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Off-plan property sales succeeds in major urban centres

The demand for property has increased and the world of housing market has become aware of these effects in Portugal, both by the Portuguese and foreigners. Nevertheless, despite the clear evolution of this sector, the truth is that in urban and national centres, mainly in the two largest cities of the country - Lisbon and Porto - there is a scenario where supply is undeniably scarce when compared to the number of potential buyers.

This scenario means that today, the demand for home surpasses the intricacies of traditionality and gradually passes from the bricks and mortar to the off-plan property projects. Nowadays, there is an ever-increasing demand for off-plan homes, which is once again bringing such properties to the centre of attention when it comes to selling them.

The option to buy a house that's newly designed in Lisbon and Porto is highly appealing, both for the national public and for foreigners who, in addition to being able to make small changes that are in keeping with their tastes and needs, still enjoy the possibility of finding the property they are looking for at a more affordable price.

Although it is not historically the first time that the housing market has witnessed this type of trend, the truth is that this has become (once again) more accentuated since the middle of last year (2017). Returning to the old trends has proved to be profitable for companies, which even say that, especially in the most populous areas of the country, such as Lisbon and Porto, it is certain that a designed house is sold, thus creating a risk-free scenario for its builder.

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This idea is reinforced by Luis Lima, the president of the Association of Professionals and Companies of Real Estate Mediation of Portugal (APEMIP), the entity responsible for the management and representation of companies in this sector, which emphasises that the scenario currently seen in the main central urban areas is directly related to the lack of supply for housing in the regions of Porto and Lisbon. Given this scenario and taking advantage of the climate of confidence around the property market, it is, therefore, common that both promoters and investors opt for a greater variety of homes that are still in the designing stage. As the president of the APEMIP says, this is a trend that appeals equally to the Portuguese as well as foreigners.

A clear example of this trend is given by the promoter, Avenue, which represents the Perella Weinberg Partners fund. This company is responsible for the renovation of half a dozen buildings in the Lisbon region and, at the moment, even though they are in a development phase, the company has already been able to sell all the properties that were in their off-plan phase. This purchase, carried out in the design phase of the property, often means that the purchased properties will not be available for several months before their buyers can actually have the key in their hands.

JLL also states that with an average of three daily sales, at least half of its income comes from purchases made at the off-plan stage. The company's residential director looks favourably on the demand for homes that have not yet been built and says that there is now greater confidence among investors, who don't seem to be afraid of the eventual bankruptcy of promoters and situations where the building project is left incomplete. For this reason, just like many others, this company keeps several properties in the design phase in its portfolio, knowing that these will be marketed with relative ease in the current scenario.

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One of the main reasons that can motivate the purchase of a designed property is the possibility to agree on changes or making customisations. Although as a rule, final finishes are offered and associated with the promise of buy / sell contract, there is some scope for the investor to change the details of the interior in order to adapt the property to their own tastes and needs. While still in the execution phase, these small changes do not normally change the value of the property or the time it will take for it to become available.

Another appealing factor for buyers is that buying a property as an off-plan project takes can have its benefits. In this case, the discount amount on the purchase of an off-plan home tends to be between 10 and 15 per cent, making it significantly cheaper than a property that's already built and ready to move into.

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