Real Estate in Q1 2022

The first quarter of 2022 has ended just a few weeks back. It was also the first quarter for Holocene Impact Capital (HIC), and we could not have been more happy with the progress that we have made – a big thank you is in order to all our clients and partners for their continuous support.

In this edition of HIC’s Real Estate Newsletter we wanted to highlight a few themes that we have seen across the global real estate market in Q1 2022 and also transactions that we were involved in within these themes.

Three main themes at HIC in Q1 2022 were:

1. Portugal takes gold. By quite a margin becoming one of the most active markets that we cover, despite recent changes to the Golden Visa scheme.

2. Hospitality is red hot. Increased interest within the industry following relaxation of COVID-19 rules in Europe and globally.

3. Climate change and sunk assets. How does sustainability affect real estate investments?

Portugal takes gold

Portugal has been well known in Europe for their Golden Visas. Since 2012 they have granted visas for over 10,000 applicants who were accompanied by over 17,000 family members. There are a number of ways to apply for a Golden Visa and one of them is through the acquisition of real estate.

In 2022 Portugal changed the criteria when applying for a Golden Visa – crucially, it was announced that residential properties only within “interior regions” of Portugal would be eligible. This list of “interior regions” is quite lengthy. However, a key takeaway would be that acquiring residential property in markets such as Lisbon, Porto, and some parts of the Algarves would no longer be eligible for the Golden Visa.

Despite these changes, at HIC, we have seen a lot of interest in the Portuguese real estate market, primarily on the development side. We were approached by both sides – real estate developers looking to secure funding for their projects as well as private investors looking for off-market development opportunities in Portugal. We have a number of projects available in Portugal, so if that is of interest, please do get in touch with us and we will be happy to schedule time for a confidential conversation.

Hospitality is red hot

The hospitality industry is finally on the path to recovery. In 2021 all countries within the European Union reported that their respective hospitality industries have improved their performance compared to 2020 – that includes occupancy rates but also RevPAR (Revenue per Available Room). These metrics are still below 2019 levels (which can be explained by uncertainty around travel restrictions around summer 2021) and are expected to go back to pre-COVID-19 levels by 2024.

At HIC we have seen an increased number of enquiries concerning hospitality assets. These come in different forms such as:

Obtaining financing for acquisition
Identifying off-market opportunities
Development projects focusing on refurbishment of existing assets

Climate change and sunk assets

Recently, we have noticed several ESG-related trends within the real estate industry that follow HIC’s mission to make the future of capital more sustainable. A few examples would be:

Cheaper financing terms for properties within the UK with EPC rating of C and above – specifically, we are proud to work with a number of lenders that offer reduced interest rates on developments which achieve EPC rating of C and above.
Increased activity within ESG-focused infrastructure assets – we have seen a number of enquiries concerning assets operating within an ESG framework. One of the examples would be a Europe-based startup that is developing a plant that allows them to convert in-organic waste into energy with zero emissions.
Conversion of existing real estate assets targeting specifically older properties and improving their long-term value given current climate risks.

Projects like these are at the heart of what we do at HIC – if you have similar requirements please don’t hesitate to reach out and we will be happy to discuss.