Real Estate Investment Outside Urban Centers Presents Opportunity
The Portuguese real estate sector has become a central topic of social and economic discussion, largely due to a context of housing scarcity and rising prices. National demand, fueled by government support for young buyers and increasing interest from foreigners, has created significant market tension. This has shifted negotiating power to sellers, leading to record-high property prices, particularly in major urban centers like Lisbon, Porto, and the Algarve.
This environment poses considerable challenges for buyers, as family budgets are increasingly strained by housing costs. This has led to a fundamental question for many: where to buy? The analysis by Cláudio Sousa and Pedro Alferes of Maxfinance PontoCrédito suggests that the answer may lie outside of the traditional urban hubs. They propose a re-evaluation of 'distance,' moving beyond a simple measure of kilometers to include factors like travel time, financial cost, and emotional connection to a location.
The concept of an 'ideal distance' is introduced, which is unique to each family and represents the optimal balance of these factors. For example, purchasing a property closer in kilometers may not be ideal if the time and financial costs of commuting are high. The authors point to Portugal's West region, including areas like Bombarral, Cadaval, and Caldas da Rainha, as examples. These locations offer lower housing prices and viable public transportation alternatives to Lisbon, making the time-distance manageable without the high property costs of the metropolitan area.
In a geographically small country like Portugal, the authors argue for a 'mindset shift.' Investing at an 'ideal distance' from urban centers can lead to lower property acquisition and construction costs, a better quality of life, and reduced reliance on private vehicles. This trend could be accelerated by several structural projects, including streamlining licensing processes, reallocating public property for housing, and promoting new construction methods to increase the housing stock.
Fiscal policy changes are also identified as crucial. A reduction in VAT on construction, a revision of capital gains taxes, and lower property acquisition taxes could stimulate development in these areas. This is complemented by ongoing upgrades to the national railway network, the expansion of schools and higher education institutions across the country, and the development of regional industrial and technology parks.
The rise of teleworking, combined with the high costs and lifestyle pressures of large cities, is encouraging new housing choices. The authors conclude that real estate investment outside of the major urban centers is a significant opportunity. They call on the banking and real estate sectors to adopt a client-centric approach, helping buyers understand their 'ideal distance' and the long-term implications of their housing and financing decisions.
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