REAL ESTATE INVESTORS ROADMAP PORTUGAL - 2019 Investment Guide - Morais Leitão
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REAL ESTATE INVESTORS ROADMAP PORTUGAL 2019 Investment Guide
TABLE OF CONTENTS
Welcome note 2
Foreword 4
Roadmap 5
Buy a House 6
Leasing 8
Investment 10
Development 12
Real Estate Market Overview 17
Portugal Key Facts 18
Overview 22
Ownership and Transfer of Property 27
Investment Structure 28
Leases 32
Planning and Licensing 35
Property Finance 38
Tax Framework 40
Real Estate in Numbers 45
Investment 46
Residential 47
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 1
WELCOME NOTE
Recently, Portugal was distinguished as an following a 2018 where all records were beaten, we
irrefutable destination status for investment, both strongly believe this is clearly the best time to launch
at the European and world stage. Moreover, this this Real Estate Investors Roadmap in Portugal.
accomplishment stems from the country's assertion
in a multitude of dimensions: a cosmopolitan, JLL and Morais Leitão thus partner up to provide the
competitive, innovative and creative country that best possible information on market practices and
has consistently gained external recognition as a legal and tax issues, aiming to facilitate the investor
destination to live, work or visit, attracting investors in approach to our market.
all these aspects and from more and more origins of
the globe. The real estate market continues to grow attracting
new foreign investors that continue year after year
Investment in commercial real estate has never believing in Portugal. The still unstable financial
reached current proportions in our country, across all markets and the low interest rates will continue to
real estate segments and with capital sourced from so benefit the real estate market.
many countries.
We believe this Roadmap could not be launched at a
At the same time, the cities of Lisbon and Porto are better time.
rejuvenating, focusing on historical centres that were
degraded and began to be lived by people of many The Roadmap aims to provide investors with a legal
nationalities. Also, in the residential sector, we have and tax framework on investment structures and type
never had so many foreigners from so many different of investment vehicles, as well as leases, planning and
origins buying properties in Portugal and moving here licensing, and financing.
to work. In the business spectrum, more and more
multinationals are choosing Portugal to establish their Following the important recent changes in the real
offices. estate legal framework, we believe that this is an
excellent moment to provide the real estate players
Portugal is not only fashionable; this event is here to with an analysis of the current status of the real estate
stay. From the perspective of the international investor market in Portugal. This Roadmap also focus on the
community, the country showed an exemplary recently created Portuguese REITs, the so called
conduct, revealing transparency and credibility, with a “Sociedades de Investimento e Gestão Imobiliária”
solid and promising path, with a great future. (real estate investment and management companies)
(“SIGI”), which follow closely the regulation of the
The very positive and promising factor is that REITs already implemented in several European
good things never go out of fashion. So, let’s be countries.
determined, as a country, to preserve our attributes.
Maintaining common sense in politics and governance Also, the Roadmap already includes the most recent
as demonstrated in recent years, along with fiscal changes to the urban lease legal framework.
stability, there is no reason to doubt that Portugal will
continue the fantastic path it is already undertaking. We trust that this Roadmap proves helpful for all
potential investors willing to invest in real estate in
We believe that this journey will no longer be Portugal.
unravelled. And once we have reached this point,
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 2 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 3
FOREWORD
APPII
Portuguese Association of Real Estate Developers and Investors
Portuguese real estate industry is booming and cities
like Lisbon and Oporto are today one of the hottest
topics and fashionable places worldwide.
Due to several reasons. From geographical and
We believe that in 2019 the main cities of Portugal will
still deserve the consideration of the international
and also local investors and we expect that our
Country will still represent an interesting and secure
destination of investment. This Roadmap is an
ROADMAP
socioeconomical causes to tax and legal incentives, important and very useful tool to all investors willing
added to a consolidated annual grow of investment to step into Portugal and its Real Estate Industry.
and transactions of the last four years and not
forgetting the motivating yields, the high valuation of
the assets and the good expectation of return, made
that Portugal became a country under the attention of
all investors worldwide.
Portugal and its cities in particular are currently in
the target of several investors all over the globe, from
US or Brasil, throughout Europe and Africa, to Middle
East, China or Russia.
Under this matter, we must point out the fact that the
total amount of investment made in all sectors of the
Portuguese real estate market in the last year reached
an expressive amount of € 30 billion, which represents
an annual increase of 20% and an incredible growth
of 80% since 2014. If we add up all the real estate
investment made in Portugal in the period 2014-2018 REAL ESTATE
we hit a number absolutely record of € 100 billion.
We should also mention the roughly € 20 billion of INVESTORS
ROADMAP
foreign investment made in this sector in the period
2014-2018, which helped not only to refurbish many
of the Portuguese cities, but also to grow the entire
economy.
PORTUGAL
2019 Investment Guide
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 4 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 5
BUY A HOUSE
Identify the Promissory Purchase and
Reservation Final Deed
property Sale Agreement
• Asset Concluded • Payment of a deposit and signature of a • This agreement identifies, notably, the property to be • After receiving the use license.
• Asset Off-plan reservation document transferred, who is the buyer and the seller, the exact price and • Signed in front of a notary or a lawyer.
• Compliance – anti-money laundering check payment terms, reps&warranties, remedies in case of default • Transfer of ownership enforceable against
and date of execution of the final transfer deed. third parties upon registration of the
acquisition in the land registry office.
Payments • Payment of the remaining price.
• Asset Concluded – 20%-30% minus the reservation deposit
Off-plan Asset
• 20% minus the reservation deposit
• Additional payment of 20% - 30% during the construction
OWNING COSTS period, made in different phases
ANNUAL COSTS
Property insurance
Contents insurance
MUNICIPAL TAX (IMI)
TRANSACTION COSTS
0.3% - 0.45% of the property tax value (VPT)
COSTS % PURCHASE PRICE
ADDITIONAL IMI (AIMI)
Legal Fees Not related with the purchase price
Applicable to properties for residential purposes, at a rate of 0.7% of the VPT ((i) it is
applicable to the taxable value a deduction of €600.000; (ii) to the taxable amount higher
Notary Depends on the complexity and purchase price
than €1.000.000 and equal or lower than €2.000.000 is applicable a marginal tax rate of 1%;
and (iii) to the taxable amount exceeding €2.000.000 is applicable a marginal tax rate of
Registration Fees €250 (or €500 in case of acquisition financed and secured by a mortgage)
1,5%.)
