Private Residences Comporta 2021 by Engel & Volkers Comporta

Private Residences • 2021 Comporta

Comporta

Andreia Pratas Administrative Manager

Filipa Canelas Team & Marketing Assistant

Cláudia Pereira Senior Real Estate Consultant

Sara Rodrigues Real Estate Consultant

Francisco Mendes Real Estate Consultant

Luis Ferreira Real Estate Consultant - Melides

Nuno Pinto Real Estate Consultant - Melides

Nome cargo

Daniel Caspa Real Estate Consultant - Melides

Claudia Chaves Real Estate Consultant - Melides

Viktoria Dimitrova Real Estate Consultant - Developments

Nome cargo

Caros

leitores,

Dear Readers,

Ao longo destes anos foram muitos os desafios com que nos deparámos, os quais fomos ultrapassando, um após o outro, sempre com uma atitude de grande determinação de quem transforma as barreiras em pequenos obstáculos, fomos caminhando e traçando o nosso próprio destino. Começámos 2021 com uma estrutura de recursos humanos reforçada, atualmente somos treze colaboradores, e dispomos de dois escritórios físicos, um na Comporta e outro em Melides, de modo a poder prestar um serviço de excelência de acordo com as expectativas da E&V, mas sobretudo porque é o nosso Adn.Em nome de toda a equipa da Engel & Völkers Comporta, deixamos o nosso sincero agradecimento pela confiança depositada no nosso trabalho.

Sincerely, Vitor Paiva Licence Partner

Cordialmente, Vitor Paiva Licence Partner

Área de terreno Plot area

Over the last years there have been many challenges that we have faced, which we have been overcoming, one after the other, always with an attitude of great determination of those who transform barriers into small obstacles, we have been walking and tracing our own destiny. We started 2021 with a reinforced human resources structure, currently we are thirteen employees, and two public offices, one in Comporta and other in Melides, to be able to provide an excellent service according to the brand requirements, but above all because it’s our dna.On behalf of the Engel &Völkers Comporta entire team, we reinforce our sincere thank you for the deposited trust in our work.

Área total Total area

Quartos Bedrooms

WC Bathrooms

GOLDEN VISA

VISTO GOLD

RESIDENCE PERMIT

AUTORIZAÇÃO DE RESIDÊNCIA

PROGRAMME

PARA ATIVIDADE DE INVESTIMENTO

The GOLDEN VISA programme allows foreign investors to apply for a residence permit, for pursuing investment activities in Portugal. One of the investment options is the purchase of real estate with a value greater than or equal to 500 thousand Euros. The amount of this investment may be reduced by 20% (400 thousand Euros) if it is made in a low density territory. The real estate investment can be carried out individually or via a sole shareholder company of which the applicant is a member. BENEFITS - Live and work in Portugal; - Travel within the Schengen area without the need for a visa; - Family regrouping; - Request the assignment of Permanent Authorisation of Residence under Foreign Laws; - Possibility to request Portuguese nationality. WHO CAN APPLY Third country nationals (from outside the European Union and the European Economic Area) who either carry out investment activities personally or through a company. FAMILY REUNIFICATION The holders of Golden Residence Permits for Investment Activity have the right to family regrouping, and may gain access to a permanent residence permit, as well as to Portuguese citizenship in accordance to the current legal provisions. MINIMUM PERMANENT RESIDENCY PERIODS For the purposes of renewing a residency permit, you may have to show that you have resided in Portuguese territory for a minimum period of 7 days, either consecutively or non-consecutively, during the first year, and 14 days in subsequent two year periods.

O programa VISTO GOLD oferece a investidores estrangeiros a possibilidade de requerer uma Autorização de Residência para Atividade de Investimento, através de transferências de capitais, de criação de emprego ou de compra de imóveis. No caso da compra de imóveis, o valor do investimento deverá ser igual ou superior a 500 mil Euros. Este montante pode ser reduzido em 20% (400 mil Euros) se o imóvel estiver localizado num território de baixa densidade populacional. VANTAGENS - Residir e trabalhar em Portugal; - Circular pelo espaço Schengen, sem necessidade de visto; - Beneficiar de reagrupamento familiar; - Solicitar a concessão de Autorização de Residência Permanente nos termos da Lei de Estrangeiros; - Possibilidade de solicitar a aquisição da nacionalidade portuguesa. A QUEM SE DESTINA Destina-se a cidadãos nacionais de Estados não pertencentes à União Europeia nem ao Espaço Económico Europeu, que exerçam a sua atividade de investimento em Portugal, pessoalmente ou através de uma sociedade. REAGRUPAMENTO FAMILIAR Os titulares de Autorização de Residência para Atividade de Investimento têm direito ao reagrupamento familiar, ao acesso à autorização de residência permanente, bem como à nacionalidade portuguesa, em conformidade com o disposto na legislação em vigor. PRAZOS MÍNIMOS DE PERMANÊNCIA Para efeitos de renovação de autorização de residência, poderá ter de demonstrar ter cumprido um prazo mínimo de permanência em território nacional de 7 dias, seguidos ou interpolados, no 1.º ano e de 14 dias nos subsequentes períodos de dois anos.

