Hectocorn was approached by a developer undertaking their first real estate project in Portugal — a large-scale, phased villa development located in the Algarve, one of the country’s most in-demand coastal regions. The developer, an Estonian UBO operating through a Portuguese SPV, was seeking €18.87 million in construction finance for the first phase of the project.
The total gross development value (GDV) of the scheme was projected at €110 million, with the first phase encompassing 160 villas and a further 80 units planned for a second stage. The full build was expected to take place over a five-year period. Despite being a new entrant to the Portuguese market, the developer had a ten-year track record delivering projects in other jurisdictions and planned to act as the general contractor for this scheme — an approach that would maximise profit margins and reduce construction risk.
One of the key challenges in this case was the client’s limited presales. With only 20% of the development reserved off-plan at the time of funding, most traditional lenders would have been reluctant to consider a high-leverage facility. In addition, the sponsor had no prior developments completed in Portugal, and the asset was owned through a cross-border structure, with the Portuguese entity ultimately held by an Estonian parent company.
Despite these challenges, Hectocorn was able to secure a facility that covered 80% of the project’s construction cost. This was achieved through a combination of strong planning credentials — full permission had already been granted — and a compelling risk profile. The lender took comfort in the developer’s in-house construction capability, as well as the strength of the Algarve residential market, which continues to benefit from high demand, constrained supply, and significant overseas investment interest.
The loan was agreed at a highly competitive rate of 2% plus Euribor. This pricing is rarely available to first-time developers in Portugal, particularly at such high leverage levels. The financing was structured with phased drawdowns to align with the build timeline, and repayment was expected to occur via unit sales, which were already underway despite limited formal marketing.
Deal Highlights
- Loan amount: €18,870,000
- Loan-to-cost: 80%
This case demonstrates Hectocorn’s ability to structure high-leverage construction finance in complex, cross-border scenarios — even for developers with no prior local presence. By understanding the nuances of the client’s strategy and positioning the project with the right lending partner, we delivered a flexible, cost-effective solution that unlocked a high-value opportunity in one of Europe’s most attractive second-home markets.
Frequently Asked Questions
Partner with Hectocorn to Fund High-Value Real Estate Developments in Portugal
Yes, but it is challenging. Most lenders require a proven local track record and at least 50% pre-sales. In this case, Hectocorn secured 80% construction finance for a first-time Portuguese developer by highlighting international delivery experience, strong planning status, and an internal build model.
Typically, 40–60% of pre-sales are expected. However, in cases with strong fundamentals (like planning in place, integrated construction, and experienced sponsors), Hectocorn can help secure funding even below those thresholds.
Interest rates vary significantly based on leverage, borrower profile, and risk factors. In this case, Hectocorn negotiated a highly competitive rate of 2% + Euribor, even at 80% LTC — rare for a first-time, cross-border sponsor.
Cross-border structures can raise concerns for traditional lenders. Hectocorn has expertise in structuring finance for international SPVs, ensuring transparency and comfort for underwriters through compliance, corporate governance, and strong advisory.
Yes. In phased projects like this Algarve scheme (160 units followed by 80), we work with lenders to structure drawdowns that align with build timelines, sales milestones, and cashflow cycles.