Investing in real estate must have a purpose. And “impacting cities, attracting economic activity and improving people’s lives” is the main goal of Emerge, the real estate developer of the Mota-Engil group. Over the years, the company has already brought hundreds of homes to market. And it wants to go further. “We would very much like to develop affordable housing,” says Pedro Ramos, Chief Business Development Officer at Emerge, in an interview with idealista/news. But “construction costs and licensing timelines do not help us,” he acknowledges.
Today, Emerge is focused on developing several projects, three of which are interconnected in the eastern part of the city of Porto. We are talking about the residential project Aurios and the mixed-use projects Central Freixo and M-ODU, born from the rehabilitation of the former EDP thermoelectric power plant and the former Campanhã Slaughterhouse, respectively. “In Porto, we expect to have an impact through the creation of a new ecosystem,” he states.
“In the near future, within five years, we will have several hundred housing units to bring to market.”
The future of the Mota-Engil group’s real estate developer will involve consolidating the 12–13 projects currently in the licensing phase, located mainly in the Lisbon area, which include residential, hospitality and mixed-use developments. “We are always talking about amounts in the order of several hundred million euros and also several hundred housing units. Perhaps the project with the most housing (…) will be in Alverca, where we have several tens of thousands of square meters dedicated to residential use,” the executive announces.
And building affordable housing is on the table. “We would very much like to develop affordable housing. We have teams looking at this and trying to finalize business plans with affordable housing, but construction costs and licensing timelines do not help us. Therefore, once we manage to overcome this, we will certainly be in that segment,” says Pedro Ramos, believing that a reduction in VAT and faster licensing processes will help. One of the projects where the possibility of developing affordable housing will be discussed is Central Freixo, he reveals in this interview with idealista/news, which you can read below.
Housing in Portugal
Pedro Ramos, Chief Business Development Officer at Emerge
Credits: Gonçalo Lopes | idealista/news
Emerge is focused on “making the world a better place for everyone.” How?
We strongly insist on making the world a better place because we believe that investing in real estate must have a purpose. And our purpose is to impact cities, attract economic activity, and improve people’s lives. And therefore, at our scale, locally, project by project, we aim to truly make the world a better place for the people who will work and live in these places.
Is that also the essence behind Emerge’s mixed-use projects, which, in addition to housing, also include offices, retail and new public spaces?
Absolutely. It is essential to have as much mixed use as possible so that people can live their lives—professionally, day to day, and in terms of leisure. M-ODU is an example of this; our ambition is to create a sense of community here that serves the local community and also those who come here to work.
“We try to do our best and leverage all the work accumulated over 79 years [by Mota-Engil].”
The real estate developer emerged within the Mota-Engil Group, which has 79 years of history. What advantages do you gain from this heritage and experience?
It does not come without challenges, obviously. Everything has been evolving. In real estate development, we are not the company’s core business and, therefore, we leverage that know-how, that credibility and that reputation that the group has built over all these years. And we try to leave our own mark by creating projects, especially since project creation is a part of real estate development. The construction of those projects is another part, and therefore synergies and coordination between teams are crucial. It is not always easy, but we try to do our best and leverage all this accumulated work over 79 years.
Rehabilitation of old buildings
M-ODU, a mixed-use complex born from the rehabilitation of the former slaughterhouse in Campanhã
Credits: Emerge
What challenges have you faced in the construction of your projects in terms of costs and labor?
At Emerge, we are developers and not builders, so we focus on product creation, on building the community, the concept, and how we will generate returns. Solutions related to labor and everything that concerns construction complexity fall under the responsibility of our colleagues at the construction company.
“We have teams (…) trying to finalize business plans with affordable housing, but construction costs and licensing timelines do not help us.”
You have several residential developments under construction or for sale in the Porto, Lisbon and Algarve areas (such as Aurios, Colina and Sand Cliff). How many homes have you already brought to market? And how many are under development?
Over the years, there have been hundreds. As developers, we are now reactivating activity and have around 13–15 projects under development—some residential, others tourist, and others mixed-use. And therefore, in the near future, within five years, we will have several hundred housing units to bring to market. We already have some on the market, around 100–120 homes. And we have other projects in Lisbon, such as a coliving project, which adds another 120–130 units, representing another housing solution we are trying to develop.
Housing in Porto
Aurios, in Porto
Credits: Emerge
Which segments are your homes aimed at? Are you considering investing in affordable housing?
