25 Nov Bringing trust, excellence and merit in the real estate sector
Francisco Quintela & Carlos Penalva, Founders, Quintela e Penalva, highlight the company’s absolute focus on each client’s needs
I would like to begin our discussion today by reminding the readers of Newsweek about Portugal’s uniqueness when it comes to the real estate market. Could you sum up the ‘key ingredients’ that Portugal boasts that make it such a competitive destination for real estate investors?
PWC did a study and considered Portugal the best place in Europe to invest in real estate. When I do my presentations to potential clients, I like to compare what you can buy in Portugal for a EUR 1 million compared to other prime places across the world. In Portugal you can buy 234 square metres, in Madrid 190 and in Paris 90. In Portugal the median price per square metre is EUR 3.600 and in Monaco EUR 46.000, in the UK it is EUR 25.000 in prime areas. Another great advantage is that Portugal has recently-built infrastructure. We can travel from the north to the south of Portugal in 5 hours in a car. There is a motorway that links all regions. The airports that we have are very close to our urban centres. We also have 95 kilometres of coast and beautiful beaches. In terms of universities we have seven in the ranking of the best universities in the world.
The Golden Visa and NHR programmes also played a large role in bringing people with significant funds, that were not completely satisfied with the jurisdiction that they were doing business in, to invest into Portugal. The quality of life and the cost of living is frankly much lower in relation to other countries in Europe. One selling point that we used a lot with our Brazilian and Turkish clients is that Portugal is the third safest country in the world, and was considered the best place to live for expats. Another aspect that allowed for the rapid development of the real estate market here in Portugal was the proliferation of short-term rentals as well as the fact that low cost airlines allowed for travel to and from Portugal at a very accessible price. The low-cost companies first brought the backpack tourists, then with the positive feedback and word of mouth that spread across the world, many more visitors from different socio-economic bands started arriving in Portugal. It should be stated that the amount spent per tourist per day has been increasing consecutively. Every year we are receiving more affluent guests.
Portugal had the intervention of TROIKA, the decision group formed by the European Union, the International Monetary Fund and the European Central Bank, in 2011 which brought about a number of reforms. Upon the new government of Passos Coelho taking over, several legislative and financial changes were made. One of these changes made a huge difference which was the revamping of the rental sector through legislative means. The laws that governed our rental market were from the first Republic in 1911. The new law enabled the removal of long-term tenants, which were paying rents that had been frozen in time due to the previous laws. The historical centre of Lisbon had a large majority of these tenants. From 2012 onwards, the historical centre of Lisbon became completely rehabilitated, allowing for promoters to market apartments at a value that reflected the current times. On top of that there was a development by the Portuguese government in the way that they promoted the country as being business and tourist-friendly and a safe place to live.
Real estate investors have been a driving force of the Portuguese economy in recent years. With a 15 percent contribution to GDP, the sector holds sway in defining what the immediate future should look like to revitalise activity. We have seen that at the start of the year APPII designed and proposed a package of exceptional measures for the government and relevant authorities to review. Can you please detail to us your analysis of the area for improvement for the sector?
We think that for Portugal to become the perfect destination to attract foreign investment of a higher quality certain topics needs to be reviewed and improved. Firstly, we need to look onto legislative and fiscal stability, which is something that we have not yet seen. I previously talked about the rental laws here in Portugal that were established in 2012. Since then, this same law has been altered four times. One of the largest funds that was previously here in Portugal purchased property based on the previous conditions of the law and ended up losing money when it was altered. This is also due to the fact that the Portuguese real estate market is in an embryonic stage, which is seeing growing pains and trying to assert the right balance of laws and legislation that fit with the particularities of the market. Within the next ten years we will see the market stabilise and mature. For now, there are still aspects of uncertainty, but with uncertainty there also lies opportunity for an investor.
With 16 years in the Portuguese market Quintela e Penalva entered at a time when the appetite for Portuguese real estate was only starting to garner international attention. The company is now a reference when it comes to mid-high to high end real estate. Can you highlight to us what single event prompted you to make a bet on the real estate market in 2004? What are the key milestones that have led to your sustained success?
