Like most European countries' real estate prices plateau, Portugal became the number one destination for investment due to its late recovery from the last financial crisis. The COVID emergency has caught the country’s real estate market on the rise. Real estate professionals and sellers sustain their high expectations of the market while capital investors actively look for new opportunities amid the crisis.
Portugal has seen a drastic increase in property prices over the last decade with a year-over-year increase of 9.8 % for apartments in 2019. Even during this current crisis the asking prices in Portugal continue to grow, compared with March 2019 Imovirtual registered a 12% increase, suggesting that sellers remain optimistic under the current circumstances. The average asking price rose from 316,629 euros to 354,757 in the same period of 2020, with Evora and Setubal contributing to the highest growth. Below data from Idealista shows a slight growth of real estate sales price in Q1 2020 across Portugal.
data source: idealista.pt
Like property owners, real estate professionals also state sustainable expectations and suggest that prices will remain stable given the uncertainties about the duration of the pandemic crisis. Soares, managing director of Engel & Völkers Porto, stated to the New York Times that the crisis has normalized the market and that escalating prices in the real estate market required a correction. Guimaraes, director of Ci said it is natural that short term expectations are low, reflecting the uncertainty of when the COVID crisis will end as this is critical for the impact on the health and economic sector. However, a recent survey of key players in the Portuguese real estate field found that opinions on the post-crisis period are less pessimistic and anticipate a recovery within 12 months after the pandemic is contained.
On the demand side, Portugal’s real estate investment has always been a market for foreign players. According to data presented by JLL and Cushman & Wakefield foreign real estate investment in 2019 exceeded €34 billion in Portugal. Despite the short-term negative impacts of the Coronavirus on the real estate market, Portugal continues to be on the radar for foreign real estate investors and developers, with companies such as Nexity currently preparing to invest 68 million euro in residential developments in Porto and Lisbon, with a second investment phase estimated at 168 million. Jornal de Negócios reported on the 27th April that Taga- Urbanic an Israeli development group active in Portugal for the last 2 years, plan to invest approximately 100 million euro in Portugal’s 2 largest cities in the upcoming 5 years, their main focus is in residential real estate.
The Financial Times reported that Chinese investors are reviving their investment activities and Portugal is among the most sought after destinations. The Chinese property site Sodichan saw a 300% increase in inquiries compared to the previous six-week period. Portugal is especially attractive due to the investment citizenship program, which was due to be blocked for property acquisition in greater Lisbon and Porto areas, however a source from the Ministry of Foreign affairs reports that it will remain unaffected, as it will be fundamental in helping the market recover following the pandemic. The Ministry of Justice in Portugal has also announced that it is preparing a set of procedures to facilitate the process of buying and selling real estate remotely.
Despite the pandemic testing Portugal as a country and the health of its institutions there is a budding optimism in the real estate sector. The long-term effect of the COVID crisis is predicted to increase the attractiveness of the country due to its abundance in rural tourism retreats, advanced healthcare systems, and established facilities for people who work remotely.
Portugal has been successful in containing the virus spread, with low numbers of both deaths and confirmed cases in comparison to most other counties and especially when compared to the neighboring counties in the South, such as Spain and Italy. As of May 18th the country is in a state of calamity with most commerce and business resuming their activities with preventive measures in place.
The foreign opinion of Portugal is positive, the world has closely followed how the country has managed the Covid-19 crisis. Forbes has nominated Portugal as the number one place to retire post Coronavirus, due to its climate, safety, good infrastructure, international healthcare, cost of living and lifestyle, among others.
In 2019 Portugal was also nominated to have the 22nd best health care system in the world according to the 2019 edition of the CEOWORLD magazine Health Care Index, which ranks 89 countries according to factors that contribute to overall health.
In sum, the overall picture moving forward is positive; expectations of a quick recovery in the real estate sector are high with investor attitudes positive and looking for newfound opportunities. Despite temporary pause prospects towards home buyers interest in Portugal both nationally and internationally are strong as the attractiveness of the country for a second home remains.