Neuza Pereira de Campos: “Real estate investment has become very significant to the Portuguese economy.”

SRS Advogados' real estate partner discusses the quick recovery of the Portuguese real estate sector.

Leaders League: What have been the most significant developments in Portuguese real estate in the last 12 months?

Pereira de Campos: In recent years it has seen significant growth. Portugal is perceived as a “sexy” and “trendy” place to invest (and to live). In fact, real estate investment has become very significant to the Portuguese economy in general, both directly and through the tourism and leisure sector.

The past 12 months, contrary to expectations, have been no different.

The most significant development, from a practical perspective, is the reassessment and repurposing of assets that might not be so attractive currently, considering the changes the world is facing, so that they can be used for other purposes that are more likely to correspond to market demand.

This is also due to the impact of the pandemic on the office sector and other retail properties, which saw a significant increase in e-commerce and a growing need for logistics assets, which impacted the real estate sector.

Did the pandemic have any impact in terms of deal flow?

In the beginning, deals were delayed for several months due to the uncertainty of the market as well as all the difficulties and limitations (if not impossibilities) of traveling, inspections, etc. In fact, several ongoing transactions were suspended or even terminated.

Afterwards, people realized that the real estate sector was still a good one in which to invest. Many real estate funds have been created recently and there are significant amounts to invest. For that reason, the real estate market has been recovering quite quickly and even surprisingly, in some ways.

In the residential sector, we have seen original and inventive solutions replace previous procedures to adapt to the constraints of the pandemic.

 Where has the demand for real estate transactions been coming from, and what is driving it?

Mostly foreign investors, particularly real estate investment funds. Real estate investment has become more sophisticated, and real estate investment funds, or other institutions such as insurance companies, infrastructure companies, etc. are becoming keener to invest in real estate worldwide.

On a national level, the situation is not much different, and the nature of the investment vehicles is, in general, the same. For smaller tickets, high net worth individuals, sometimes acting in concert, have found real estate as an attractive investment.

Demand is still very diversified and includes tourism and leisure (often purely as a real estate investment, but also purchases of tourism developments or as a sale and leaseback deal), logistics (for the reasons mentioned above), general residential, and event retail and services.

How has your background in private equity aided you in the real estate deals you’ve advised on?

Real estate investments in Portugal have become more sophisticated. In particular, real estate investment funds often implement sophisticated structures for that previously were only seen in private equity investments.

Having worked on numerous private equity transactions has provided me experience in these kinds of transactions, making it easier to assess the investment requirements and concerns that are typical for these more sophisticated structures.

My experience has also provided me with tools to assist on real estate transactions that are structured as equity deals and not just asset deals.