“We analyze each project with the assurance and guarantees for them to become successful cases”
On the occasion of the launch of our first projects in Portugal, we interviewed Simão Cruz, Country Manager in this country, to learn more about his experience in the real estate sector and about the process of opening this new market and seeking new investment opportunities. Additionally, following the successful closure of the Paulo Duque and Barao Forrester projects, which have accumulated a total of over 6 million euros, we are proud to have become the leading platform for fundraising through real estate crowdfunding in Portugal.
Simão, what can you tell us about your experience in the real estate sector?
My experience in the real estate sector began in 2005 with Grupo Martifer, developing and managing a portfolio of residential, commercial, and logistics projects in Portugal. Later, I spent 2 years as head of the first real estate project in East Timor, and then I participated in the expansion of a gas station network and managed several industrial projects for the group in Mozambique and Venezuela. In 2021, I started as Country Manager for the real estate platform Crowdestate in Portugal, where I was until joining Urbanitae.
Regarding Urbanitae’s internationalization, what have been the first steps you have taken to open up the market in Portugal?
The first step has been to study all the legal and tax aspects, considering Urbanitae’s investment model. Our concern has been to adapt the structure used in Spain to Portuguese law so that our investors feel the minimum impact when investing outside Spain. The next step was to begin presenting our platform to the best Portuguese real estate developers and explaining in detail the advantages of having Urbanitae investors in their projects. As a result of this work, we have a pipeline of very interesting projects that we are evaluating with the aim of proposing the best projects to our investors in the coming months. These are ongoing steps, turned into a process where each project must be analyzed with its characteristics, having the necessary security and guarantees to become successful cases.
Regarding the project selection process, what factors have been considered most important in this selection? Any particular location you have focused on?
We are identifying projects preferably in the Greater Lisbon and Greater Porto areas for the added value of location where liquidity is highest. This does not mean that we do not analyze projects in other cities, but the selection criteria tend to filter projects mainly in these areas. We seek recognized developers with a history of successfully completed projects, with minimal or no risk of building permits, preferably with pre-sales, execution periods of less than 3 years, and generating returns in line with our investors’ expectations. In Equity projects, having confirmation of bank financing availability is also an important factor.
How is the rental market in Portugal? Is there high demand for residential or commercial rentals in certain areas?
Like in Spain, the rental market in Portugal has seen strong upward price trends in recent years, mainly in residential rentals in the central areas of major cities. Demand far exceeds supply, and the levels of new product and new construction do not meet market demands, especially in Lisbon and Porto. According to Idealista statistics, average rental prices between March 2023 and February 2024 increased by 16.5% in Lisbon and 19.4% in Porto. The Portuguese government tried to control the rise in rents in 2022 by limiting their increase to 2%, but it was concluded that the measure had the opposite effect, and new contract rents continued to rise. As a result, in 2023 there were no longer any limitations, and rents were updated by 6.94%. With this measure, it is expected that growth will continue at a more moderate pace in 2024.
How important is sustainability and ecological development in real estate projects in the Portuguese market?
Sustainability and ecological development in real estate projects in Portugal are becoming increasingly important. Materials such as cement and metal were the basis of construction in the country and are being replaced by durable and environmentally friendly sustainable materials. 40% of carbon emissions come from buildings, electricity consumption, and construction materials. With the goal of being carbon-neutral by 2050, the Portuguese government has approved several laws and incentives to promote the development of sustainable real estate projects. At Urbanitae, we are committed to supporting projects of developers who consider sustainability as an important component in their projects, and this will be reflected in future projects that we are already following in our pipeline.
Lastly, tell us, what real estate projects are already underway or planned in Portugal?
Urbanitae’s first project in Portugal has been the Paulo Duque project, a residential building with 6 units in Cruz Quebrada, Dafundo, in the municipality of Oeiras on the outskirts of Lisbon, very close to the Torre de Belém. This is a Vogue Homes project, one of the most reputable Portuguese developers with several award-winning properties in its portfolio, with a track record of over 20 years of experience, more than 50 projects developed or under construction, and €751M under management. Urbanitae investors will enter a project with ongoing construction, no building permit risk, bank financing in place, and one of the units already sold. We also have underway the largest real estate crowdfunding project in Portugal: the Barao Forrester project. A €5M ticket for the development of 94 tourist apartments in Porto, in collaboration with the developer Caler Asset Management. This is Caler AM’s third hotel project in Porto, the previous two being the five-star One Shot Palácio de Cedofeita and the four-star Vincci Ponte de Ferro hotel in Vila Nova de Gaia. Two very complex projects, each with its unique characteristics, developed during Covid and at a time of rising commodity prices, so compared to the previous two, our Barao Forrester project is considered a feasible challenge for this developer. We are also in the due diligence process for two other projects, which are expected to be added to the platform during this second quarter, with several projects under analysis planned for the second half of 2024.