Portugal Property Developers Focusing on Middle Class Market

Discover how real estate developers in Portugal are shifting their focus towards the middle class and domestic market for future housing supply.

In the latest Portuguese Investment Property Survey (PIPS) for the 4th quarter of 2023, significant shifts in investment trends have been observed. According to the report, there has been a notable decrease in the dominance of Lisbon in new projects, with its weight dropping from 52% in the 3rd quarter to 41% in the 4th quarter. Conversely, there has been a surge in intentions for investment in peripheral areas of Greater Lisbon, rising from 30% to 44%.

The survey, a collaborative effort between Confidencial Imobiliário and the Portuguese Association of Real Estate Developers and Investors, based on consultations with key industry players, also highlights a decline in the share of developments targeted at international demand, decreasing from 24% in the 3rd quarter to 18% in the 4th quarter. Similarly, projects catering to both national and international buyers have witnessed a decrease in importance, falling from 52% to 38%. However, projects aimed at the domestic market have seen a significant increase, accounting for 44% of new projects in the 4th quarter compared to 24% in the previous quarter.

This shift in investment patterns is attributed to a "greater confidence in the evolution of macroeconomic indicators, in a context of slowing inflation and a possible inflection in the rise in interest rates," as stated in the PIPS for the 4th quarter of 2023. Ricardo Guimarães, director of Confidencial Imobiliário, believes that this new trend signifies a return to the market dynamics observed before the spike in interest rates, which prompted industry players to focus on the more resilient "prime" markets.

The latest PIPS report sheds light on the evolving landscape of the Portuguese real estate market, with a noticeable reorientation of investment towards peripheral areas of Greater Lisbon and a renewed focus on the domestic market. These changes reflect a shift in investor sentiment driven by changing macroeconomic conditions and market dynamics.