0% - 6,5% depending on the type of property and the acquisition price
CONDOMINIUM COSTS Real Estate Transfer Tax (IMT)
and property tax value of the same
typically €0.5 / sqm - €4 /sqm Stamp Duty (IS) 0.8%
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 6 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 7
LEASING
RETAIL RETAIL
OFFICE RESIDENTIAL RENTAL PAYMENTS SHOPPING CENTRES
SHOPPING CENTRES HIGH STREET RETAIL
Temporary kiosks, muppies &
Lease Agreement or Rent Payment and € / sqm / month, due monthly in
Type of contract Use of Shop Agreement Lease Agreement Lease Agreement Pure Mall Income other publicity; antenna and other
Services Agreement Frequency advance
income
Bank guarantees are usually Differs a lot depending on the
Lettable Area GLA GLA GLA GPA Rent Deposit provided - equivalent to 6 months' Effort Rate sector and brands, but can be
rent considered as an average - 12%
None, following the end of the Operational Costs - service charges
5 years There’s no typically lease length;
6 years; lease. The tenant is responsible for – utilities, security, cleaning,
Lease length (Minimum 1 year by law; 5 - 10 years (Minimum 1 year by law; Tenant Liability Recoverable Costs
Anchors: 10 – 15 years reinstating the premises with the gardening, maintenance and
Maximum 30 years by law) Maximum 30 years by law)
exception of wear and tear infrastructure management costs
Equal contractual term Equal contractual term or 3 Tenant responsible for internal
Property costs – managemnet
Contract Renewals or 5 years in case of term - - years in case of term inferior to Repairs repairs; Landlord responsible for Non-recoverable costs
costs, taxes and insurances
inferior to 5 years. 3 years. external repairs and maintenance
GLA excludes areas in mezzanines;
Fixed rent + Parking + Fixed rent + Turnover Tenant: contents insurance;
Rent structure Fixed Rent + VAT Monthly rents excluding utilities Insurance Comments Stores with +5.000 sqm need
service charges + VAT rent + VAT Landlord: building insurance
commercial licensing
Bank guarantee: 6 month
Basis of rent increases or
of rents + service charges; Bank guarantee: 6 month Bank guarantee: 6 month Consumer Price Index
Guarantees Deposit of 3 months rent review
or up-front payment of 6 of rents + service charges of rents + service charges
months of rents
Service Charges €10 - €16 /sqm Frequency of rent increases
Annual indexation
paid by the tenant Anchors: €4 - €8 / sq m €0.5 - €4 paid by the tenant or rent review
(security, maintenance €1.5 - €4/ sq m/ month / month Restaurants €1 - €2 /sq m/ month (security if exist, maintenance
and cleaning of usually pay more €2 /sq and cleaning of common areas) Subletting generally accepted
common areas) m/ month subject to landlord's approval (for
group companies subletting less
Tenant subleasing &
Rent free period: 3 than 50% no approval required,
assignment rights
Rent free period: 0.5 a 1 months; Rent free period for for more than 50%, approval
month per contract year; Fitout contribution for fitout: 3 months; required); Assignment is not
Incentives Fitout contribution anchors; Discounts: first 3 years - widely accepted
in some cases for big Discounts: first 3 years 25% 1st year, 15% 2nd
Through negotiation with landlord
tenants 25% 1st year, 15% 2nd year, 5% 3rd year
Tenant early termination (may only be granted subject to
year, 5% 3rd year
rights financial indemnity or through
securing a replacement tenant)
Core & Shell, with basic
installation of technical Tenant's building
Equiped or not. With furniture Original condition allowing for
Hand-over Conditions floor and ceiling and air Core & Shell Core & Shell reinstatement
or not wear and tear
conditioning. without responsibilities at lease end
data cabling.
Prime shopping centres:
Key Money - Only in prime zones -
up to 6 months of rents
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 8 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 9
INVESTMENT
PRE-CONTRACT CONTRACT EXCHANGE PRE-CLOSING CLOSING
Preparation of Marketing Material Short List Due Diligence and Promissory/
and Data Room Vendor Due Diligence + Promissory Agreement Negotiation Conditioned SPA Signature
+ Meeting with Bidders to Negotiate Final Proposals +
Approach to Investors + Definitive SPA
+ Reception Final Proposals
Non-Binding Offers
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 10 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 11
INVESTMENT
TRANSACTION ASSET DEAL ASSET DEAL SHARE DEAL SHARE DEAL
STEPS SELLER BUYER SELLER BUYER
• Searches
• Prepare relevant data
• Enquiries • Due dilligence (DD)
package (financial, • Prepare DD data pack
• Investigate title enquiries
1. Pre-Contract legal and technical) and • Prepare DD responses
• Surveys • Prepare DD report
contract draft • Negotiate contract draft
• Prepare report • Negotiate contract draft
• Negotiate contract draft
• Negotiate contract draft
2. Contract Exchange - • Pay deposit - • Pay deposit
• Pre-Closing searches
• Finalize financing structure • Restrictions on conduct • Pre-Closing searches
• Manage property to
3. Pre-Closing • Stamp Duty payment of business until • Finalize financing
buyer
• Property Transfer Tax completion structure
payment
• Property transferred • Shares/ units - Transfered
4. Closing • Discharge mortgage • Assumption of - • Assumption of
responsibility responsibility
• Appointment of new
directors, change of
registered office and
5. Post-Closing - • Registration fees -
registration of the same with
the Commercial Registry
• Registration fees
DEVELOPMENT
PROJECTS DEVELOPMENT
Final Drawings & Inspections from municipality,
Preliminary Licensing Execution Quantities Condominium Constitution suppliers, Civil Protection to After sales &
Study Project Project Map Construction (Strata Title) get the use licensing Guarantees
15 days — 1 month 1 month — 3 months 1 month — 3 months 1 month — 2 months 1.5 years — 2 years 1 month — 2 months 1 month — 3 months
• Prior Information Request (PIP) (optional and binding) SALES
• Allotment License (mandatory in case of allotments)
• Construction License or Advance Notice (comunicação prévia)
• Use Permit (mandatory)
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 12 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 13
DEVELOPMENT
CONSTRUCTION COSTS SOFT COSTS
€/ SQ M NORTH PORTO LISBON SOUTH
Soft costs % of total construction costs
Residential
Professional Fees 3% - 4%
High-end 900 1,150 1,450 900
Midscale 800 1,000 1,150 800 Project Management 2% - 3%
Low-end 700 850 1,000 700 Technical Supervision 2.50%
Retail 400 600 700 500
Municipal Taxes Varies according to each municipality
Office 400 600 600 500
Industrial 300 400 400 400
GUARANTIES
Underground 300 350 400 350
2 years for equipment (corresponds to the legal applicable period)
10 years for the building structure
5 years for construction - finishing (corresponds to the legal applicable period)
FITOUT & FURNITURE
RETAIL FITOUT OFFICE FITOUT OFFICE FURNITURE
Low Quality 450 - 650 €/sqm 400-450 €/sqm 700€/pax
Average Quality 650 - 850 €/sqm 600-650 €/sqm 1200€/pax