We started in 2004, with our backgrounds in finance and business management, specialising in the real estate market. There was an opportunity after the crisis in 2001, where a lot of financial capital was put into real estate assets. We had known each other for many years and, in 2004, we started talking and saw that there was a lot of opportunity in the Portuguese market. We started the company and it was focused in the area of real estate consultancy. In 2008, there was the global crisis and we had to transform the company to offer a brokerage service, not only consultancy. This was the time where we started to structure our company to what it is today. Back then we were two people and today we are close to being 89 people with 4 offices, in Lisbon, Oeiras, Estoril and Porto. Our strategy was based on our capability to hire excellent people. What we have is excellence in our service and that is what has allowed us to grow substantially. We also have a strong relationship with all the large players in the market.
Our partnership with Knight Frank takes us into a new era full of positive challenges. We have been partners for one year and a half now. Their idea was to evaluate how we work here in Portugal, which has gone well. As of next January, we will initiate the co-branding with them. Next year will witness two vectors in which we will achieve growth, through Knight Frank and our department of partnerships. For us 21 percent of our business comes from partnerships. 95 percent of that 21 percent comes from the initiative of partners coming to us to align with them. They recognise our professionalism, our quality, our product, our service and fee safety in doing business with us.
In 2020, partnerships are a trend we are watching closely and preparing for strategically.
How does global demand for real estate in Portugal compare this year to others gone by?
In 2018, 53 percent of business came from international investors. In 2019 it decreased to 38 percent and in 2020 we are at 21 percent. This is a strategy, as in 2019 we focused on the Brazilian market and locations that are more niche, which resulted in the decrease in this value.
The pandemic has understandably had an enormous effect on people’s spending power. In spite of this, it has been a year full of surprises: January and February were the best two months of the company’s existence and July 2020 was the third best month since opening the business. The luxury segment has shown resilience and growth in demand and price in certain parts of the country, particularly off the coast of Lisbon and along our beaches.
In a world where the personalisation of services is becoming the norm, lifestyle management and a real estate concierge service has been a trend that we have noticed the major real estate players having been paying a lot of attention to as of late. We know that Quintela e Penalva make this a strategic arm of their services offering. Can you please give us a thorough overview of the services you offer in this area?
In the niche market that we work in, clients are buying ‘life projects’, which have a residential asset included. I will admit that there is a lack of quality in terms of added extra services for high net worth individuals when purchasing a property in Portugal. It is a market that is immature, as many providers are more focused on results and the bottom line. We are 100 percent focused on each client. We have a specialised department that is dedicated in concierge and relocation services that are personalised for each client. Many of our clients are already expecting that when they buy their home, added services should be offered as part of the package. They want a handy-man, a personal shopper and someone to point them in the right direction when handling the bureaucracy that exists here. Our clients are always kept up to date with restaurant openings, exhibition openings and private clubs. We also want to add to these services to offer a 360-degree level of services to accompany the client’s lifestyle.
Recent reports have indicated that Lisbon will continue to outperform other rival cities over the next five years, with a rosier forecast than locales such as Beijing, London, Los Angeles, Madrid, Shanghai, Sydney, New York, Dubai and Hong Kong. What is Quintela e Penalva’s perspective on the future for Portugal in general and how is the company preparing strategically?
I think that Portugal will be ever more in the centre of investors’ focus. We are a hub and a doorway to nine Portuguese-speaking markets that are growing. Portugal has a footprint in all of the continents and is the second oldest place with the same defined borders in the world. I think that Portugal will be a powerhouse of touristic services associated with real estate. The trend in the last ten years was large investments in the metropolitan area in Lisbon, which at this moment is increasing and spreading out because of the price increase. I think that anywhere where there is an opportunity for tourism there will be development, the same can be said about Chiado and Gerês in the north of the country.
Could you please provide us with a final message to the readers of Newsweek?
Portugal is already a reference for investment within Europe. It has a huge potential for growth and is a country that has strong diplomatic relationships with most countries across the globe. We are always open to receive investors and we are ever more aware of what investors want from our jurisdiction. We should also be aware that Portugal is a 90 percent service economy. We depend on partners from outside for the growth of our country. Here, at Quintela e Penalva, we are open to receive investors guaranteeing the maximum quality of service. We see that Portugal is going to become much more consistent in its legislation, which is somewhat of a relief for foreign investors. One aspect, however, that must be altered significantly, is the time that an investor waits for a building license currently. Once this is rectified, I see an unlimited potential for Portugal. We would like to say that when someone approaches us, they should know that we are not here to try and make a profit from them, but we are more interested in creating a relationship that endures into the future. We have construction companies that are working with us since the very first project we did with them. Start as you intend to continue!