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Q&A: Sara Outeiro, Business Development Manager at EQTY Capital

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The residential market, particularly prime real estate
in Lisbon, has been growing steadily since 2014. Since I made a career change in
2016, from retail to the real estate market, I’ve always had the feeling of
being in the right industry at the right time.

At Sotheby’s Realty, as a district manager for a prime
district in Lisbon, Príncipe Real, which I like to think of as the Lisbon
equivalent of the Le Marais district in Paris,
with its hip boutiques, antique shops, galleries, trendy bars, and beautiful 19th
century palaces, I got to meet the city’s most interesting individuals and
upcoming developers. It was the best position one could hope for. I worked in one
of the most sought-after districts in Lisbon: central and traditionally
residential, but still slightly away from the touristic hubs of Av. da Liberdade
and Chiado. High-net-worth individuals were on the waiting lists to get a prime
property there.

When the opportunity came to join the
EQTY team, I recognized all the developers on their platform, showing me that they
were on the right track of the added value chain. These were developers very
well known within the prime real estate market, and I had already worked with
many of them through Sotheby’s. The experience of the team and the exclusive
access to this extensive portfolio pipeline made the decision to join the EQTY
team very easy.

What makes Portugal, and more
specifically, Lisbon, so appealing to foreigners and Portuguese alike?

I am what you call in Portuguese an “Alfacinha
de gema.” The literal translation is “Little lettuce from the core,”
which might not be too glamorous, but relates to being born and raised in
A person from Lisbon is casually known as an alfacinhaor little lettuce. Historically, it is said that this is how the Moors used to describe the people of Lisbon as they cultivated vegetables in small
near the castle walls that were being
maintained in the city
. It is also said that, similarly, the Portuguese don’t
particularly like to leave their
place. After having experienced living in Africa and the United States, I
can relate to why people might find Portugal, and specifically Lisbon, so
appealing that they’d never want to leave.

The district of Lisbon has that slow-moving
and casual environment inherent to small cities, but with the infrastructure,
art, history, and culture of a leading European capital. From central Lisbon,
it takes you only 15 minutes to the beach, and the average yearly temperature
of 16.7
°C (62.1°F) makes it possible to enjoy weekends at the beach from March through
October. It is no surprise that the digital nomad crowd is storming in and
making their way to Portugal to enjoy surfing and all the other activities that
the city has to offer all year round.

Additionally, there is the fact that Portugal
is ranked 6th in the Global Peace Index, has a stable political framework,
great public health and education systems, a low pollution index, the cost of
living is substantially lower than most EU countries, Portuguese cuisine is
amazing with local organic products prevailing, and most of the younger crowd
speaks a proficient level of English.

What attracts investors to Portugal,
especially high-net-worth individuals?

Although the Golden Visa program was
established with the objective
of attracting foreign investment
dynamizing the Portuguese
economy, it is not the main driver of the Portuguese Real Estate market’s appeal
and only accounts for a small percentage of the market value (below 5% of real
estate transaction volume in 2021). The Non-Habitual Resident program (NHR),
first established in 2009 and updated in 2020, has in fact been a more
significant attraction for foreign investment into the country.

According to Henley & Partners’ Global Citizens Report, Portugal is ranked among the top 10
countries for migrating millionaires for 2022. With several news articles
increasingly identifying Portugal as the new investment migration destination,
the country has been trending with noted increasing attention from around the
globe. As such, we are currently witnessing a great influx of
investment. HNWIs are looking for alternatives for retirement or a “plan B”,
and a European investment providing a residence in Portugal with access to the
Schengen Area sounds inviting. It also contributes to the fact that the dollar
is currently at parity with the euro.

Portugal is undeniably on the radar as a living destination, and
international demand is expected to be booming despite the recent changes in
the Golden Visa rules. Evidence of that is the increase of 7.8% in the first
quarter of 2022 in the average sales price in Lisbon’s high-end residential
market, even though the city is excluded from the GV program by real-estate

How would you say the residential market is currently performing in
Portugal? Any market bubble in sight?

Since I entered the real estate market in 2016, there has always
speculation about a real estate bubble. However, apart from the
beginning of 2020 due to travel restrictions and COVID uncertainty, the prime
residential market has been robust and keeps growing with no break in sight. In
fact, according to JLL research, 2021 has a record high sales volume with
190.000 dwellings sold, of which 11% is attributed to international demand and
89% is attributed to the domestic market. International demand largely
focuses on prime assets,
with very little leverage being used by buyers. At Sotheby’s, for example, most
of the investors I’d engage with required no leverage.

We can’t ignore that there is an imbalance between supply and demand,
which is rapidly driving up housing prices in Portugal. However, the market has
been quite resilient despite COVID-19, and 2022 is expected to be another
outstanding year as demand for real estate is higher than ever.

In short, there is still a lot of room for market growth, especially
with the rising interest from foreign nationals due to the political and
economic climate worldwide. As well, with stricter rules on home credit since
the 2008 recession, and the mortgage market only accounting for 45% of the
market share, occurring in the prime residential market in Portugal in the near
future, Portugal appears to be on solid ground.

What are the advantages of the EQTY branded funds, which have a great
focus on prime real estate in Portugal?

With financial markets and cryptocurrency facing record lows, those seeking alternative investments to stocks and bonds may turn to the housing market. This strategy still entails some risks, but they are mitigated if you choose to invest wisely in a well-performing
market. The prime real estate market, particularly in Lisbon, Porto and the
Algarve regions, ticks all the boxes, especially at a time of inflation.

The general perception as to why the
fund route is chosen is tax efficiency and the fact that it requires less direct
management than the traditional real estate route. Naturally, funds are able to
offer greater diversification and are highly regulated and managed by
professional, independent, and licensed fund managers. Furthermore, even with
the recent changes in the GV program, investment through funds is a great long-term
alternative if you want to have access to capital gains and attractive yields expected
from the pool of prime real estate assets.

EQTY initiated funds are GV eligible, regulated funds managers cherry
pick from a platform of leading developers EQTY has put together in the prime
residential market. Instead of buying or financing only one developer, the risk
is diversified by selecting only the best units from the best developers in the
country. Track records, balance sheets and overall performance are a priority. Any
acquisition should include an extensive market analysis and a conservative estimation
of the expected yields. Coming from a real estate background it puts me at ease
that I’m working with such a high-quality portfolio. Apart from the fact that I
wouldn’t work for a company I didn’t believe in, it really makes my job easier,
as a business developer, to be working with such a differentiated and forward
thinking team.

by Advertiser

Read More: Q&A: Sara Outeiro, Business Development Manager at EQTY Capital

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