High Quality 850 - 1,750 €/sqm 800-850 €/sqm 2200€/pax
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 14 15
REAL ESTATE
MARKET
REAL ESTATE
INVESTORS
ROADMAP
PORTUGAL
2019 Investment Guide
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 16 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 17PORTUGAL KEY FACTS
PORTUGAL ID
OFFICIAL LANGUAGE CLIMATE
Portuguese, 5th most spoken language 276 sunny days per year, country with
Total Population 10,3M
in the world (spoken in 8 countries) one of the mildest climates in the world
Source: INE
Lisbon Metropolitan Area Population 2,8M
LOCATION
BIG MAC INDEX
PORTO
Iberian Peninsula, southwest of Europe,
6th cheapest country in Europe
Porto Metropolitan Area Population 1,7M border with Spain and the Atlantic Ocean
Coast Line 6,3M
Active Population 5,2M
20th Country with best quality of life in the world in 2018
4,8M; +151,000 jobs created, a growth of 3.3%
Employed Population
4th Most Peaceful country in the world
Area 92,000 Km² 1st Best Country in Europe for the expats to live in
Source: INE 2017
73% Satisfaction of the portuguese people with the living conditions
LISBON
Source: Expat Insider 2018, Global Peace Index 2018, Internations,
US News Quality of Life Ranking 2018 worldwide
7 regions
18 districts + 2 autonomous regions
Azores
308 municipalities
3,092 parishes
Madeira
FARO
Portugal is a member of several global and european
organizations, communities, treaties, as well as one of the most
globalized and peaceful nations in the world.
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 18 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 19POLITICAL ADMINISTRATION
The Republic of Portugal is a Parliamentary
democracy, based on the respect and the effective
25th
guarantees for fundamental rights and freedoms and JLL Global
the separation and interdependence of powers. Real Estate Transparency
Ranking - 100 markets
LEGISLATIVE POWER
PRESIDENT OF THE REPUBLIC (HEAD OF STATE) PARLIAMENT (ASSEMBLY OF THE REPUBLIC)
Represented by 230 members which are elected by
Elected by direct universal suffrage for a 5-year term (max. 2 terms)
popular vote to serve a 4-year term
EXECUTIVE POWER
GOVERNMENT (PRIME-MINISTER, MINISTERS AND SECRETARIES OF STATE)
Elected by popular vote to serve a 4-year term
JUDICIAL POWER
CONSTITUTIONAL COURT, COURT OF AUDITORS
SUPREME COURT (JUDICIAL, ADMINISTRATIVE AND FISCAL COURTS),
MARITIME COURTS, COURTS OF ARBITRATION AND JUSTICES OF THE PEACE
11th Largest exclusive economic zone in the world
53 Countries with a Portuguese Historical Presence
10th Countries with a Portuguese Historical Presence
10th Best democracy in the world
Source: Liberal democracies index (180 countries)
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 20 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 21OVERVIEW
The buoyancy of the residential market continues
Portugal has established itself as a consolidated . Real estate investment is also more diversified, with
to exceed expectations, with the number of national
destination, much sought after by investors from more opportunities to invest in the hotel sector and National Home Sales (Q3 2018)
home sales increasing followed naturally by the
around the world. Several factors were responsible demand for alternative sectors such as senior and
for placing Portugal on the investor radar including student residences, hospitals, clinics and private
increase of values. Additionally, according to the 132,000 units /
favourable economic, security, solid real estate market rented schemes (multifamily schemes). Transactions
Statistics Portugal, housing appreciated 11% in the
first three quarters of the year against the same period
+19% yoy in Portugal
indicators, growth of tourism and higher levels of
profitability than most comparable markets.
of large real estate portfolios and NPL assets held by
banks are also reflecting a strong growth.
last year. Price increase will however tend to slow and +22% yoy in Lisbon
down due to the emergence of several projects that
will, in a way, bring a better balance between supply
The political and governmental stability has In the office occupational market, Portugal
and demand. The residential projects developed in
allowed Portugal to comply with its international has established itself as a destination for the
the centres of the cities of Lisbon and Porto have
commitments improving the country’s credibility, establishment of several large multinational Following the boost of the residential market, the
been mainly targeted at the high-end market or the
which is reflected in the performance of sovereign services and startups with a noted increase of co- property development sector has also registered
short-term rental market, primarily attracting foreign
bonds and the positive review submitted by credit working spaces. Portugal is an excellent choice for record performance levels, both in number and
buyers, whose purchasing power is higher than the
rating agencies showing more confidence in the multinational expansion or the creation of new volume of transactions in land or buildings to
Portuguese. Thus, the centres of the cities have
Portuguese economy. Economic growth, deficit businesses given the qualified human resources refurbish. In the centres of Lisbon and Porto the
reached unattainable values for most of domestic
reduction and increased employment in Portugal and the low costs associated with tax, labour and demand for development opportunities is extremely
buyers, which has naturally channelled domestic
place the country on a converging path with the occupation. The level of competitiveness, the high, driven by a very positive momentum in the
demand to other zones. This trend has evoked
European Union. infrastructure quality and the capacity to attract placement of the final product, be it housing, offices
the interest of various developers for less central
talent are also key to the competitive advantages of or hotels. The shortage of buildings for sale, together
areas aiming to develop projects targeted at the
The performance of the investment market in our country. In this sense and given the significant with the increase in the final product price, has caused
middle-class with affordable prices, adjusted to the
commercial real estate has evolved very positively increase in demand and shortage of quality office pressure on the value for which buildings are being
purchasing power of Portuguese families. The short-
in line with international trends. Investment volume space, rents have been progressively rising. The take transacted for real estate development. The largest-
term rental market is still very active, through the
remains at record highs year after year since 2014, up volume has been experiencing records year after scale mixed-use projects will cater to the increased
increase in tourism; and the long-term rental market
surpassing the 3.35 billion euros barrier in 2018, year, highlighting both the entry of new companies demand for offices, retail, hotels and housing, and to
continues to reflect an extremely scarce offer.
