Jorge Garcia, Real Estate specialist, analyses recent developments.
Source: Author
Author: Jorge Garcia, Real Estate Specialist
Portugal at three speeds
The real estate market in Portugal continues at three speeds. The speed promised by national and local decision-makers, the more or less rapid speed at which operators move according to their capabilities and skills, and the slow speed of the Public Administration.
Recently, the government approved a set of necessary measures, with the intention of addressing the serious housing access crisis.
Gap between decision and execution
At different speeds, operators in the real estate ecosystem have been trying to adapt to internal and external constraints that affect their activity, while the responsible authorities, namely those in charge of licensing, remain in a lethargic state.
In public entities, nothing has changed; technicians continue to “pass upwards”, and obstacles remain. Faced with new challenges and constraints, when it is necessary to respond to the shortage of housing supply, the Public Administration continues to fail as if the time and money of real estate developers and taxpayers were free.
Invisible costs of administrative time
Over the long period that elapses until the licensing of a new housing development, real estate developers incur financial costs, access to affordable housing is denied to future residents, those who can are paying higher rents in other locations, and municipalities are losing tax revenues from IMI, IRS, among others.
These are easily quantifiable costs that are not assigned to anyone. The cost of decision time is a significant economic cost which, together with others, has led to “the numbers not adding up” in many affordable housing projects.
Compliance with outdated construction regulations also continues to generate additional costs, with bureaucracy acting as a “protective shield” for technical and political responsibilities.
Bureaucracy, blockages and structural challenges
Stagnation has a high cost, but change brings a lot of work and headaches when it interferes with the multiple corporate interests embedded in the numerous state bodies.
In recent events we have attended, operators’ complaints remain unchanged. When discussing building or renovating for affordable housing, implementing energy transition and building decarbonisation programmes, modernising construction, digitalisation and technological innovation, the WFD - Water Framework Directive, and the transformation of urban spaces, we are faced with major challenges.
We have an ageing housing stock with around 70% of buildings being energy inefficient, ageing urban and building water networks, degraded and in some cases containing contaminating materials, a lack of skilled labour and funding sources, regulatory complexity, and slow licensing processes.
Industrialisation of construction and productivity
But the issue that is most concerning in the short term, given the need to increase productivity and decarbonise, the shortage of labour, and the need to reduce delivery times for housing units, is the industrialisation of the construction process at scale.
According to recent statements by Miguel Garcia at the “Real Estate Shapers” event organised by “Magazine Imobiliário”, a building with 77 units could be delivered in less than a year. Would the “heavy state machine” be up to it?
Last but not least!
On 9 June, ADIT – Brazilian Association for Real Estate and Tourism Development celebrates its 20th anniversary. It will take place in Maceió, State of Alagoas, where it all began.
I had the privilege of being a speaker at the first edition of this event related to tourism and real estate investment in Brazil. When it was founded, the organisers sought inspiration abroad. Two decades later, it is in Brazil that it can be found, in the best that is done on a global scale.
Thank you Felipe Cavalcanti for your entrepreneurship and for continuing to be a source of inspiration.
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