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Leasing, is the next challenge?

The real estate market, despite not completely losing its luster, is losing speed.

For one reason or another, as is natural, investors and customers react to changes in conditions on the ground and in the economy, and look for alternatives.

Economic changes, changes in distribution chains, raw material costs, rising interest rates, difficulties in accessing credit, etc., all influence the decision to invest.



These changes in the market have caused changes in demand.

Namely because the ease of access to credit and the high prices in the market in recent years have placed many families taking out loans at the limit of their ability to pay.

This could lead to a situation similar to that experienced in 2008/2011, with the need to deliver housing to banks or place some on the market.

Which could mean increased competition for the new housing market.


This will put some families looking for alternatives, along with those who cannot access credit.



B2R potential


One such market will be leasing.


But the rental market in Portugal is very complex.

There really is a crisis in this market. Stock crisis.

It is not something unique to our market, but it is very serious given that the country has become accustomed in recent decades to acquiring mortgages in order to have housing, which is why construction for this segment has been reduced.


In other countries, where the habit of renting is more ingrained, the volume on offer is much greater, even with prices showing an increase. But since the offer is greater...


As we had the opportunity to mention in one of our publications here on the blog, in April 2021, "Build to Rent"(B2R) seemed to become a solution for some investors, given the market circumstances and investment alternatives .

However, investment, with the end of the pandemic, turned to commercial solutions or to companies that, to the surprise of many, returned to physical facilities in many cases, introducing some changes to the form and spaces of work.


Will the promises of our rulers regarding affordable housing ever come true?


It is difficult to conceive that yes, especially when there is always the old game of pushing between central and autarchic State (among others).

Systems are also slow, particularly with regard to licensing, so that development of this type is carried out in the short term.

Or with the necessary speed, so this could become a form of incentive.



Other Markets...


Something that has affected the market is the observation of market developments in other countries with the continuation of factors such as COVID, the conflict in Ukraine and the rise in interest rates.


Sweden (Bloomberg), the United Kingdom (Bloomberg) and even Germany (Bloomberg) have had drops in the market, some of them very pronounced as is obvious in the referenced articles.

Some with price breaks, others with a market without supply.


Even the world's largest housing market, China, has been hit hard by bankruptcies and delivery failures by many buyers.

With the downward trend of economic growth all over the world, prices eventually end up having to give way, at least for those who went into debt to invest.



How to streamline Build to Rent?


Will we really be able to make a rental market flourish in this context?

Promises of affordable leasing by municipalities and the State will always be insufficient for the requests of thousands who need solutions.

The solution would even be to encourage "Build to Rent" and similar solutions, which have been developed for students, but still with very high prices.


The profitability of these assets, although extended over time, will always be guaranteed.

It needs professional management and a differentiated approach, but it will be a type of business with continued return, particularly given the existing demand.



Turning the Solution into Reality


Will there be political will to make it happen?

And who will be the interested investors?

Those who develop this type of solutions in the rest of Europe and already have the knowledge in their management, and where are the markets being "punished" more at this stage?

And if the market trends that are beginning to affect other countries are extended to here, wouldn't that be the most interesting bet?


Naturally, it is a type of investment that requires some prior analysis and the selection of a market segment permeable to this type of solutions, but with a change in mentalities and receptivity to this type of project, as we previously listed in our publication Abril and in other market analyses, is a very interesting area of investment and constant profitability, with less risk than some capital markets.


And with cities like Porto and Lisbon growing in terms of foreign companies, namely those linked to technology, creating jobs, the market is growing every month for this type of solution.


So who will encourage this bet? And who will lead it? Will it be you?

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