never achieved before. The Retail sector is the one and existing company expansions. Currently, strong the necessary stock renewal. Thus, and despite the
responsible for achieving such high volumes, due demand is primarily focused on quality buildings less positive impact that the latest legislative changes
to the large tickets that it usually entails. The office with large dimensions, which explains the increase in The imbalance between supply and demand brought to the real estate market, the outlook is that
sector is also extremely sought after, especially the average deal size. Vacancy is low and mostly not is significant which explains the extremely the transactional activity will continue in line with
the well-located assets with good tenants, which matching the quality standards, however, there is a high values. previous years, mainly backed by the solid demand
easily attract low risk profile investors. Investment robust pipeline of new buildings. for the final product and the continuous increase
in commercial real estate in Portugal has been This situation, combined with the general increase and diversity of developers, both national and
driven by an increasing and diverse number of in housing prices and the different lifestyle adopted international, operating in the Portuguese market.
investors of different nationalities and profiles. Due Vacancy Rate by the new generations, suggests that the long-term
to market consolidation and the resulting lower risk rental market is effectively starting to emerge in the
perception, a market transition has been witnessed,
6.5% medium term. Banks have been offering mortgage
which regained at the end of the crisis with a more loans with increasingly low interest rates, luring the Buildings to refurbish
in the centre of Lisbon
opportunistic nature and now reflects a core and buyer towards a purchase instead of a lease, where
value-add profile. Pipeline 2019 – 2023 rents are constantly increasing. more than 7,000
As a result, rents have increased and yields 561,000 sq m
have compressed, increasing asset value and
the respective return for investors, increasing
market liquidity.
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 22 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 23INFRASTRUCTURES
Retail is strong and increasingly consolidated. per room. More tourists and a greater diversity of
The shopping centres continue to maintain their nationalities are expected given the strategy of HIGHWAYS RAILWAYS
relevant and important position in the life of the creating new air routes. 3,100 kms 2,600 kms
Portuguese people. They are undergoing an image
upgrade, expansions and innovations, with a great Hotel Openings in 2018 Source: Infraestruturas de Portugal 2018
focus on the restaurant sector, where food courts are
becoming more humanized, keeping up with current
7 hotels with a total
trends to provide visitors with new experiences. of 556 beds
Tourism continues to be the driving force behind
AVIATION MARITIME
street shopping in prime areas, but the new lifestyle
No. of Airports – 10 (ANA) No. of Maritime harbors – 10
of the Portuguese is pushing the locals further and
No. of aerodrome – 39 (NAV) Cargo handled - 95.9M tons (AMT 2017)
further onto the "street," where the physical stores Portugal is a truly global destination, considered one
Cargo Handled – 167,000 tons, +22% (ANA 2017) 3M TEUS
of successful brands focus on the relationship and of the best in the world. The last few years have been
engagement with the client, rather than on the exceptional, full of business, awards and recognitions
Source: AMT 2017
product itself. Due to the economic recovery and that led us even further.
the growth of tourism, high street retail continues to
grow, with more and more zones showing significant If the Portuguese were the ones to discover
consolidation. the world in the fifteenth century, today it
is Portugal that is being discovered by many
other nationalities.
Shopping Centre Pipeline
50,000 sq m No wonder, therefore, that more and more companies,
investors and individuals look to Portugal through a
different perspective eyes, a country to work, to
invest and to live!
Year after year, tourism has hit record highs and In Portugal all citizens have the right and free acess The quality of educational institutions and the
has been crucial for the economic development, to the public institutions and education. Similar to diversity of international schools present a wide
job creation and historic city centres refurbishment. the private health services, the public health services choice in which residents can trust. Portuguese
2018 was a successful year defined by international have great infrastructures and highly qualified universities have had an excellent international
awards and international published articles, which professionals. performance, attracting students and teachers from all
enhance the notoriety, quality and media coverage over the world due to the improvement in the quality
of the Portuguese destination. The main tourism of teaching.
performance indicators have grown sustainably
and reach records year after year. On the supply
side, the focus is on the growing qualification and
diversification in terms of size, positioning, concept
and targeted markets. Local accommodation has 1st Nova IMS: Best Masters degree in the world in Information Management
asserted itself as an alternative to the traditional hotel Source: EDUniversal
and in this sense, the Portuguese hotel market is in
increasing consolidation as a destination for the major
international operators, through the construction of 12th Best health system in the world
hotels from scratch or transactions over € 500,000 Source: OMS
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 24 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 25MACRO ECONOMIC FACTS OWNERSHIP AND
TRANSFER OF PROPERTY
GDP € 187bn + 2,8%
Real estate ownership (propriedade) in Portugal The transfer of ownership takes place as a result of a
GDP per capita € 23k encompasses not only the full ownership (plena contract:
TOURISM
propriedade) but also other in rem rights (v.g., in rem
Unemployment Rate 8.9% guaranty and acquisition rights like the surface rights (i) a public deed executed before a notary, or
20,6M No. of tourists and usufruct rights). Full ownership is similar to the (ii) a certified private document, in which case it may
Inflation 1.6%
French “droit de proprieté” and to the common law be executed before a lawyer or a paralegal officer.
Private Consumption 2.4% 51,8M No. of passengers in the airports “freehold” and consists of the complete and exclusive
right to possess, enjoy and dispose of a property, with LAND REGISTRY
Exports 7.8% no time limitation. Registration is essential to prove title to the property.