PORTUGUESE NON

STATUT DU RÉSIDENT

HABITUAL RESIDENTS

FISCAL NON HABITUEL AU

REGIME

PORTUGAL

The Non Habitual Resident regime was introduced in 2009 and represents a major step forward in making Portugal a tax free jurisdiction for individuals in receipt of qualifying non-resident income. One of the principal objectives of this regime was to attract individuals and their families to Portugal by making it beneficial from a tax perspective to become tax resident in Portugal. As a result Portuguese NHRs have the ability to: grow their wealth in a white listed jurisdiction; earn income in a tax friendly environment; dispose of their assets and benefit from tax exemptions; pass on their wealth without inheritance or gift taxes, namely for children or spouse; and to enjoy their retirement without tax on their pensions.

Le régime de Résident Non Habituel (RNH) a été introduit au Portugal en 2009. L’un des principaux objectifs de ce régime était d’attirer des personnes et de leurs familles au Portugal en le rendant bénéfique d’un point de vue fiscal de devenir résident fiscal au Portugal. En conséquence, les RNH Portugais ont la capacité de faire croître leur richesse dans une juridiction en liste blanche, de disposer de leurs biens, et de profiter de leur retraite sans impositions sur leur pension. QUELS SONT LES AVANTAGES?

WHAT ARE THE BENEFITS?

Ce régime représente une avancée majeure en rendant Portugal une juridiction libre d’impôts pour les personnes ayant un revenu de retraite.

A Non-Habitual Resident (“NHR”) will be exempt from personal income tax on certain types of qualifying income if this income is subject to tax in the country of source. A special flat rate of 20% is also applicable for certain types of income obtained in Portugal arising from a number of highly qualified activities.

Les personnes qui y déclarent leurs revenus étrangers peuvent également bénéficier de ce régime préférentiel, tels que du revenu d’affaires et professionnel, des gains d’investissement, participations, dividendes, revenus de propriétés et des gains en capital.

Pensions, dividends, royalties and interest from non-Portuguese sourced income are exempt from personal income tax in Portugal. Certain types of salaries, provided they are paid from a non-Portuguese source, can also be exempt from tax.

Ce régime attractif couvre également des revenus provenant des activités de haute valeur ajoutée, qui bénéficient d’un taux d’imposition spécial de 20%.

The sole requirement to benefit from this preferential treatment is to become a Portuguese tax resident, not having been a tax resident in Portugal in the previous five years. This status is granted for 10 years.

La seule exigence pour bénéficier de ce traitement préférentiel est de devenir un résident fiscal portugais, ne pas avoir été résident fiscal au Portugal au cours des cinq années précédentes. Ce statut peut être maintenu pendant 10 ans.

Índice/Index

Tróia

21-25

Comporta

26-42

Melides

43-55

Grândola e Santiago do Cacém

56-62

Alcácer do Sal

63-68

Alentejo

69-70

Costa Vicentina

71-73

Alentejo Coast Housing Market Report The house prices in the Alentejo Coast are rising because of the pandemic, not despite it. LISBOA, 30 APRIL 2021

INTRODUCTION ImoEconometrics and Engel & VÖlkers Comporta worked together to publish a joint report on the housing market in the Alentejo Coast (in the municipalities of Alcácer do Sal, Grândola, Santiago do Cacém, Odemira and Sines). The report analyses the residential market conditions in the Alentejo Coast. Itexamines market performance and the major trends for 2021, covering topics important to you and your second home decisions, whether you are seeking insights on investing or selling.

