In Portugal, the scarcity of housing, particularly at affordable prices, was becoming a challenge when the Covid-19 pandemic emerged. Covid-19 has curtailed home transactions, which are expected to fall around 10-15% in Lisbon and 20-25% in Porto in 2020, and mitigated the upward trend of sales prices. Although a decline in prices is likely to be observed in some specific areas over the next few months, we do not expect this to be a generalised trend as housing shortage is far from being solved and we are still evidencing growth rates in several areas.

After decades of build-to sell construction, the private rental sector is currently an emerging asset class in Portugal. The development of this asset class, which was already being driven by social, cultural and demographic changes, is expected to accelerate in the aftermath of the new coronavirus, enhanced by the increased propension to renting due to the worsening of household’s affordability in a recessive economic context.

We are confident in the revamping of the residential market in Portugal, once the pandemic is controlled, as housing is a basic necessity and the market fundamentals remain robust. There is still a significant shortage of houses, both for sale and for rent, and a relevant pipeline. At the same time, we continue witnessing a high level of interest from both developers and investors.