51,8M No. of passengers in the airports + 16,5%
The responsibility of the land registry rests with the
Minimum Wage € 600 (14 months)
Fiduciary ownership is not provided under Portuguese Land Registry Offices that keep public records of
law. It is only accepted in the Madeira Free Zone, each property’s legal status, including ownership
Source: INE Jully 2017;Turismo Portugal 2017; ANA Aeroportos 2017 through a trust, for the purpose of activities therein and encumbrances. The Land Registry is based on
pursued. the principle of priority of registration (princípio da
prioridade do registo) whereby the first recorded in
The co-ownership is allowed under the Portuguese rem right prevails over other recorded in rem rights
law. In this case, each co-owner is the holder of an even if the latter have been created prior to such
ideal share over the property and is allowed to sell record date.
such share to third parties and the remaining co-
-owners are entitled to a pre-emption right in any such The registration of facts establishing the
Portugal's position in the
34 th
ranking of global competitiveness
sale. The co-ownership legal regime entails specific
rules regarding the property management of the
constitution, recognition, acquisition or
changes of in rem rights over a property is
relevant property.
mandatory by law.
12th Country with less organized crime. Lack of record of such facts in the land registry entails
lack of protection of the relevant property purchaser
vis-a-vis third parties (erga omnes effects) and also the
14th Country with less bureaucracy.
+44% +64% impossibility to transfer such property.
17th Country with the latest technology available.
Tourists growth in 5 years Tourism revenue growth in
2017 vs. 2013 5 years 2017 vs. 2013
19th Infrastructure Quality. Portuguese roads are in
6th place in the ranking of the 140 countries. Required documents for transfer of a property
22nd Country with the longest life expectancy. 1st 11th
Country in the world Land registry certificate Tax certificate Use permit or building permit
23rd Quality of the Education System: Quality of Portugal Best Destination
with more events and (certidão predial) (caderneta predial) (as applicable)
future workforce. in Europe 2018
international conferences
26th Country with most transparency in institutions.
Energy certificate Proof of payment of the Residential technical file
Source: Competitivity ranking of the Source: Travel BI, World Travel Awards & European
applicable property transfer taxes (if applicable)
World Economic Forum 2018 - 2019 (140 países) Best Destination, Country & Cities rankings ICCA 2017
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 26 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 27INVESTMENT STRUCTURE
investments. As mentioned, the most used limited b) Undertakings for Collective Investment in
liability companies in this context are joint stock Real Estate
Any property may be acquired directly (asset deal) or
companies (“S.A.”) or limited liability companies by
indirectly, through the purchase of equity interests of the “quotas” (“Lda.”). AIFs under contractual form (FII)
entity owner of the property (share deal). Undertakings for collective investment correspond to
Alternative Investment Funds foreseen in the Directive
Joint stock companies (S.A.)
2011/61/UE (AIFs) and are governed by Law 16/2015
dated of 24 February, as amended (RGOIC), which
• Five shareholders or single shareholder
implemented the said AIFs Directive. AIFs in real estate
• Minimum capital of €50,000
ASSET DEAL assume the form of real estate investment funds
As a rule, the acquisition process starts with a letter By law, unless parties agree to sell the property on an (FII), open-ended or closed-end (public or privately
of intent and/or a promissory purchase contract “as is” basis or agree to specific guarantees, a vendor Joint stock companies (S.A.) may have five subscribed), or the form of joint stock real estate
that precedes the effective transfer of the property is liable for any hidden defects of the property for a shareholders, natural or legal persons, or a single companies (SII), with fixed capital (SICAFI) or variable
and which sets out certain obligations and/or the legal five-year period. shareholder, as long as it is a commercial company. capital (SICAVI). AIFs are under no circumstance liable
fulfilment of a set of conditions precedent. The minimum capital is € 50,000. Although it is for the debts of unit holders, of the AIFs management
SHARE DEAL recommended, a transfer of shares does not have to company and of the custodian entity. Only AIFs assets
Upon signing of a promissory agreement, it is standard Usually the corporate vehicles used to acquire be agreed in writing. The transfer shall be made by will be liable for AIFs debts.
market practice that the promissory purchaser pays properties correspond to limited liability companies, endorsing the shares and by requesting the issuing
to the promissory seller a down payment that varies either joint stock companies (sociedades anónimas company to register the transfer of the shares in the
FIIs are represented by investment
between 10% and 20% of the purchase price. By law, – “S.A.”) or limited liability companies by “quotas” shares’ registry book; in case of book entry shares, the
as general rule, in case of default by the promissory (sociedade por quotas - “Lda.”), and undertakings for transfer will take place through its registration in the units. Holders of investment units
purchaser, the promissory seller is entitled to keep collective investment under contractual form (real buyer’s account, based on an order of the seller. are called participants.
the down payment received; in case of default of the estate investment funds - FII) or undertakings for
promissory seller, the promissory purchaser is entitled collective investment under corporate form (i.e., real
Private limited companies (Lda.)
to receive twice the amount paid as down payment. estate investment companies - SII). The investment units may be represented by
Alternatively, specific performance of the promissory certificates of one or more units, or in book-entry
• Typical for small and medium enterprises
agreement may be sought by the non-defaulting In share deals the due diligence exercise conducted form. More than one class of units may be issued,
• Capital split in quotas, with minimum of €1
party. Upon execution of the promissory purchase by the investor must also cover the relevant vehicle based on rights or special characteristics, provided
contract it is also customary to provisionally register owner of the property, notably its financial, tax, that this is stipulated in the incorporation documents
the acquisition of the property with the Land Registry corporate and legal situation. Limited liability companies by “quotas” (“Lda.”) and consistent with the risk profile of the FII
Office which will become definitive upon the effective correspond to the most typical structure of small and investment policy.
acquisition of the property. Pursuant to the principle The acquisition of equity interests of the vehicle is medium companies in Portugal, given their lighter
of priority of registry, this provisional registry provides made by means of a private purchase agreement and, structure. Capital is split in “quotas”, with a minimum The incorporation of the FII depends on the
security to the promissory purchaser against potential save for limited liability companies by “quotas” (the of 1 € per “quota”. In general, the company has two authorisation of the Portuguese Securities Market
subsequent liens and encumbrances that may fall over transfer of which is subject to registration with the partners, but it is possible to have only one, taking Commission (CMVM). The FII have no legal personality
the property. Commercial Registry), is not subject to any specific into account some legal specificities and provided that and are managed by an AIF management company.