ABOUT IMOECONOMETRICS ImoEconometrics is a research and consultancy company, founded in 2005, focused on property market research and appraisal. ImoEconometrics is specialized in property market studies, commercial due diligence and feasibility studies and is a leading supplier of property price indices (housing and commercial) in Portugal. The ImoEconometrics 109 municipality house price indices constitute the most accurate independent house prices in Portugal. ImoEconometrics’philosophy is to develop honest collaboration with clients to help them make decisions that contribute toward the creation of competitive advantages and good return on investment. ImoEconometrics follows RICS regulations and is committed to the highest professional and ethical standards. Joaquim Montezuma PhD REV MRICS

SUMMARYOF THE ALENTEJO COAST MARKET

Housing Transactions 2019

2020

1.488 (4,8%)

1.495 (+0,5%)

New approved projects

Completed Housing 2019

2020

251 (+93,1%)

186 (-25,9%)

Homes on sale (new and resales)

2019

2020

2019

2020

494

638

1442

1651

House Price Evolution 4Q 2019

4Q 2020

Transactions Alentejo Coast by Nationality (2019, %) Portugal International

89% 11%

Transactions Grândola New Resorts by Nationality (2019, %) (+13,2%)

(+3,6%)

METHODOLOGY For this study, a comprehensive definition of the concept of second home was considered as initially proposed by Downing and Dower (1973). That is, a classic dwelling used as a non-habitual residence in a system of full ownership, with or without complementary services and infrastructures. This definition encompasses fully owned housing assets within tourist developments, as well as all other properties used as second homes, excluding partially owned assets. The use of a more comprehensive second home concept is justified by the fact that various types of second homes are competing in the same

Portugal International

30% 70%

market. The definition excludes partial ownership because the specific characteristics of this type of ownership, and the price per unit area, are not directly comparable with that of fully owned assets. The geographic area under analysis encompasses the Alentejo Coast region that runs from the River Sado to Zambujeira do Mar, and in administrative terms, the municipalities of Alcácer do Sal, Grândola, Santiago do Cacém, Odemira and Sines. Just a 90-minute drive from Lisbon, the 29-kmwhite sandy coastline of the Alentejo Coast has remained largely undeveloped. Recently, it has started to attract celebrities, politicians and even royalty to its beaches. Both national and international developers have

launched new resorts and high-end residential projects, offering proximity and easy access to natural, scenic and recreational amenities, including golf courses, marinas, walking trails and cycle paths, together with facilities to play football, tennis, padel, volleyball and petanque. Several sources of information were used including data from Engel & VÖlkers Comporta listings and transactions, data from ImoEconometrics’ database, data from listings of the main developers and real estate brokers operating in the geographical area under analysis and data from INE and the Ministry of Justice. Additionally, as part of this market research, interviews were conducted with a sample of the major local property developers. ECONOMIC OUTLOOK In recent years there has been a significant improvement of the Portuguese economy. Considerable progress has been made in the current and capital account with the maintenance of a surplus slightly below 2% of GDP over the period 2018-20, allowing a continued gradual reduction in the level of inflation. The economic recovery continued in 2017 and 2019, driven by tourism, exports and the recovery of investment, along with a moderate growth in private consumption. The economic recovery allowed further reductions in the unemployment rate, with a reduction of 6.2% in unemployment at the end of 2019. The growth in exports reflected the evolution of external demand and gains in market share. The outbreak of COVID-19 has caused an unprecedented shock in the world economy. This has been a dramatic event and a temporary pullback. The current recession is synchronized (it occurs worldwide) and is associated with the great uncertainties of the virus cycle. However, global economic prospects have been improving markedly in recent months, helped by the gradual deployment of effective vaccines, central banks´ monetary boost and governmental support measures. Low interest rates and the extension of credit default have contributed to minimizing adjustments in residential real estate prices worldwide. There are signs that economies are coping better with measures to supress the virus, helping to improve confidence in housing markets. The recession of the Portuguese economy in 2020 has proved to be less severe than previously expected. The Portuguese GDP in 2020 declined by 7,6% and the unemployment rate was 6,8%. Remarkably, the majority of Portuguese firms were able to retain workers and employment with more than one year of tenure increased in the fourth quarter of 2020

