Real estate markets: Lockdown and social distancing reinforce trends

Real estate markets: social distancing from mind

The effects of covid19 on the real estate market differ. The office and the residential market is coming out of the crisis robustly, the retail sector has to fight.  Where can all this go?

Portugal´s real estate market is still robust and has even seen some price increases in the summer, as various statistics show - but lockdowns and social distancing measures have triggered or intensified complex processes. Trends like home office or the digitalization of shopping are gaining momentum. This is also having an impact on the real estate market.

The national property market has so far come through the crisis in good shape. The reasons for this are the continuing high demand for real estate from the Nacionals and abroad, the low number of existing properties and the restrained new construction activities in previous years.

In our opinion, the further development of the real estate market is dependent on the structural changes that the Covid 19 crisis will highlight in the long term.  Shutdown and social distancing measures have already triggered or intensified complex processes. Trends such as home office and online shopping, which have gained momentum as a result of the crisis, will lead to a reorientation in the residential, office and retail markets.

Nevertheless, we are convinced that residential real estate will remain an attractive form of investment!

This is what we conclude from the figures of the last weeks and months, as neither rents nor prices have collapsed on the housing market despite the pandemic. On the contrary: As already mentioned, prices for owner-occupied homes, condominiums and apartment buildings have risen more strongly in the first three quarters of 2020 than in the first nine months of 2019. We therefore assume that demand for residential space for owner-occupancy and as an investment will remain high.

We could observe from the many articles in the last months that the importance of the own four walls by Covid-19 has increased significantly, also larger flats and houses are increasingly on the search list of investors. In addition, there is a historically low interest rate phase that will continue and the yield premium of residential real estate compared to other investment options is still very good.

Author: Paulo Lopes