Impact of COVID-19 in Lisbon Real Estate

The world we know was turned inside out with the confinement forced by the new coronavirus. We believe that there are habits that are here to stay and that we will see a paradigm shift with an impact on the real estate market. Families moving out of cities to the periphery, smaller offices and in the center of cities (or almost virtual), greater interest in holiday homes and villas, strengthening the importance of the house, conversion of local accommodation to housing.

It is these trends that we will seek to explore in this article.

Remote work is here to stay

The pandemic has fostered the widespread and large-scale adoption of telecommuting. Companies have realized that employees can be more productive working from home, because they save time in transport and long lunches, meetings are faster, and there are fewer interruptions (very typical in open spaces). Those who have small and/or school-age children end up having more work and being more strenuous, but in a future situation of normality of daily life, children return to day care centers and schools, and working from home can have immense benefits, for both workers and companies.

Let’s take a look at some of the trends we expect to see in the near future:

  • Reduction of office space: For companies, office-related costs are an important component of their structural costs. With more employees working remotely, companies will be able to have their headquarters in premium buildings in the city centre, in smaller spaces, therefore more cost efficient. Warren Buffet himself questions whether people will return to offices.
  • Geographical mobility/City migration: For employees, teleworking brings the added advantage of geographic mobility. There is no longer a need for daily commuting to companies and the daily loss of hours in traffic queues or public transport. Therefore, living relatively close to work is no longer an advantage and employees can choose to live wherever they want, on the outskirts of cities, on the beach or in the countryside, and can even travel to other countries while working. Homes outside the cities are much cheaper, and the quality of life can be better;
  • Holiday Home/Houses: Being confined for months on end in an apartment in the middle of the city, surrounded by thousands of people, potential transmitters of the virus, without getting air and seeing the sun, without outdoor space for physical activity – let’s face it, it could be more pleasant! This means that many people are now considering the advantage of having a 2nd house in the province, outside large population centers. Or, change your Lisbon apartment for a house, where you have more space and can enjoy the outdoors;
  • Conversion of local accommodation to housing. The pandemic is being particularly adverse for activities related to leisure and tourism, in particular hotels and tourist accommodation. Many homeowners will consider selling their apartments to local accommodation or switching to traditional tenancy. This will boost the available supply and cause a drop in prices in the most touristy areas. On the other hand, it will allow the attraction of more stable and young residents, which will also be beneficial for the rejuvenation of these areas. The prospects for this segment are not very optimistic, however, it is in the ability to overcome adversity that good deals are made, for those who can resist.
  • Increase in the number of divorces/marital separations: the confinement forces couples and families closer together, which is positive, except when they are no longer on the same frequency. In China, the number of divorces increased after confinement, and the same is to be expected in Portugal. That means more families selling and looking for (smaller) homes.

Paradigm shift in sight?

We could be witnessing a complete change in the paradigm prevailing until a few months ago, which pointed to a massive concentration in cities, with young people looking for the central areas for the dynamics and scope of the offer of events, from yoga and meditation in the park, trendy restaurants and shops, concerts, the vibrant multicultural context due to tourism, etc… Being in the center meant being close to the epicenter of events, where everything happens, where everyone is. This led many companies to have to open offices in the center, and to give priority again to the center of Lisbon compared to other centralities of the 1990s and early 20th century, as is the case of TagusPark in Oeiras, which ended up losing its former attractiveness (of course is an opinion, debatable).

The volume of online purchases in Portugal until the end of 2019 was relatively low when compared to the Nordic and Anglo-Saxon countries. Recently, we were witnessing an explosion of meal delivery through digital platforms such as UberEats and Glovo, but, for example, online shopping in supermarkets still registered relatively low levels of adherence (mostly because of those who are unable to offer services immediate). Not to mention shopping for clothes, electronics and others. The pandemic changed all this very quickly, catching supermarkets off guard to the point of having delivery times of more than 1 month. In the US and UK, for some time now, a large number of physical stores have been closed and they have started to favor the online channel. This makes retail spaces less desirable, and on the other hand, logistics operations gain greater importance.

It will be interesting, going forward, to observe the behavior of the student accommodation market. The offer of online training has been increasing considerably over the last few years (and now it has exploded), and even fully online MBAs are starting to appear. Even if part of the courses can work in blended mode (in person and distance), the offer of online will increasingly gain more expression. This does not necessarily mean that fewer young people can come to study face-to-face at universities, as the social interaction component is particularly important at this stage of their lives. However, it is possible that there will be some behavioral changes with a direct impact on real estate.


For all that has been said, we hope to observe:

  • Rotation of assets from Offices, Retail and Hospitality to Residential and Logistics;
  • Increase in demand for Holiday Homes and Villas;
  • Relocation of demand to areas with differentiated activities on offer (eg beaches, countryside, surfing, other sports) and lower population density;
  • Conversion of local accommodation to housing.

Expected price evolution

Regarding prices, it should be remembered that real estate is a type of asset with little liquid, which reacts more slowly to economic shocks, and as such, although a correction is expected, especially in terms of capital appreciation, it is still too early to understand what will be the magnitude. In our opinion, the areas with the greatest potential impact will be the most central and most exposed to tourism and local accommodation (eg Santa Maria Maior and Misericórdia).

With the foreseeable shift from a seller’s market to a buyer’s market, the times when homes sold in 2 to 3 months are ending, and take-up times are expected to increase beyond 6 months. This was a trend that had already been observed before the pandemic, and we already expected the market to enter a more rational cycle of appreciation, as we indicated in our last Lisbon Real Estate Market Snapshot 2019. It was clear that we were in the final phase of the growth cycle, which was already being noticed in other more mature international markets. In any case, Portugal and Lisbon benefited greatly from a national and international environment that exceptionally favored real estate (and which we believe will continue to benefit in the long term).

Recommendations for those considering selling

  • Pricing: For those selling, at this stage of uncertainty, it is especially important to set the asking price at market price. Putting houses above the market price to test the market is a huge mistake, and this will be reflected in the final price. It’s the same situation as someone who buys an iPhone. Why buy in September when you know that sales are on from November onwards (the black friday, cyber monday, various Christmas campaigns, etc…)?
  • Security: Furthermore, in the current situation, it is very important to ensure that all security procedures are followed, whether in visits to homes or in contractual terms (dematerialized, digital contracts). Buyers have natural reservations and care for their physical health and want to realize that they can do everything safely.
  • Marketing and commercial follow-up: Placing an ad on real estate portals and waiting for the house to sell will not work. It will be necessary to use multiple marketing channels, and intensively follow up the potential interested parties, show them that this is as good a time as any to buy a house to live in, and can be advantageous for those who want to invest. On the other hand, for those who sell, even if they sell below initial expectations, if you are thinking about changing houses you will benefit from a more advantageous purchase as well. What matters is the final balance. Don’t forget about it.
  • Market Information: Finally, more than ever, decide based on data. We are one of the companies that invests the most in market statistics, and we collect our own information, because only then will we be able to provide an excellent service to our customers. Decide price, offers, trading strategies. Alternative and creative solutions (always within the law), such as using permutations.

We hope this article has been helpful to you. If you want to exchange some impressions, call us on +351 960 236 626 or e-mail: [email protected].

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