.
Since the times of the 15th century Discoveries, Portugal has been across the globe discovering the world, however, he says that it is only since 2014 that the world has rediscovered Portugal in terms of a destination in which to invest and live.
Polignac de Barros tells Newsweek: “To highlight how successful this platform has been I must highlight the following: 50 percent of our members are foreign investors, funds and private equity from all over the world. Through this programme what we try to do is create synergies between these foreign investors with our local members. 85 percent of the foreign investors wants to work with a local established partner and we are the central point for them to find the right stakeholders within the construction and real estate industry.”
The APPII president rounds off the interview by saying that its idea for the future is to continue improving on what the association has already achieved.
“Our target is to consolidate the association so that it is the main entity representing the real estate sector in the country, not only for investors, but also for the Portuguese authorities and local players,” he says.
“On the other hand, our goal is to be able to explain in an objective way that the real estate sector is the most strategic sector for economic growth. Real estate is at the top of the economic pyramid and we will be the sector to reignite the whole economy,” concludes the President of APPII, Henrique Polignac de Barros in the Newsweek interview.