The dynamism of the construction sector in Portugal
In order to reduce the gap between demand and the shortage of real estate supply in Portugal, 2018 is being marked by an increase in new construction. Approximately 2 million square metres of new housing construction entered the licensing process in the first five months of 2018 (from January to May) 1.
Manuel Reis Campos, President of CPCI2 believes that price evolution will begin to stabilize as soon as there is a response to the current needs of the Portuguese residential market. Generally, experts admit that prices will balance when there is more real estate to offer.
Following this market trend, developers are starting to invest in new construction. According to data from the Association of Industrial Construction and Public Works (AICCOPN), in 2017, 14,120 building permits were issued, corresponding to a growth of 24.4%, over 2016. And counting, up to April of the current year, 6,188 licenses for new construction, an increase of 38% compared with the same period last year.
In Portugal, a total of 15,100 new properties have a building license, distributed over 6,776 new housing projects. Of these new projects, only 400 and about 1,400 homes will be built in the Algarve, according to Confidencial Imobiliário data.
Paul Cotterell, sales director of Casas do Barlavento, warns that promoters should be aware of the demand and rental market trends: "we, real estate agents, are in daily contact with potential buyers, so we know the needs and the customer's purchasing power, which allows us to see business opportunities." He adds that "fortunately, in the Western Algarve, new high-end construction is emerging. This is the case of Horta do Galvão (Rodrigues & Vermelho), Adega (Miralagos) and Prime Residence (BlueRock), all in Lagos. However, there is a shortage of real estate for the middle and low-middle classes, the economy’s primary drivers of the region; the majority of which are the essential workforce for the hotel industry in the Algarve”.
1 Data obtained through the energy pre-certificates issued by ADENE.
2 Portuguese Confederation of Construction and Real Estate