compared with the same period in 2019, notwithstanding the deeply negative impact on the hospitality sector (e.g. hotels, restaurants and cafés). During the period 2021-23, the Portuguese Central Bank foresees a recovery of the Portuguese economy, assisted by the gradual control of the pandemic, by the support of approved economic policy measures and again the low interest rate environment. DEMAND From 2014 to 2018,the number of house transactionsin the Alentejo Coast recorded an impressive annual average growth rate of 18% (CAGR = Compound average growth rate).In comparison, the number of new properties sold registered a smaller increase during the same period. In 2010, new house sales represented 35% of the total house transactions compared with just 17% in 2020. During 2021, it is expected that existing homes continue to represent the bulk of property transactions (see graph 9). In 2020, the total number of house transactions in the Alentejo Coast market was around1,5 thousand, a relatively stable number compared with 2018 and 2019 (graph 1). The housing demand in the Alentejo Coastgrew at a high pace in the third and fourth quarters of 2020, recovering the ground lost during the second quarter of the same year. The municipality of Grândola concentrates most of the resorts and new residential projects in the Alentejo Coast and represented, in 2020, 19% of the total transactions in the region. Remarkably, the houses sold in the Grândola Municipality during the second semester of 2020 surpass 2018 levels(graph 3). The Alentejo Coast overall has followed a similar pattern, after a minor dip in the first quarter of 2020 and an intense decline in the second quarter, the housing demand rallied back in the third and fourth quarters of 2020 at a growth rate that exceeded recent averages. The number of homes purchased by foreign buyers in the Alentejo Coast decreased since the beginning of the Covid-19 pandemic with Portuguese buyers driving most of the sales in 2020.Grândola displayed different behaviour from the rest of the Alentejo Coast. The new residential projects in Comporta maintained the preponderance of foreign buyers in 2020, representing between 55%-80% of new house transactions according to poll data collected from property developers in the area. The over all demand behaviour shows the attractiveness and resilience of the Alentejo Coast housingmarket, supported by its proximity to Lisbon, natural and scenic amenities, services offered, climate and rural characteristics.

GRAPH 1 - EVOLUTION OF THE VOLUME OF HOUSING TRANSACTIONS IN THE ALENTEJO COAST(2010-2020, YEAR) 1563

1456 1182

1273

1489

1495

1371

1009 912

808

705

507 309 2010

2011

221

178 2012

243

252

246

240

269

2015

2016

2017

2018

2019

2020

185

2013

2014

New Properties sold

Total Number of transacions Alentejo Coast

Source: INE, Ministério da Justiça; calculation & data analysis ImoEconometrics

The low interest rate environment is probably with us for the next few years. Due to the scarcity of alternative investment options, we anticipate that the

share of capital that investors allocate to housing will remain strong during 2021.

GRAPH 2 - EVOLUTION OF THE VOLUME OF HOUSING INVESTMENT AND AVERAGE VALUE PER TRANSACTION IN THE ALENTEJO COAST (20010-20120, YEAR) 250

200

203

201 166

150

138

137 108 109

100

123 111 104

129

121

166 130 111

101

175

117

84 58

50 _ 2010

2011

2012

2013

2014

Average value per transaction (thousand €)

2015

2016

Sources: INE, Autoridade Tributária, calculation & data analysisImoEconometrics

2017

2018

2019

Volume of housing investment (Million €)

2020

Despite the difficult times caused by the Covid-19 pandemic, housing investment in the Alentejo Coast grew by 5%during 2020 compared with 2019. The year2020 ended with a total volume of residential property investment of 175million euros. Grândola had the highest volume of residential property investment in 2020 (57 million euros), followed by Santiago do Cacém (32 million euros); Sines (31 million euros), Odemira (29 million euros) and Alcácer do Sal (113 thousand euros). The average value per transaction, mostly existing homes,has been relatively stable since 2017, regis-

tering 117 thousand euros per transaction in 2020. The average price was higher in the Grândola municipality with 201 thousand euros per transaction, followed by Sines (125 thousand euros), Alcácer do Sal (113 thousand euros), Odemira (89 thousand euros), Santiago do Cacém (77 thousand euros). The resorts and new residential projects located in the Grândola Municipality have been transacted at much higher prices, with prices ranging from 400 to 1200 thousand euros, depending on the property type, location and project. The average transaction price in Grândola’s resorts (new and resales) is 585 thousand euros.

GRAPH 3–NUMBER OF QUARTERLY TRANSACTIONS IN GRÂNDOLA(1Q2019 – 4Q2020)

110

100 90 80

40 30 20 1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

2Q2020

3Q2020

4Q2020

Source: INE, Ministério da Justiça - Direção-Geral da Política de Justiça; calculation & data analysis ImoEconometrics

