Build or rehabilitate: what is the future?

The evolution of construction in Portugal has followed a very different path compared to other European countries, especially regarding its production structure. This can be subdivided and analyzed into two main segments: new construction, which involves the creation of structures from scratch; and rehabilitation, which involves interventions in existing buildings with the aim of improving their performance and/or altering their functionality (such as through alteration, reconstruction, or conservation work).

In Portugal, building renovation has represented less than 12% of the construction sector's total output, thus falling roughly four times below the European Union average. This weak performance, especially in housing, can be explained by several factors, including easy access to financing for new construction projects, the lack of a sufficiently dynamic and competitive rental market, and the social value traditionally attributed to real estate.

However, with the greater maturity of the built environment and the increased need to adapt existing buildings to new demands (comfort, safety and technology), this reality tends to reverse.

The rehabilitation segment in Portugal has thus registered increasingly significant growth, which will tend to intensify with the degradation of buildings – it is estimated that more than 35% of buildings in Portugal require immediate work, mainly those built before 1990 – and with public policies of intervention in the building stock, under municipal programs and the granting of tax and financial benefits for the conservation of buildings.

Specifically, while before 2000, incentives for urban rehabilitation were sporadic or limited to urban rehabilitation societies for historic areas, and the corresponding legislation was fragmented, after 2000, particularly with the approval of the urban rehabilitation legal framework (Decree-Law No. 307/2009 of October 23), rehabilitation gained a more solid legal framework, with integrated regimes, strategic programs, and specific fiscal instruments. This scenario was reinforced with the publication, in 2014, of the exceptional and temporary regime for the rehabilitation of buildings (Decree-Law No. 136/2014 of September 9) and, in 2019, with the corresponding definitive regime (Decree-Law No. 95/2019 of July 18), which introduced legislative adaptations in areas such as accessibility, earthquake and fire safety, acoustics, thermal, and telecommunications.

The challenges for building rehabilitation are, however, varied.

In general, interventions involve a preliminary diagnosis, actions on hidden systems, coordination with the built heritage, and adaptations within a complex legal framework. Fundamentally, rehabilitations must be proportional, follow a gradual approach, and maintain a cost-benefit balance; preserve and enhance the architectural, aesthetic, and sociocultural elements of the existing structure; and minimize environmental impact by reusing components, valuing recycled materials, and reducing emissions and waste.

Therefore, rehabilitation works, especially in the case of masonry structures, tend to be more complex and the technical knowledge available for their design and execution is generally scarce.

In this sense, over the years, to adapt buildings to new uses and functions, several irregularities have been committed, increasing their vulnerability (e.g., in terms of energy efficiency, fire, and earthquakes), such as the use of inappropriate materials and the removal of structural walls or pillars. Many older buildings also fail to comply with current legislation, which can result in penalties (e.g., in terms of the practice of architecture and engineering, tax incentives, and reputation) and, ultimately, criminal prosecution.

Furthermore, the costs associated with rehabilitation tend to be higher than those of new construction—generally between 20% and 25% more per square meter—and are more unpredictable, largely due to the shortage of skilled labor and the technical complexity inherent in working on older buildings, which are often dilapidated or subject to heritage protection. Therefore, from an economic standpoint, rehabilitation is particularly justified when the preservation of urban identity, the valorization of built heritage, the promotion of environmental sustainability, and the possibility of accessing tax benefits and European funding are at stake. Conversely, when buildings have serious structural deficiencies, significant seismic or fire risks, or very low levels of energy efficiency, new construction may prove to be a more economical, safe, and technically viable solution.

That said, several governmental and organizational measures can and should be adopted to encourage the successful implementation of rehabilitation works.

At the government level, several financial and tax incentive mechanisms stand out for projects carried out in urban rehabilitation zones duly certified by local authorities. These include access to structural funds, a reduced VAT rate (6%), exemptions from IMT and IMI (Property Transfer Tax), and IRS (Income Tax) deductions for private investments. These measures also include the expansion of rehabilitation areas managed by integrated intervention units—such as urban rehabilitation companies—the simplification of administrative procedures, and support for the professional certification of specialized technicians, particularly through training funding under European programs.

At the organizational level, it is essential to employ qualified companies and professionals, conduct specialized diagnostics and audits in accordance with applicable technical and legal standards in the main areas of intervention (such as structures, seismic and fire safety, thermal and acoustic performance, and environmental sustainability). Equally important is fostering coordination between architects, heritage conservators, licensing and regulatory bodies, as well as promoting benchmarking practices and the dissemination of successful rehabilitation projects to encourage the replication of best practices.

In this context, the entry into force of European Directive 2024/1275 (EPBD – Energy Performance of Buildings Directive), implemented in Portugal through the Long-Term Strategy for the Renovation of Buildings (ELPRE), together with the most recent national legislation, such as Decree-Law No. 95/2019, represents a strategic opportunity to respond to the housing crisis, reduce seismic and climate risks, safeguard built heritage, mobilize specialized technical knowledge and promote the transition of rehabilitation from an exceptional practice to a systematic and preferential approach, whenever appropriate.

It's important to note that, with more than 1.3 million buildings—approximately 35% of the total—requiring renovation, the renovation rate will need to be significantly increased, from the current 0.5% to 4% of the building stock per year. Only then will Portugal be able to achieve the strategic objectives defined at national and European levels, particularly in the areas of sustainability, energy efficiency, and digitalization, with a view to meeting the targets set for 2050.

The texts in this section reflect the authors' personal opinions. They do not represent VISÃO nor reflect its editorial position.