requirement. the expression “unipessoal” is added to its corporate
Prior to the conclusion of the final purchase contract, name. The “quotas” are registered in the Commercial The incorporation of AIF management companies is
investors should typically have their advisors verifying Registry. The transfer of “quotas” must be in writing subject to the authorisation of the Bank of Portugal
the legal, urban planning, licensing, environmental, a) Corporate Vehicles (Special Purpose Vehicle – and must be also registered; information on the (BdP) and CMVM. Their activity is subject to different
technical and tax status of the property (due SPV) “quota's” holders and on the respective amount is rules concerning the management of funds. Investors
diligence). publicly available. generally resort to existing AIF management entities
It is market practice to incorporate special purpose
vehicles (SPV) for direct or indirect real estate
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 28 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 29AIFs under corporate form (SII)
as their incorporation corresponds to a complex by investors which hold shareholdings corresponding
SIIs have legal personality and may assume the form
procedure ultimately depending on the authorisation to less than 2% of the voting rights, that is at least 11
of a joint stock company with variable capital (SICAVI)
of BdP and of CMVM. investors must hold 20% of the share capital.
or with fixed capital (SICAFI). The property assets held
by these companies are managed by the companies
At least 80% of SIGI’s asset value shall correspond
The investment units must be themselves (self-management) or by a third-party
to property ownership rights, surface rights or other
entrusted to a single custodial manager (external-management).
equivalent rights over properties and at least 75%
entity. of the total value of SIGI’s assets shall correspond to
The main advantages of the self-managed SIIs consists rights over properties subject to lease agreements or
in allowing investors to be involved in its operation other form of economic exploitation.
The FII’s assets may include property, liquidity through the appointment, by the latter, of the relevant
and equity interests in property companies. This directors of the SIIs. SIGIs’ indebtedness may not exceed, at all times, 60%
composition shall comply with the rules and limits of SIGI’s total asset value and at least 75% of the net
legally defined for each type of asset and each Undertakings for collective investment under income resulting from the sale of assets should be
type of FII. Within one year from incorporation, corporate form are governed by the RGOIC and by the reinvested within 3 years in other assets allocated to
the FII must have assets worth at least € 5 million Portuguese Companies Code, save where the rules of the SIGI business.
under management. FIIs’ property must be subject the latter are incompatible with the specific purpose
to evaluation by at least two independent expert of these AIFs or with the provisions of the RGOIC. AIFs under corporate form (SIIs) are allowed to convert
appraisers within the period provided in the law. into SIGIs through a resolution of its shareholders
SICAVIs and SICAFIs are respectively subject to the adopted by a majority of votes corresponding to 90%
The FII regulation defines the rules to call and operate regulations legally provided for open-ended and of its share capital.
unit holders’ meetings, as well as their competence, closed-end FIIs.
and in the absence or insufficiency of such rules, the
Portuguese Companies Code applies. c) Portuguese REITs: Sociedades de Investimento e
Gestão Imobiliária (“SIGIs”)
The creation of the FII is contingent upon the
submission of an application underwritten by the SIGIs were created by a decree-law which entered into
management company, together with the drafts of force on 1 February 2019 and follow the regulation of
the management regulation, of the contracts to be the Real Estate Transfer Trust (REITs) implemented in
entered with the custodian of the subcontracted various European countries.
entities or of the service providers, and the documents
certifying the acceptance of functions of all the SIGIs are joint stock companies (SA), with or without
involved entities. public subscription, and have a minimum paid-up
share capital of €5,000,000. SIGIs may either directly
Several charges are due upon incorporation and manage its properties or economical rights over
operation of the FIIs, including charges with the properties or enter into service agreements with third
CMVM, fees due to the management company, to the parties for the management of the same.
custodian, to the appraisers of the properties and to
the auditor. SIGIs’ shares shall mandatorily be admitted to trading
in a regulated market or in a multilateral trading
system and at least 20% of the shares must be held
30 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 31LEASES
1.1. GENERAL LEGAL FRAMEWORK 1.2. TYPES OF LEASES
Leases are mainly regulated by the Portuguese Civil Code. This legal regime is There are two types of lease contracts: residential and non-residential leases
applicable to any agreement for the temporary use of a real estate property against
the payment of a consideration by the respective user. Non-residential Leases
A) CONTENTS
A) FORM / CONTENTS
The most relevant aspects of non-residential
leases can be freely agreed upon by the
Entered in writing Include parties’ identification, Can encompass term and respective parties, including term, early termination
description of premises, purpose, use renewal/ opposition to renewal, early and opposition to the renewal, reinstatement
Do not require any additional formalities, permit and rent termination rights, maintenance and and upkeep obligations, etc. Otherwise, the
except if term equals or exceeds 6 years upkeep obligations, work obligations, rules on residential leases shall apply.
(mandatory registry with the Land Common to provide rental guarantee – reinstatement of leased premises,
Registry Office) rent deposit, security or bank guarantee rent review B) DURATION / RENEWAL
Non-residential leases can be for a Unless otherwise agreed the duration Lease with a duration equal or exceeding
B) ASSIGNMENT / SUB-LEASE specific duration (from 1 year up to a is automatically extended for equal and 6-years must be registered with the land
maximum of 30 years) successive periods or for successive registry office.
periods of 5 years if the agreement has a
Unless agreed otherwise or in case Upon sale of the leased premises, the
Leases with non-specified duration are duration inferior to 5 years. Lack of such registration inibits the
of business transfer of the tenant, a contractual position of the landlord is
not commonly used in the market. tenant from invoking the lease duration
tenant can neither assign its contractual automatically assigned in favour of the
If the parties do not specify the duration, Regardless of the duration of the in excess of the said 6year period vis-à-
position nor sublease the leased purchaser of the leased premises.
the lease shall be deemed a 5-year fixed- agreement, the landlord is not entitled vis third party purchasers of the leased
premises without prior authorisation of
term lease to oppose to its renewal during the first property.
the landlord.