Traditionally, Portuguese buyers have been the main contributors to housing demand in the Alentejo Coast (graph 4). Even though,international buyers have accounted for a substantial percentage of the sales of the new resorts and high-end residential projects located in Grândola and Alcácer do Sal. In some new residential projects, foreign buyers accounted for 80%of transactions. In 2019, foreign buyers accounted for 15% of property investment and 11% of property transactions in the Alentejo Coast region. The proportion of property transactions was higher in the municipality of Santiago do Cacém with 14%, while in Grândola, Odemira and Sines foreign buyers represented 10%of transactions and in Alcácer do Sal they represented just 7%. According to Vitor Paiva, Office Manager of Engel & VÖlkers Comporta, foreign buyers accounted for 70% of Engel & VÖlkers transactions in 2020 and 80% in 2019, indicating that the proportion of inter-

national buyers is significantly higher for the resorts and new residential projects located in Grândola. Vasco Cunha Mendes, CEO of Spatia Comporta, reported that the foreign demand in Comporta had not decreased significantly since March 2020. Indeed, he indicated that foreign buyers represented60% and 55% of the new house transactions in 2019 and 2020,respectively. During 2020, the rise in the number of homes purchased by Portuguese buyers in the Alentejo Coast helped to offset the slight reduction of international demand due to the Covid-19 crisis. Graph4 shows the strong market recovery in the Alentejo Coast during 2020, with a surge in sales in the third and fourth quarters. Many of Lisbon’s residents fled the city during the coronavirus pandemic and searched for larger hous-

es with more outdoor space. However, it is unclear how many of these new homeowners will return to urban living, whether partly or entirely.

incorporating elements of a first home. The second home has become a hub from which the buyers work, exercise, learn, socialise and relax.

Vitor Paiva considers that the Covid-19 pandemic benefited the housing marketin the Alentejo Coast, because of the increased interest in lower density coastal locations and availability of ready-tomove-in farms and detached houses. According to JohnDwer, CEO of Costa Terra, theAlentejo Coast housing market has hugely benefited from the Covid-19 pandemic as people have begun to value low-density to a different degree.

According to JohnDwer,people are likely to mix leisure and work increasingly in their second homes. José Botelho, CEO of Vanguard Properties, reported that the clients are looking for proximity to Lisbon, resort amenities, nature, low density,home office spaceand a good network infrastructure to support communications. The home buyers can find these features in the new residential projects in the Alentejo Coast. Likewise, João Madeira, head of real estate at Sonae Capital, reported that the Portuguese buyers have been looking forlower density living in coastal areas nearby Lisbon and properties with more outdoor spaceanda private swimming pool.Also, Vasco Cunha Mendes mentioned the rising importance of the home office space, storage space and connectivity,reinforcing the “co-primary home” trend in Comporta.

One of the trends of the Covid-19 pandemic is the rise of the “co-primary home,” where families spend substantial time at their “second” homesgiven the fact they can now work orhave classes remotely. Many new home buyers no longer perceive the property as a second home since the use is hybrid

GRAPH4 - EVOLUTION OF THE HOUSING TRANSACTIONS IN THE ALENTEJO COAST (2016-2019, YEAR)

1415 1326

1242 1144

129

2016

2017

Nr. Transaction international buyers

148

163

2018

2019

Nr. Transaction national buyers

Source: INE, Ministério da Justiça - Direção-Geral da Política de Justiça; calculation & data analysis ImoEconometrics

In 2019, according to the Direção-Geral da Política de Justiça, the top five foreign buyer nationalities in the Alentejo Coast were German,followed by British, French, North American and Spanish. If the German buyers represented the highest number of housing property transactions and investment in the Alentejo Coast, the American buyers recorded the highest median purchase price. The distribution of these nationalities is not uniform across the Alentejo Coast. According to Vasco Cunha Mendes, the French property buyer prefers Comporta, a very popular destination within the French community, while the German buyer would rather buy a rural property located outside Grândola. John Dwer mentioned that the French were early buyers in the Alentejo Coast attracted by bigger lots. José Botelho reported that the Covid-19 pandemic did not seem to discourage international buyers from buying in the Alentejo Coast. During 2020, new trends emerged, one being the influx of North American and Mexican buyers together with more traditional French, Swiss and Belgian buyers. More-

over, there is a growing trend of younger international households actively looking for “second” homes in the Alentejo Coast. Interestingly, some high-end new residential projects in Grândola have been selling mostly to North American buyers. According to João Madeirathe amount spent by international buyers is marginally higher than the Portuguese buyers. Vasco Cunha Mendes reported that the new home transactions typically range from 500 to 1200 thousand euros in Comporta. SUPPLY At the end of the first quarter of 2021, the total supply of houses on sale in the Alentejo Coast was approximately 1,65 thousand units, an increase of 15% compared with the end of 2019. The main supply was in the municipality of Grândola (43% of all houses for sale), Santiago do Cacém (23%), Alcácer and Odemira (13%), whereas the municipality of Sines represented just 8% of all houses for sale (see Graph 6).

