Analysis of the Portuguese real estate market after pandemic declaration

March 2020 will mark the end of a cycle of real estate expansion in Portugal. This Covid-19 pandemic is likely to force an abrupt interruption of the real estate market, and thus change the rules of the game rather severely. 

The failure to carry out deeds and/or closed or virtually closed deals, the failure to make profits from these same deals may lead to the closure of some real estate companies, as well as lead some, or even many, consultants to abandon the activity. 

This abrupt stoppage in the real estate market may, or even should, lead investors to refer to their activity expecting a significant correction in the prices of the assets to be acquired, which will also be inevitable. 

At the level of the international market, and in an interview with the Diário Económico this week, APPII states, and I quote, "The Portuguese Association of Real Estate Promoters and Investors (APPII) believes that the effect of the coronavirus outbreak on the real estate sector will have a negative impact on attracting foreign investment. 

This is not at all our vision for this market, given that we have been in contact with foreign investors who have told us that they have not given up on our market, they are only expecting the duration of this crisis, as well as the correction that the market will make in terms of price. 

In terms of the economic conjuncture, the vision of three of the largest European banks, Deutsche Bank, Santander and Lloyds Bank, is that the downturn will be very abrupt and very rapid, however, the recovery will come about in the same way, acute and fast. 

Generally speaking, the markets have been reacting positively since the beginning of this week, after heavy falls last week leading even to the closure of some sessions, and after the announced incentives to the economy by the ECB, as well as the Central Banks and IMF. 

"Despite the turbulence imposed by the coronavirus crisis, the agency says that maintaining a stable outlook for the national rating "reflects the assessment of DBRS Morningstar around several of Portugal´s main rating indicators," highlighting some positive elements that make the Portuguese economy better prepared to face the present scenario. 
"The Portuguese economy - having diversified in recent years to have higher quality exports and increased private sector investment - is in a stronger position than in the previous crisis and better able to support a balanced growth", he specifies". 

Text: Vitor Ferreira 

Sources: Jornal de Negócios and Diário Económico