Content provider for

João Torroaes Valente
Morais Leitão

05 April 2022

Morais Leitão is a full service law firm with expertise spanning multiple industries, including corporate real estate, tourism and M&A practice areas. 

What is Morais Leitão’s presence in Portugal at the moment, particularly looking at your activities in real estate?

Firstly, it is pivotal to signal that Morais Leitão is Portugal’s most prestigious independent law firm. Among our strong team of first-tier professionals, 12 are dedicated fully to corporate real estate M&A, while also working side by side with the urban planning, environment and tax departments. At Morais Leitão we are well positioned to face the demands and challenges of the modern real estate market, with a proven track record in innovative solutions and corporate structures for real estate investment.

For instance, we were involved in the incorporation of the first REIT in Portugal (SIGI) by assisting its joint venture founding partners Sonae Sierra and Bankinter.

What prompted the appearance of these vehicles (REITs and other funds) on the market?


Portuguese REITs have two specifics: (i) they are fully tax exempt, only the dividends distributed to the shareholders are taxed (the investment income, the rental income and the capital gains obtained by the REITs are excluded from taxation), and (ii) the acquisition of real estate properties is to be made for leasing purposes (including non-standard contractual forms, such as the use of units or space in shopping centers or offices). 


Furthermore, REITs allow to collect equity from investors in order to invest in real estate, thus enhancing the Portuguese capital markets. That's the reason why REITs are successful worldwide and why the real estate industry is so eager to make them flourishing in Portugal. Nevertheless, there is still some legislative finetuning to be done so as to allow the existing Portuguese large property company groups to transform the respective holding companies into REITs (like in Spain) and, as a consequence, make all the underlying affiliate/property companies benefitting from this regime.

How open is the banking sector to offering financing routes for the real estate projects in Portugal?

After the financial crisis of 2008 real estate financing almost disappeared – however, in the last five or six years there was an enormous growth in this area from traditional Portuguese banks which we see is currently slowing down and tapering off, and it is therefore more difficult at the moment to find traditional bank financing for real estate projects other than the most solid ones.

We have recently, however, started seeing investors capable of finding workarounds for this problem - notably using forward funding structures, whereby you finance the development of the project you're planning to buy and after the construction is done, you receive a turnkey brand-new product. This trend is probably going to continue during 2022 and in the following years to come.

What is the impact that you observed the pandemic to cause in the various sub-segments of the property market?

There was a slowdown in demand and investments right after March 2020.  

Retail has been the weakest segment in the context of the pandemic due to the rise of e-commerce and shopping centers closures, and tourism struggled with the lockdown and travel restrictions that were implemented. The offices’ sector is the most resilient and the high demand is in sharp contrast to the low offer, particularly in terms of new builds. The star sector is definitely logistics, around the globe, and Portugal is no exception. We have the largest transaction ever rolling out as we speak - where a Portuguese bank is selling one of the largest funds holding logistic assets.


Despite the setbacks caused by the pandemic, things have been slowly picking back up, and 2021 was a recovery year with over EUR 2 billion in transactions for real estate investments (still EUR 1 billion less than pre-pandemic times). In 2022, forecasts are also very optimistic with an expected investment value of over EUR 3.5 billion, reaching pre-pandemics figures. 

A massive portfolio of hotels is going to be sold for EUR 1 billion alone, which is a massive transaction for the size of the market.


Are there any significant amendments to the legal framework in the past couple years that a new investor should be aware of?

The Portuguese government has revised the Golden Visa legislation that boosted real estate investment in Portugal during the financial crisis and it remained a driving force since then (including during the pandemic). In fact, recent legislative changes fueled by the left coalition that governed the country for the last couple years have restricted the requirements to benefit from the Golden Visa regime and the acquisition of residential properties in Lisbon, Oporto and the Algarve, that were extremely attractive for non-EU citizens, are no longer eligible for applying to the regime. 

Despite such political measures, investors are looking for ways to circumvent the said limitations. Notably, acquisition of participation units in private equity funds that hold real estate assets is seen as an alternative route for qualifying for the Visa with a lower investment threshold. 

Furthermore, over the last years, changes have been introduced to the legal lease framework (again fueled by the left coalition that governed the country for the last couple years) giving more protection to tenants and thus creating hurdles and restrictions on the lease market. This said, the recently elected socialist party majority government is expected to be more keen on (again) enhancing foreign investment into the country, notably real estate and tourism driven. Understandably, the industry is quite optimistic in this context. 

The same optimistic outlook is shared regarding the recently new elected mayor in Lisbon, where a great expectation has been created to refuel the city development,  and also in Oporto where the former mayor has been reelected thus allowing the good work to continue in the urban planning and investment fronts.

What are the main objectives you want to achieve with priority in the next two to three years at Morais Leitão?

The goal that keeps us pushing forward is to consolidate what we have been building in the Portuguese legal market during the past recent years: the most solid and reputable corporate real estate practice of the country, encompassing M&A, corporate structuring and capital markets associated to the real estate and tourism sectors.

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