Before the COVID-19 outbreak and following rigorous lockdowns, Portugal’s resilient and rapidly rising economy had been performing admirably. This accomplishment was demonstrated by the first government surplus in more than four decades. Also, the record amount of foreign direct investment (FDI) that had flowed into a slew of big projects, particularly in the energy sector in the profitable real estate and tourism industries.
According to the consultancy firm, 1.1 billion euros were spent in commercial real estate in Portugal from January to the fourth quarter of the year, with 534 million euros invested in the third quarter. And the 2 billion dollar barrier could be surpassed by the end of the year, according to Savills.
The Portuguese property market is resuming its pre-Covid-19 growth trajectory, with the recovery driven by a return of investor confidence- Savills’ conclusions on the Portuguese real estate market, which anticipates continued growth until 2022.
In addition, as per Arish Capital Partners, a renowned real estate investment and development firm, investors from around the GCC and MENA area are currently looking for properties to invest in different sectors. By 2019, the international community had made significant investments in the country’s real estate sector, with 35% of all property investments in the Lisbon area.
“The last several years have been amazing for the real estate sector in Portugal,” said Rosalia Torres, Partner, and Head of Sales at Arish Capital Partners. In addition to being a driver of employment creation, the real estate sector was responsible for rising foreign investment. Following the epidemic, the building sector has also experienced a surge, which will give rise to new investment opportunities while also hastening the restoration of houses around the country. According to JLL and Cushman & Wakefield study, foreign investment in real estate assets in Portugal is expected to exceed €34 billion in 2019.”
The availability of eligible assets, given municipal planning regulations, will likely be the most significant constraint to expansion; yet, this will continue to spur growth for investors in the right assets.
Several international retail brands, seeking great premises at more competitive pricing as the market returns to normalcy. Apart from increased investor interest in the residential, commercial, and retail sectors, the student housing sector also is expanding rapidly. Portugal will continue to be a potential destination for student housing since it is a good market for talent, with many of them being young students and professionals. There is currently a scarcity of student housing, representing another attractive investment opportunity.
By a recent report by CBRE, Portugal’s GDP will be on track to reach 2019 levels by the end of 2022. Furthermore, the European Commission reports that the Portuguese economy grew for the seventh straight year in 2020 and will continue to develop in 2021. It is believed that Portugal will be a prime real estate investment destination in the coming years.
Despite the dark clouds that the COVID-19 storm has put over the national economy, Portugal’s real estate sector offers a ray of light for both the public and private sectors, given its strategic importance to fiscal well-being through its 15% contribution to GDP.