Rebenta a Bolha! (The game is over)

Artur Filipe da Silva, lawyer and partner at BAS, wrote about the appreciation of the Portuguese real estate market at Jornal Económico:

The phrase “rebenta a bolha”, popular among kids, was used by the blindfolded player whose mission was to find the hidden players. When he couldn’t find all the players he shouted, “rebenta a bolha!”

In the grown-up world, the expression has been popping up as a question within the context of the valuation that the Portuguese real estate market has shown in recent years. With the subprime crisis still well present, the question of whether we are facing a bubble is, as such, legitimate.

It’s our opinion, however, that today’s real estate market is different and there are no evidences that we are on the verge of a real estate bubble. This perception is fundamentally based on the fact that the current valuation is based on different pillars of those who then (did not) support the real estate market.

Previously, the real estate valuation was essentially based on the policy of that time of granting (often without criteria) housing loans for the purchase of permanent or secondary housing. Currently, the dynamism of the market is based on a policy of attracting foreign investors, through the Gold Visas program and the non-habitual resident tax status, which attracts investors with their own capital.


“There has been an increased effort to facilitate and increase economic activity.”


Having just returned from the Portuguese Real Estate and Tourism Show in Paris, we have the conviction that if Portugal maintains a stable fiscal policy, which in some aspects may even be improved, the investment in real estate by the latter will continue. On the other hand, the country is also different.

In fact, there has been an increased effort to facilitate and increase economic activity. The climate clearly favourable to entrepreneurship has been reflected in the attraction of companies and start-up projects, which justifies the increase in demand in the office segment and the growth of Tourism, which led to the increase of the economic activity commonly known as “short-term rentals “.

This activity, even by the recent case-law fluctuation as to its legality, deserves a legislative intervention, to take place in the context of a reform of the lease market, that structures this activity and drives the lease as a real alternative to the purchase of private housing, without, however, killing it.

Considering the profitability of real estate assets, especially in the cities of Lisbon and Oporto, it’s still within the average value of big European cities with which we compete, so there is still room to attract investors to the sector. It’s, however, paramount to continue valuing cities by making them friendlier to those who live, work and visit them. Of equal importance will be a fair, stable taxation and, allow us a final reflection, why not move to impose that some litigation related to lease are mandatorily settled by alternative means of dispute resolution, which are cheaper and faster, thus contributing to greater peace and justice, both for investors and for other agents in this sector.

For all of this, we are not the one to call “Rebenta a Bolha!”.


Read the article in its original version here.

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