GRAPH6 – SUPPLY VS. DEMAND AND AVERAGE TIME TO SELL BY MUNICIPALITY (MARCH 2021) 717

372

209

227

414

322

281

251

212

30,6

7,9

10,8

6,7

Alcácer do Sal

Grândola

Odemira

Santiago do Cacém

Sines

Total Supply

Nr. of Transactions

Time to Sell (Nº of months)

Sources: Engel & VÖlkers Comporta, real estate portals and ImoEconometrics database

The current house supply in the Alentejo Coast is still low compared with potential demand, on average the houses take around 13 months to sell. The new construction in resorts isstill minimal. Sines has the lowest supply/transactions ratio and an average time to sell of just 7 months. Grândola concentrates 40% of the total supply in the Alentejo Coast and records the longest selling time. Much of the

Grândola supply is used houses and the number of new houses is limited and remains below the levels needed. According to Vitor Paiva, Grândola is in an expansion phase with several new residential projects in the pipeline. These projects should reach the market between2022 and 2024; thus, meeting the rising demand of investors for new residential projects.

GRAPH7 – DISTRIBUTION OF HOUSES ON SALE BY TYPE (MARCH 2021, %)

22% Detached houses 53%

Farms Apartments

25%

Sources: Engel & Völkers Comporta, real estate portals and database ImoEconometrics

More than half of the housing on sale aredetached houses (53%), and mostof this supply is resale (see Graph 8). Today the availability of ready-to-move-

inhomes within resorts in the Alentejo Coast is extremely low and it is not expected to change significantlyover the next few years.

GRAPH8 – DISTRIBUTION OF HOUSES ON SALE BY NEW SALES AND RESALES (MARCH 2021, %) 6%

New Supply New Supply ResalesResales 94% 94%

Sources: Engel &VölkersComporta, real estate portals and database ImoEconometrics

The supply of new homes on sale has been decreasing since 2011 due to the plunge in housing construction. The new home supply has been unable to keep pace with demand. In March 2021, just6% of homes for sale in the Alentejo Coast were new

houses. The Grândola municipality concentrated most of the newly built homes in the Alentejo Coast (84%),followed by Alcácer do Sal and Sines with 9% and 8%, respectively.

GRAPH9 – CONSTRUCTION OF NEW HOMES AND LICENCES TO BUILD NEW HOMES IN THE ALENTEJO COAST (YEAR) 638

494

476 397

239

283 225 120

2010

2011

2012

2013

2014

2015

Nr of new house properties built

186 93

251

206

203

2016

2017

130

2018

2019

2020

Nr of energy certificates issued - new building licences

Sources: INE e ADENE, calculations ImoEconometrics

From 2017 to 2020, starts and completions grew gradually(see Graph 9).In 2019 and 2020, starts continued to grow strongly reaching the level seen before 2010.

expected that the gap between supply and demand of new housing units in the Alentejo Coast should start to narrow after 2023.

During 2020, the number of licenses to build new dwellings increased by 29%. The forecast for 2021 is that the year will end with just over 100 completed homes in the Alentejo Coast. This residential construction output is still low considering historical housing completions and actual demand. It is

PRICES House prices (based on bank appraisals) in the Alentejo Coasthave increased by 41% since 2015 (see Graph 10). The average house prices in the Alentejo Coasthave already surpassed the 2006 peak, by 6%.

GRAPH 10 - HOUSE PRICE DYNAMICS INTHE ALENTEJO COAST (ALL HOUSE TYPES) (1Q2010-4Q2020; BASE 100 =1Q2009, HOUSE PRICE INDEX BASED ON BANK APPRAISALS) 105,0 100,6 93,7

94,4

93,2

91,6

92,1

90,6

89,9

87,6

86,4 81,6

90,7

84,6

83,8

83,7

87,3

80,5

T1-2010 T2-2010 T3-2010 T4-2010 T1-2011 T2-2011 T3-2011 T4-2011 T1-2012 T2-2012 T3-2012 T4-2012 T1-2013 T2-2013 T3-2013 T4-2013 T1-2014 T2-2014 T3-2014 T4-2014 T1-2015 T2-2015 T3-2015 T4-2015 T1-2016 T2-2016 T3-2016 T4-2016 T1-2017 T2-2017 T3-2017 T4-2017 T1-2018 T2-2018 T3-2018 T4-2018 T1-2019 T2-2019 T3-2019 T4-2019 T1-2020 T2-2020 T3-2020 T4-2020

78,6

Source: ImoEconometrics

The growing national and international awareness of the Alentejo Coast has helped to increase the attractiveness of investing in the region’s housing market, together with the Portuguese investor immigration programs (Golden Visa) and fiscal policy (Regime for Non-habitual Residents) that have been successful in attracting wealthy third country and intra-EU investors to invest in housing in Portugal.

