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INVESTING IN MEDITERRANEAN REAL ESTATE

INVESTING IN MEDITERRANEAN REAL ESTATE. PORTUGAL. Why Portugal? Member country of the EU High level of safety High quality infrastructures and good accessibility Cosmopolitan people with gentle attitude towards foreigners Very good food products , excellent wines Varied scenery

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INVESTING IN MEDITERRANEAN REAL ESTATE

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  1. INVESTING IN MEDITERRANEANREAL ESTATE

    PORTUGAL
  2. Why Portugal? Member country ofthe EU Highlevelofsafety Highqualityinfrastructuresandgoodaccessibility Cosmopolitanpeoplewithgentleattitudetowardsforeigners Verygoodfoodproducts, excellentwines Variedscenery Temperateclimate
  3. YES, but why investing in property? Property market highly developed and transparent High quality supply in all sectors (retail, offices, residences) Considerable presence of foreign occupiers Strong international contingent of developers and investors No foreign exchange risk vis a vis other European markets Annualised returns 2000/10 only outperformed in Europe by UK Fiscal framewok favourable to investment funds (FIIs) and property investment companies (SIIMOs) Tax benefits for rehabilitation projects Golden residence visa
  4. Marketevolution- Before 2008: Annualmarketgrowthof 30% to 150% due to highdemandfromdomesticandforeigninvestors Annualassettransactionsover $1,3 billion Marketdominatedbyretail sector due to excellent performance Prime yields veryhighonrelativelylowassetvalues
  5. After 2008: Marketprogressive slow-downanddecrease in valueofannualtransactions Scarcityof funding for theproperty sector Increase in industrial and hotel sectorsdemand Increasedmaturenessandsignificantresilienceofpropertymarketwithownersreluctant to sell Marketstillgeneratingbetter performance than some otherEuropean countries Mainforeigninvestors: Germany, UK, Netherlands, USA, France, SpainandBrazil
  6. Marketopportunities- Assetsatdiscountfrompeakprices Expectedincrease in distress sales overthenextfewmonths in theleisure & tourism sector Growthforecast in tourismof 4% p.a. until 2020 Trophyproducts in prime locations in greatdemand Returnsin thelong/mediumtermstillverycompetitive
  7. PropertyInvestmentmostlyusedvehicles – Commercialcompanies (Plcs, Llcs ) A- PropertyInvestmentFunds (FIIs) B- PropertyInvestmentCompanies (SIMOs) FIIsandSIMOsunderthe dual supervisionof central bankandsecuritiesmarketauthority (CMVM)
  8. CommercialCompanies – Plcs (minimum capital €50.000) Llcs (minimum capital €1) Commonwith Individual investments/familyestates Small/midsizeasset portfolios Self management Notsubject to regulatorysupervision
  9. PropertyInvestmentfunds (FIIs): Propertyinvestmentfundsindustry in Portugal hascurrentlyaround€12.3 billion ($16 billion) under management More than 250 investmentfunds (FIIs) Investmentfundsmaybeclosed-end, open endedormixed, dependingonwhetherthenumberofinvestmentunitsisvariable, fixedorvariableandfixed Closed-endfunds (privatelysubscribed) mostcommonlyused Management performedbythirdparties (property / securities management companiesorcreditinstitutions) Minimum€5million ($6,5 million) assetsworthwithinfirstyear
  10. PropertyInvestmentCompanies (SIIMOs): Shalltake theformof a plcwithvariable capital (SICAVIs) orwithfixed capital (SICAFIs). SICAVIs share capital equivalentatanypoint in time to net global valueofitsassets Assetsunder self-management ofshareholdersoroutside management Minimum share capital €375.000 ($450.000) Minimumassets global net valueof€5 million ($6,5 million)
  11. Taxtreatmentofpropertyinvestmentfunds (FIIs)andpropertyinvestmentcompanies (SIIMOs) – Open- endedFIIsandSICAVIsandclosedendoneswithpublicsubscription are exemptfromtransfertax(IMT) andstamptax Closed-endFIIsandSICAVIswhoseunits are heldbyqualifiedinvestorsorfinancinginstitutionspayonly 50% of IMT andstamptax. Incometaxon net rents 20% (exempt in case ofrehabilitatedproperties) Capital gainstaxatthe rate of 25% leviedon 50% oftheadjusteddifferencebetweenaquisitionandtransfervalues (except in case ofrehabilitatedproperties) Incomepaid to non-residentsnotsubject to taxation
  12. General taxtreatmentof non-residentsonproperty– Transfertax (IMT) onpropertypurchasesat a rate of6.5% (urbanassets) onpricevalue (plus 0.8% stamptax) Propertytax (IMI) annualpaymentat rates of0.3%/0.5% onproperty’staxablevalue (maybeincreased in case ofpropertiesleftvacantorownedbyresidents in taxhavens) Incometaxonpropertyobtainedby non residentsat a rate of20% Capital gainstaxobtainedby non residentsonthe sale ofproperty in Portugal at a rate 25% leviedonthe diference betweenadjustedaquisitionvalueandtransfervalue
  13. Taxtreatmentofrehabilitatedproperties – Land tax – exempt (for 2 yearsafterconclusionofworksor 5 years in case ofresidential use) Transfertax– exempt ( ifworksstartwithin 2 yearsofpurchase) Incometax – 10% onunitsofpropertyfundsand 6% onrentsreceivedbyresidentsfromrehabilitatedpropertiesandexempt in case ofpropertyfundsandcompanies (FIIsandSIIMOs) Capital gainstax – 6% andexempt in caseofpropertyfundsandcompanies (FIIsandSIIMOs)
  14. Golden ResidencePermit Foreignnationalsfromoutside EU willbegranted a residencepermit in case ofanyofthefollowinginvestments: Capital transferof €1 million Creationof t least 30 jobs Purchaseof real estate in a minimumvalueof €500.000 (20.750.000 RUB) Visa isvalid for 1 yearrenewable for sucessiveperiodsof 2 yearsifinvestmentconditions are maintained After 5 yearsinvestorisentitled to a permanentresidencepermit
  15. большое спасибо! Thank you for your attention! Speaker: António Alfaia de Carvalho Firm: Carvalho, Matias & Associados Website: www.cmasa.pt Tel: +351 21 8855440 Fax: +351 21 8855459 E-mail: acarvalho@cmasa.pt
  16. Disclaimer Thispresentationwasprepared for general guidanceonlyandwasnotmeant to constituteprofessionaladvice. Matters in ithavebeensubject to simplificationsand, therefore, informationcontained in here does notreplacespecificprofessionaladvice. No representationorwarranty, expressorimplied, isgiven as to theaccuracyandcompletenessoftheinformationcontained in thispresentationandthefirm does notacceptanyliabilityanddisclaimsallresponsibility for theconsequencesofanyoneactingorrefraining to act in relianceoninformation in here, or for anydecisionbasedonit. Carvalho, Matias & Associados, Sociedade de Advogados RL.
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