5 years.
D) LANDLORD’S PRE-EMPTION RIGHT
C) EARLY TERMINATION ON BUSINESS TRANSFER BY TENANT
C) RENT D) MAINTENANCE
By law, the early termination of the Furthermore, in the cases of early Unless otherwise agreed, in case of
Unless otherwise agreed between the The parties can freely agree on the Unless otherwise foreseen by the parties, lease (denúncia) by the landlord is only termination by the landlord, tenants transfer or payment in lieu of business
parties, rent will be paid on a monthly payment of the rent in advance for the landlord is responsible for upkeeping allowed upon a 5 years minimum prior and any of its employees are allowed by the tenant that includes the lease,
basis, until the first working day of the a period that shall not exceed three the leased premises. notice by the landlord or in case the to claim compensation for damages the landlord is entitled to a pre-emption
month immediately preceding the months. latter intends to execute demolition arising therefrom. right thereover.
relevant month. works or refurbishment works in the
leased property insofar as the leased
premises cannot be kept leased after the
said works are implemented.
E) REINSTATEMENT F) PRE-EMPTION RIGHT
Residential Leases
Unless otherwise foreseen by the parties, In case of sale of a leased property, the
the tenant shall return the leased tenant of the property for more than
premises at the end of the lease in its 2-years is entitled to a mandatory legal A) CONTENTS B) DURATION / RENEWAL
original state except for normal wear and pre-emption right over the respective
tear. sale.
The degree of contractual freedom in Leases can have a specific duration Unless otherwise agreed the duration
residential leases is more limited than from a minimum of 1 year up to a is automatically extended for equal
in non-residential leases insofar as the maximum of 30years. and successive periods of 3 years if the
matters pertaining to early termination agreement has a duration inferior to
and opposition to renewal are 3 years.
G) DEFAULT AND EVICTION OF TENANT mandatorily determined by law.
Either party may terminate the lease Termination by the landlord must be When under certain circumstances (v.g. C) EARLY TERMINATION / OPPOSITION TO RENEWAL
contract in case of serious default by the judicially declared, except in case of non- in case of opposition by the tenant) the
other party. payment of rent, charges or expenses process may be brought ultimately to
or of the tenant’s opposition to works court. The opposition to renewal and early By way of example, where the initial However, landlord is not entitled to
ordered by public authorities, in which termination rights of each party duration of the lease or its renewal is six oppose to the renewal of the lease
case it is possible to obtain an out of under fixed term residential leases are years or more, the landlord or the tenant agreement during the first 3 years.
court special eviction process with the mandatorily determined by law. will be required to comply, respectively,
National Lease Desk (Balcão Nacional do with a minimum 240day or 120day Provided that one third of the lease
Arrendamento). prior notice to the other party for its term has elapsed, the tenant will also be
opposition to renewal. entitled to an early termination right at
any time upon 60 to 120 day prior notice
to the landlord.
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 32 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 33PLANNING AND LICENSING
Transitional system Use of shop agreements FRAMEWORK PLANNING
There are two transitional systems enacted by the Contracts for the use of a shop integrated in The Public Policy Basic Law on Land, Regional Territorial management instruments interact between
Law 6/2006, of 27 February, as amended (NRAU) in commercial schemes (v.g., retail parks, shopping Planning and Urbanism (approved by Law no. themselves and include three major categories:
respect to “old leases” executed prior to 28 June centres or factory outlets) are neither subject to the 31/2014 of 30 May, as amended) provides for the national, regional or municipal, depending on the
2006: (i) the legal framework applicable to residential lease’s general legal framework nor to any typified general rights and duties regarding the land, the interests involved.
leases entered into under the former urban lease regime specially provided in the law. In fact, these structuring of property, the means for intervention
regime (RAU), i.e. after 18 November 1990, and to correspond to non-standard contracts (i.e., atypical and administrative control of the use of the land, and Municipal territorial planning instruments (Planos
non-residential leases entered into under Decree-Law contracts), entered into by the parties within the the territorial management system. Municipais de Ordenamento do Território): These
no. 257/95 of 30 September, i.e. after 5 October 1995 scope of their freedom to contract under the general instruments implement the public policies at a
(DL 257/95); and (ii) the legal framework applicable to contract law. The feasibility of a property project requires local level and are divided in three categories that
residential leases and non-residential leases entered compliance with the territorial management shall be considered for each property project: (i)
into prior to the said dates. This type of contract tends to be standardised within instruments (national, regional or municipal planning “PDMs” – Municipal Master Plans (Planos Diretores
the industry and entails the right of the shopkeeper instruments) that apply to the area or zone where Municipais); (ii) “PUs” – Urbanisation Plans (Planos de
Old rents updating system to use the relevant shop area and to benefit from the such project will be located. Urbanização); and (iii) “PPs” – Detail Plans (Planos de
Furthermore, a system has been enacted in 2012 common/centralised services and amenities provided Pormenor).
aiming the smooth transition into the NRAU of the by the owner or the operator of the commercial The territorial management instruments set out land
leases entered into prior to the RAU and to the DL scheme at hand. occupation, use and transformation rules, which have
The feasibility of any property
257/95 as well as the update of the respective rents. a binding nature, both for private and public entities.
project requires compliance with
It corresponds to a negotiation process between the On the other hand, the material execution the relevant applicable territorial
landlord and the tenant that starts at the initiative of (construction) of the property project requires
the landlord. the implementation of urban operations (mainly
management instruments, especially
urbanisation and construction operations), which, as a at local level.