The very low interest rates, governmental stimulus and the pandemic-friendly features of the Alentejo Coast region supported the positive house price trend during 2020. House prices are rising in most of the municipalities in the Alentejo Coast because of the pandemic, not despite it.

GRAPH 11 - AVERAGE HOUSE PRICE TRANSACTIONS DYNAMICS (1Q2016-4Q2020; €/M²) 1300 1200 1100 1000 900 800 700 600

01 6 Q 220 16 Q 320 16 Q 420 16 Q 120 17 Q 220 17 Q 320 17 Q 420 17 Q 120 18 Q 220 18 Q 320 18 Q 420 18 Q 120 19 Q 220 19 Q 320 19 Q 420 19 Q 120 20 Q 220 20 Q 320 20 Q 420 20

500

Alcácer do Sal

Grândola

Source: INE based on house transaction values.

Odemira

Santiago do Cacém

Sines

The municipality of Grândola has the highest average house price transaction in the Alentejo Coast (1286 €/sqm), followed by Sines (1275 €/sqm) and Alcácer do Sal (1167 €/sqm). These average house prices reflect the fact that the percentage of new home sales have been very low inthe region.

Grândola registered the highest and most impressive increase in house prices since the first quarter of2016 (67%) followed by Odemira (41%), Santiago do Cacém (29%), Sines (28%) and Alcácer do Sal (25%).

TABLE 1: PRICES OF HOMES ON SALE PER SEGMENT IN GRÂNDOLA (2021, MARCH) Grândola

Percentile 5%

Average

Percentile 95%

Detached House resales (€/m² GBA)

1.500

3.500

6.000

Apartment resales (€/m² GBA)

2.000

3.600

5.400

Detached house first sales (€/m² GBA)

3.100

4.260

5.100

Apartment first sales (€/m² GBA)

3.500

3.850

4.550

750

1.700

1.900

Resort Plots (€/m² GBA)

Sources: Engel & Völkers Comporta, real estate portals and databaseImoEconometrics

There is significant heterogeneity across the Alentejo Coast in terms of clientele, residential product on sale and house prices. As mentioned before the Grândola municipality concentrates most of the supply of new residential projects and resorts that are targeting an upper market segment. The average existing apartment price on sale in Grândola was 3600 €/sqm and range from 2000 to 5400€/sqm, whereas the prices of new apartments located, mostly within resorts, range from 3.500 to 4.550€/sqm. Santiago do Cacém and Odemira municipalities traditionally target mid-segment housing and much of the second homes supply consists of old farms (over 45%).The average existing detached house price on sale in Santiago do Cacém and Odemira was 1220and 2350 €/sqm, respectively (Table 2).

Sines has the highest population density in the Alentejo Coast and its housing market is mostly driven by first home buyers. The housing demand evolution in Sines has been related with the Port of Sines. This relationship should be reinforced by the expansion work on Terminal XXI during 2021 and the new multi-billion euros hyperscale data centre campus. The new campus in Sines will consist of 450 MW and will represent an investment up to 3,5 billion euros. The existing apartment price on sale in Sines was 1970 €/sqm and ranges from 1100 to 4020 €/sqm (Table 2). The scale of the new investments in Sines will change the structure of the demand and is expected to have a positive effect on local house prices.

TABLE2: PRICES OF EXISTING HOMES ON SALE PER SEGMENT IN THE ALENTEJO COAST (2021, MARCH, TYPE OF HOUSE)

Alcácer do Sal

Percentile 5%

Average

Percentile 95%

650

2.140

5.180

1.100

2.120

3.100

Percentile 5%

Average

Percentile 95%

Detached Houses (€/m² GBA)

1.490

3.320

5.930

Apartments (€/m² GBA)

2.030

3.600

5.380

Santiago do Cacém

Percentile 5%

Average

Percentile 95%

Detached Houses (€/m² GBA)

500

1.220

2.550

Apartments (€/m² GBA)

600

1.250

2.100

Percentile 5%

Average

Percentile 95%

820

2.160

5.380

1.100

1.970

4.020

Percentile 5%

Average

Percentile 95%

Detached Houses (€/m² GBA)

400

2.350

3.930

Apartments (€/m² GBA)

