Avenue Looks to Invest €300 Million in Middle-Class Housing

The developer Avenue, which invests in luxury products, is looking for opportunities to build homes for the middle and upper-middle classes in Lisbon and Porto.

After six years of operation in Portugal, Avenue is now preparing for a new investment cycle focused on Lisbon and Porto. The new plans include 300 million euros in investments in projects aimed at the middle class.  The developer is currently in the final phase of acquiring two plots of land in Lisbon, where it will develop residential buildings from scratch for the first time for the middle and upper-middle classes. In an interview with Dinheiro Vivo, Avenue’s general director, Aniceto Viegas, declined to disclose the properties’ locations. Still, he stated that the investment in the two would reach about 50 million euros, including the construction of close to 100 homes, with construction slated to begin next year. Mr Viegas added that the company is looking at two further residential investments in Porto.

While the developer has not yet ruled out any new luxury developments, Avenue has opted to focus for the moment on the middle class. According to Mr Viegas, Portugal is suffering from a shortage of housing. Estimates point to a shortage of 15-20,000 homes. Currently, only 15% of yearly housing sales are for new builds (vs 85% for existing homes), when other European countries’ norm is between 20% and 25%. “In fact, we have a lack of housing in all segments,” he reasoned.

In this way, Avenue, which had been primarily focusing on refurbishing existing structures, has changed its strategy to focus on new builds. According to Mr Viegas, the third investment cycle in Portugal will begin in 2022. It will involve equity investments of €150 million to buy land and a similar amount of bank financing to fund construction.

Avenue, a well-known player in the Portuguese real estate market, will continue to focus on Lisbon and Porto. According to Mr Viegas, “they are in the same league [and] they are fascinating cities” for investors.

All Eyes On Porto

Buyers have been expanding their focus away from Lisbon since 2017. Consequently, Porto has been attracting a rising number of investors, particularly the French and Spanish, and Brazilians and North Americans, through its golden visa programme. According to the interview with Dinheiro Vivo, the association of Port Wine with the city “is a powerful tool of communication” in external markets.

Since beginning operations in Portugal, Avenue has invested a total of more than 600 million euros in eleven different developments. Average annual sales have reached between 70 and 100 million euros. Avenue’s general director concluded that the pandemic has not had a significant impact on its business, except for a slight decrease in the pace of sales. Prices held steady throughout and he expects a “clear upturn as of the second half” of this year.