The real estate sector is proving to be resilient in Portugal however new analyses has shown that 16 percent of real estate companies are at risk in 2023.
According to a report by idealista, Informa D&B analysed the level of resilience of Portuguese companies and crossed it with the “Risk of Failure”, which reflects the probability of an entity ceasing its activity in the next 12 months with outstanding debts. And it concluded that in 2023 around 13% of companies are in a situation where it is more likely that they will not be able to withstand the current crisis. Around 23% of Accommodation and Restaurant companies are at greater risk of not being able to withstand the impact of the crisis that is approaching throughout this year.
In this study Informa D&B considers that there are companies in the construction and real estate sector at risk of not resisting the crisis current inflation. About 16% of these companies with real estate activities will face serious difficulties this year, says the document. And also the construction sector has 11% of companies at risk of closing.
This can be explained by constraints on both the supply and demand sides. The rise in material prices, the lack of labour (and being more expensive) and the delays in licensing further increase the builders’ budgets, which end up being reflected in the final prices of houses, making them more expensive. On the other hand, inflation, the rise in house prices and the increase in interest on mortgage loans are already slowing down the purchase of houses.
“2022 was the year with the fewest closures ever”, concluded Informa D&B, which noted that during the past year 12,988 companies were closed, 8.8% less compared to 2021 “maintaining the downward trend that has been seen since 2012, with the exception of the first year of the pandemic”, they also explain.
On the other hand, 48,404 new companies were created in Portugal last year (+14% than in 2021), witnessing a “significant recovery after the sharp drop during the Covid-19 pandemic”. And this makes the balance sheet for 2022 very positive: between the increase in new companies and “the fall in closures and insolvencies, the result is a significant increase in active companies in Portugal, which at the end of 2022 are almost 550 thousand”, said Teresa Cardoso de Menezes, general director of Informa D&B.