We would very much like to develop affordable housing. We have teams looking at this and trying to finalize business plans with affordable housing, but construction costs and licensing timelines do not help us. Therefore, once we manage to overcome this, we will certainly be in that segment. Today, we are in the mid-high and high-end segment, but also serving the middle class. We have a small project in São João da Madeira that is positioned more toward the middle class. And we also have some opportunities that we are studying in more peripheral regions, which can also cater to other segments.
“VAT is an essential measure [to build affordable housing].”
What needs to be done at a legislative level to build affordable housing? How do you view the reduction of VAT to 6% and the simplification of licensing processes?
VAT is an essential measure. This uncertainty does not help in the short term because developers end up on standby, waiting for visibility on the decisions they can make. I do not know how the simplex will ultimately stabilize, but lengthy licensing processes and consultations with authorities make administrative procedures long. And when we measure returns, they are impacted by time—the longer the process, the lower the return—which is a source of concern for developers trying to attract capital. Therefore, the solution will involve VAT and licensing.
Rehabilitation of vacant properties
Central Freixo, Porto
Credits: Emerge
You have projects based on the rehabilitation of buildings, such as the former Campanhã Slaughterhouse and the former EDP thermoelectric power plant. Why did you decide to move forward with these projects? How do they transform cities, in this case Porto?
We understand that to be part of territorial cohesion and urban rehabilitation, we cannot look at isolated projects. Therefore, our investment in the eastern part of Porto is consistent. We have these and other projects [such as Aurios] that are fundamental to being what we want to be: developers with a purpose.
In the city of Porto, we expect to have an impact through the creation of a new ecosystem. These three projects are all very close to each other, benefiting from the externalities generated by one another. This perspective of being part of urban rehabilitation requires us to think about profitability in an integrated way rather than building by building. And the proximity of Central Freixo and Aurios is a good example of this, with Central Freixo benefiting from decisions already made and helping to position us. Ultimately, they will benefit an entire area that had been depressed until now and that will begin to take shape and become what we aspire it to be: a new part of the city, full of life and community, both residential and economic. This is our motivation.
“We aim to create [in OPO-City] the 15-minute city model, possibly the first in Portugal.”
Are you considering developing affordable housing at Central Freixo, given that it is a large-scale project?
We have a significant construction area, and as a large project it will be built in phases. In the third or fourth phases of the project, this may be a consideration that we will have to discuss with our partner, Ginkgo Advisors. But it is something that is part of our social responsibility, both of Mota-Engil and of the Ginkgo fund itself. It is very relevant. Therefore, all variables will be taken into account and the partners will decide.
Mixed-use projects
OPO-City, Matosinhos
Credits: Emerge
Tell us about the megaproject OPO-City, a village with commercial spaces and housing that will be built within the city of Matosinhos. How many homes are we talking about? What are the distinctive features of this project? And what is the associated investment?
We still cannot say much about this project. It is a large-scale development, with 270,000 square meters of mixed-use space, where our ambition is to effectively create almost a new city—a new hub of economic activity and housing. Our goal is to create the 15-minute city model, possibly the first in Portugal. We have a similar ecosystem under development on the outskirts of Lisbon, in Alverca, which is also very significant.
We are still in the administrative process, in the final phase of licensing for the subdivision. It will be a few years before the first buildings of OPO-City begin to emerge, and we are talking about an investment of several hundred million euros. But it is our belief that we will be able to create a new centrality, leveraged by all the strengths of the Matosinhos region and locality—its proximity to the commercial hub, the airport, the sea, and the excellent road network that exists.
“Perhaps the project with the most housing, which is currently in licensing, will be in Alverca.”
Emerge has several projects that it will announce shortly, in Ajuda, Alverca, Lumiar, Montijo… What can you tell us about them? Will they be residential?
The future involves consolidating the projects that are currently in the licensing phase—around 12–13 projects—some residential, others in hospitality, and others mixed-use. Today, it is somewhat difficult to quantify the investment that will be required, especially because it is a moving target that will fluctuate with construction prices when we are finally able to build. We are always talking about amounts in the order of several hundred million euros and also several hundred housing units. Perhaps the project with the most housing that is currently in licensing will be in Alverca, where we have several tens of thousands of square meters dedicated to residential use.
And therefore, our expectations are to continue developing these projects and finding new opportunities to somewhat offset these long real estate cycles resulting from licensing processes, which also require us to go to the market and find new opportunities—perhaps a bit more liquid—in order to continue evolving.