550

2.220

3.900

Detached Houses (€/m² GBA) Apartments (€/m² GBA)

Grândola

Sines Detached Houses (€/m² GBA) Apartments (€/m² GBA)

Odemira

Sources: Engel &VölkersComporta, Real estate portals and ImoEconometrics; GBA= Gross Building Area

According to João Madeira,over the last 12 months, the gap between the asking price and selling price of houses in the Alentejo Coast region has been decreasing. The closing of this gap is due to the new supply shortage, together with increasing transactions and prices. Regarding the future, Vitor Paiva contends that the

local planning authorities have an important role to play in enhancing the attractiveness of the Alentejo Coast. This includes the construction of public beach access points and the development of infrastructures to assist in the creation and development of new businesses. John Dwer also stressed the importance of the infrastructure being able to keep pace with the new market dynamic.

GRAPH12 – BUYING PRICEOF TYPICALLY 120-SQ. APARTMENT LOCATED IN PRIME LOCATIONS IN EUROPEAN CITIES (€/M²; MARCH2021) UK, London

31777 19925

Switzerland, Geneva France, Paris

19199 14417

Austria, Vienna

12567

Finland, Helsinki Norway, Oslo

12424

Sweden, Stockholm

10489

Netherlands, Amsterdam

10355

Czech Republic, Prague

10335

Italy, Rome

9886 9460

Russia, Moscow Germany, Berlin

8863

Spain, Madrid

7469

Luxembourg

6909

Turkey, Istanbul

6873

Malta, Valleta

6866

Denmark, Copenhagen

6420

Portugal, Lisbon

5746

Slovenia, Ljubljana

5487

Greece, Athens

5430

Estonia, Tallinn

4787

Belgium, Brussels

4758

Andorra

4374

Slovakia, Bratislava

4368

Ukraine, Kiev

4212

Poland, Warsaw

4190

Latvia, Riga

4184

Hungary, Budapest Serbia Alentejo Coast, Comporta

3774 3359 3100

Lithuania, Vilnius

3245

Croatia, Zagreb

2968

Sources: Global Property Guide and ImoEconometrics for Alentejo Coast.

In comparison with international housing markets, Troia/Comporta have very competitive housing prices, given the region’s attributes and the quality of the residential properties on sale (see Chart 12). The average house price per sqm in Troia/Compor-

ta is significantly lower than most European cities. Indeed, average house prices in Troia/Comporta are lower than the house prices in cities located in countries like Lithuania, Latvia, Serbia, or Estonia.

RESUME AND CONCLUSIONS: • The residential prices in Grândola and Alcácer do Sal during 2020 performed much better than expected when the covid-19 pandemic started; • There has been a boom across the segment for resorts positioned in low-density costal locations like the Alentejo Coast; • The house prices are rising because of the pandemic, not despite it; • The average house transaction in Grândola, the municipality where the majority of new residential projects are located, grew by 23% during 2020; • The pandemic-friendly features of the Alentejo Coast helped the housing market perform particularly well during 2020. Many Lisbon residents fled the city during the coronavirus pandemic, searching for coastal homes with more space and fewer neighbours and good quality amenities and services; • Ending 2020 with a total volume of residential property investment of 175 million euros,residential investment is expected to maintain an upward trend during 2021; • The Portuguese buyers have been the main contributors to housing demand over the last 4 years. The international buyers accounted for 11% of total house transactions in the Alentejo Coast and they are expected to grow during 2021 and 2022. This percentage is significantly higher in the new residential projects, mostly located in Grândola, representing 60%-80% of the total house transactions. • The rise of the co-primary home in Grândola, where families spend equal time in the city and at their “second”homes; • The Alentejo Coast is starting to look increasingly attractive for affluent North American buyers; • There is still a lack of new housing supply in the Alentejo Coast. According to the pipeline, the gap between housing demand and supply should start to narrow only after 2023; • Residential investment in the Alentejo Coast is expected to maintain a positive trend during 2021 and 2022; • Residential demand performed better than expected in 2020 and the first quarter of 2021 suggests that the remainder of the year will remain strong at all levels; • The Alentejo Coast’s prime residential prices are very competitive compared with other European cities.

LISBOA, 30 APRIL 2021

Joaquim Montezuma de Carvalho, PhD MRICS REV

Moradia em projeto, sem CE • Housing project, no EC

Tróia Moradia Contemporânea Projeto Chave na Mão • Contemporary Villa Turnkey Project E&V ID: W-02KG5J • € 1.500.000 1.535 m²/sqm

281 m²/sqm