Impact of new land use policies on the Portuguese real estate market

The Portuguese real estate market has undergone several transformations in recent years, driven by economic, demographic and regulatory factors. Recently, the approval of a new law that allows rural land to be reclassified for urban use promises to significantly change the sector. But what are the real implications of this change? In this article, we analyze the impact of this measure on the development of new projects, housing supply and real estate investment in Portugal.

What changes with the new legislation?

The Portuguese Parliament recently approved a set of changes that make the conversion of rural land into urban land more flexible. This measure aims, above all, to increase the supply of affordable housing, helping to combat the scarcity of real estate in some regions and curb escalating prices.
The main changes include:

• Easier conversion of unbuildable land into urban land, subject to certain criteria;
• Reduced bureaucracy in approving new housing projects;
• Tax incentives for investors developing affordable housing or sustainable infrastructure projects.

Impact on real estate supply
One of the main consequences of this measure is an increase in the number of housing projects, especially in semi-urban areas where the supply of urban land is limited. This could contribute to:

• A better balance between the demand for and supply of real estate;
• A reduction in the pressure on housing prices, making them more affordable for the population;
• A stimulus to the development of new residential areas, with a positive impact on the local economy.

However, this change also raises questions about the sustainability of urban growth, requiring careful planning to avoid real estate speculation and the disorderly expansion of cities.

Effect on investment opportunities

For real estate investors, this new legislation represents an excellent opportunity for expansion. With the increase in the number of plots of land suitable for development, possibilities arise for:

• Acquiring land at more competitive prices before its reclassification;
• Development of innovative and sustainable projects;
• Creation of new housing and commercial centers in previously underused areas.

However, it is essential that investors pay attention to local regulations and environmental guidelines to ensure that their projects are in line with urban planning and sustainability requirements.

The fall in Euribor rates: an additional factor

Another element that could boost the real estate market is the recent drop in Euribor rates, which serve as the benchmark for most mortgage loans in Portugal. In recent months, the 12-month Euribor has fallen significantly, making loans more accessible and stimulating demand for real estate.

With lower interest rates, both private buyers and institutional investors can benefit from more advantageous conditions for acquiring or developing new properties, reinforcing the dynamism of the sector.

Conclusion

The new land use policies represent a structural change for the Portuguese real estate market, creating both opportunities and challenges. If, on the one hand, they facilitate access to urban land and encourage the growth of housing supply, on the other, they require careful planning to ensure the sustainable growth of cities.

For investors and buyers who want to take advantage of these changes and find the best opportunities in the real estate market, relying on specialists is essential. IR Group has proven experience in real estate investment in Portugal, offering strategic advice and solutions tailored to the needs of its clients. Contact us and find out how we can help you invest safely and profitably in the real estate sector!