Works on leased properties general rule, require the Administration’s prior control
Early termination of leases by the landlord is allowed by means of administrative licensing procedures. PRELIMINARY CONTROL PROCEDURES: LICENSING,
for the purposes of execution of reconstruction, PRIOR COMMUNICATION, PRIOR INFORMATION
modification and expansion works on the leased Thus, the Portuguese Urbanism Law rests on three REQUEST AND USE PERMIT
property, insofar as after the envisaged works it is major pillars: the Basic Law on Territorial and The RJUE is in the forefront in respect of licensing
not feasible to keep the lease in the existing property Urban Planning Policies (“Lei de Bases da Política property projects and defines which urban operations
under equivalent physical conditions and under e do Ordenamento do Território e do Urbanismo”) require prior control (i.e., licensing – licenciamento,
certain terms and conditions defined by law (v.g. (LBPOTU), the Territorial Planning Instruments prior communication – comunicação prévia or use
indemnity to the tenant equivalent to 2 years of rent). Regulations (“Regime Jurídico dos Instrumentos de permit – autorização de utilização), respective
As a general rule the consequences of such works in Gestão Territorial”) (RJIGT) and the Urbanisation administrative approval procedure, and the
the leased property is the suspension of the lease and Construction Regulations (“Regime Jurídico da monitoring of their execution.
agreement (and not its termination), in which case Urbanização and Edificação”) (RJUE).
the landlord must relocate the tenant in alternative Municipalities are the local entities responsible
leased premises for a period of 3 years under similar Portuguese legal system has rules that limit the use, for preliminary control of urban planning projects,
conditions. occupation and transformation of the land, namely including license applications, prior communications
the “public interest constraints and easements” and permissions, this notwithstanding, in certain
resulting from the Public Hydric Domain Regulations, cases, the relevant projects require prior approval or
the National Agricultural Reserve Regulations, the an opinion from entities of the Central Administration.
National Ecological Reserve Regulations, the Natura
2000 Network Regulations, or the Immovable Assets Real estate projects are also subject to the rules
with Cultural Interest Classification Regulations. contained in the municipal urbanisation regulations
on construction and land, as approved by the
Certain property projects may also require an municipalities.
environmental impact assessment.
Real Estate Investors Roadmap Portugal | 2019 Investment Guide 34 Real Estate Investors Roadmap Portugal | 2019 Investment Guide 35A) LICENSING SPECIAL LICENSING
Short Rentals (alojamento local)
According to the RJUE, urban operations Tourism licensing Short rentals offered to tourists for consideration,
with major territorial impact are subject
to licensing, notably: Tourism undertakings include hotels, tourist notably through apartments, houses, lodges or
(iv) works in classified/proposed buildings, villages, tourist apartments, tourist resorts, tourism hostels) are subject to prior registration with the
(i) allotment operations; as well as;
(ii) urbanisation works in areas not (v) in buildings integrated in classified/proposed undertakings corresponding to manor/country relevant municipality and are not qualified as a
covered by allotment operations; assemblages or sites; and houses, rural tourism undertakings, and camping and tourism undertaking. The local lodging activity is
(iii) works carried out in areas not (vi) Works carried in buildings located in protection
covered by allotment operation or area.
caravan parks. subject to the supervision of the relevant municipality
layout plan; as well as of the Food and Economic Security
The installation of tourism undertakings is subject to Authority - “Autoridade da Segurança Alimentar e
licensing according to general law (notably, the RJUE). Económica (ASAE)”.
B) PRIOR COMMUNICATION (COMUNICAÇÃO PRÉVIA) Whenever there are allotment operations intended for
the installation of tourism development, a favourable The owners of short rental properties must comply
As a rule, urban operations that do According to the RJUE, the following works are opinion by the Portuguese tourism regulator (Turismo with certain rules, such as an information book
not require licensing are subject to subject to prior communication:
administrative prior control, notably: de Portugal, I.P.) is mandatory. detailing the internal rules of the property, including
the prior communication. (i) reconstruction works which will not result in an the relevant provisions of the condominium regulation
increase in the façade’s height or in the number
of floors Differently from other countries, the tourism (if applicable) and civil liability insurance.
(ii) urbanisation works and renewal works in plots undertaking operator is not required to have a specific
in an area covered by allotment operations; and
(iii) construction, modification or extension works operation license for its activity. Nevertheless, certain URBAN RENOVATION
in an area covered by allotment operations or tourism undertakings are required to have a star Renovation of buildings has shown in recent years
layout plans.
classification, which is attributed by the Portuguese a remarkable dynamism, as a result not only of
tourism regulator on the basis of the level of services tax incentives associated with the recovery and
C) PRIOR INFORMATION REQUEST (PEDIDO DE INFORMAÇÃO PRÉVIA – PIP) and amenities. refurbishment of existing buildings, but also of the
simplification of prior control procedures specifically
In this context, it is common practice in the market that a potential property investor files a PIP with Commercial licensing implemented to facilitate the approval of urban
the municipality in order to obtain formal confirmation on the feasibility of a specific urban operation
Advance notice: In general, the exercise of commercial renewal operations.
before submitting the licensing request. The municipality’s decision on the PIP is binding on the
municipality insofar as the subsequent licensing request is filed under the exact terms and conditions activities does not require administrative licensing.
of the PIP which is granted within the maximum period of one-year (this period may be extended for It requires only the submission of an advance notice In certain situations, the prior communication does
one additional period of one year).
(“comunicação prévia”), i.e., a formal statement not require opinions, approvals or permissions
informing the relevant administrative authority in granted by entities other than the relevant
D) USE PERMIT (AUTORIZAÇÃO DE UTILIZAÇÃO) advance that the activity will be started. municipality.
The use of buildings or of their condominium units (frações) also requires a specific use permit Commercial schemes and large commercial Municipalities can define a perimeter of a renovation
attesting that the relevant building has been built in accordance with the respective construction
license or prior communication regarding what is its allowed use. As mentioned above, the exhibition
surfaces licensing: However, the installation of large areas. These are well defined areas, which, due to
of the use permit of the property is condition precedent for its sale. commercial surfaces not integrated in commercial the degradation of the buildings and infrastructures
complexes and of commercial complexes with a require integrated urban renovation.
lettable gross area ≥ 8,000 sq. meters requires an
installation prior permission, to be granted by joint The delimitation of urban renovation areas by the
decision of the director-general of economic activities relevant municipalities may determine the following
(DGAE), of the mayor of the relevant municipality and effects: (a) tax incentives, notably the IMT (Municipal
of the chairman of the competent Commission for the Tax on the Transfer of Property) and the IMI (Municipal
Coordination of Regional Development (“Comissão Tax on Property); (b) the access of the owners of the
de Coordenação e Desenvolvimento Regional”- CCDR). properties to financial incentives.
By law DGAE shall prepare a final report submitting a
draft decision, based on the criteria set out in the law.
Said permission is conditioned upon the payment of
fees to the said public authorities.
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