Covid-19’s current impact on buying Portugal real estate

Despite the current a high number of cases of Covid-19 in Portugal, real estate is in demand for purchase, as well as long-term rentals.

With the number of new cases escalating exponentially, and the pressure on the national health system leading Portugal to receive foreign aid, the country’s second general lockdown - closure of all retail establishments (F&B limited to home deliveries), compulsory homeworking, remote learning, border closures and travel banning - is proving more challenging than the first one. These measures will have a long-term impact on the economy, given the prominence of small and medium-sized companies and the high dependence on tourism.  

Nevertheless, current low inflation levels continue fostering investment activity, namely in real estate, the most recent example being the acquisition by a Singaporean listed fund (owned by French billionaire Pierre Castel) of a core and core-plus office portfolio from Rivercrown, for approximately €120 million according to a recent report at Cushman & Wakefield.

Moving abroad therefore remains a very attractive option, and areas in Portugal that will provide expats and international buyers with a better lifestyle after the Covid-19 pandemic are set to see greater price stability throughout 2021. 

As a consequence of this, properties that are better adapted better to the needs of people in Portugal after the pandemic, offering a greater number of bathrooms, larger terraces, more outdoor space, a home office and an increase in the quality and specialisation of communal spaces and services are the properties that will see the least price variation, and may even see price rises. 

Two real estate asset classes continue to benefit from this context, namely the industrial and logistics sector and the residential rental market. Regarding the former, some developers have announced new speculative projects, including the recent purchase by VGP Parks of a 27,000 sq m land plot in Sintra, to build a 13,000 sq m logistic warehouse. In the residential rental segment (an historically under-supplied market), 15% of existing short rental accommodation in Lisbon and Porto have shifted towards long-term leasing given the strong reduction in tourism activity, according to the Portuguese Local Housing Association (ALEP).