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Lisbon Market Snapshot Real Estate 2020



  • Variation of –2.5% in the average price per m2 and of –6.2% in the average price of transactions of higher values (95% percentile) . The average price drops because there are fewer transactions in the prime and not so much because the price in the medium segment is falling;
  • The main negative impact was registered in the historical zone and in the volume of transactions in the prime segment. Central, North and Eastern areas with positive performances;
  • Variation of –17.7% in turnover and –21% in turnover;
  • Rents fell -4.4%, but leasing transaction volume fell less than sales volume (-5.6% vs -17.7% ).


  • Change of +6.4% in price/m2 and -10.2% in transaction volume in the Lisbon Metropolitan Area as a whole.


  • If you buy using credit, buy now or when prices drop is practically indifferent;
  • Contrary to the general perception, the profitability of local accommodation is not much higher than that of traditional rental, with some exceptions;
  • In the historic area it is better to rent while in the surrounding areas it is preferable to buy;
  • Whoever buys the 1st house, should consider investing first in houses to rent and only later buying your house.


2020 was marked by a very adverse context due to the COVID-19 pandemic that had a strong impact on the economy and the behavior of the population in general. The Lisbon real estate market has shown enormous resilience, contrary to the most pessimistic forecasts.

The price drop in Lisbon ended up being only 2.5%, and this drop has more to do with the reduction of transactions in the prime segment (higher prices) than the fall itself prices in the medium segment. In fact, in the medium segment, there were even price increases in many parishes of Lisbon.

Transaction volume fell by 17.7%, largely explained by the practically total confinement period of March and April 2020.

When we analyze the performance in terms of the parishes of Lisbon, it is clear that the main impact was in the historic area of Lisbon, where there is also the greatest offer in the prime segment. In the remaining parishes, particularly in the central, northern and eastern parts of the city, the performance was quite positive. The Lisbon Metropolitan Area, with the exception of the capital, also had a very positive performance, with an increase in the average price per m2 transacted by 6.2% and a drop of 10.9% in the volume of transactions.. span>


The average price per m2 fell by 4.4% in Lisbon and the volume of transactions fell by 5.6%. The drops were more pronounced and homogeneous, with a few rare exceptions (Beato, Santa Clara, Olivais, Penha de França and Ajuda). Demand remained very strong, which is a very positive indicator.

The average yield drent dropped by 0.1% to 4.3%, but in real terms, discounting Euribor-12, it is around 4.7%, a very healthy value for the residential market , and very appealing when compared to other European cities.

Type buyer profile

The market continues to be dominated by 3 large profiles of buyers, who buy to live, to invest or the prime segment. All are particularly price sensitive, for different reasons:

  • Buying for a living: Portuguese families, who are buying a house for the first time (and choosing between renting or buying) or buying a bigger house, live off their work income and generally resort to financing. Therefore, they are very price sensitive;
  • Buy to invest: Portuguese and foreign investors who buy to lease. As the average rental price has fallen more than the selling price, they are very price sensitive. They evaluate the investment by the financial return, naturally having other capital allocation options that compete with real estate;
  • Buyer segment prime: Portuguese and foreigners with own capital (although some resort to financing by choice), many of them with background  business and a good financial education. Many of them buy to diversify capital allocation or to live (buylifestyle). They are much more cautious, anticipating that there may be a correction, and thus benefiting from better opportunities.

Move to Lisbon

At times, Portugal was considered and presented as the Florida of Europe, a paradise for pensioners, slogan which I consider very unhappy. This image of Florida and Portugal are both wrong. Florida today attracts much more than retirees, with Miami positioning itself as an important business center and the same happens with Lisbon.

Abstracting from the moment we live, conditioned by the COVID-19 pandemic, Lisbon is nowadays one of the most vibrant European capitals in Europe, and I would like to highlight 3 attributes in which the city stands out highlights:

  • High-tech: Lisbon is the 5th largest hub for start-ups in Europe (source: EU Startup Monitor), it hosts important technological events (eg : Web Summit) and other conventions, is one of the cities with the best support for the creation of startups, through programs of incubators and venture capital. Lisbon is one of the cities best connected to the world’s major financial centers (New York, London, Paris, Frankfurt, São Paulo, among others) with the highest number of daily flights;
  • Lifestyle: Lisbon is the 3rd best city in the world for expats (source: Internations 2020). Lisbon has over 300 days of sunshine a year, has excellent beaches just a few minutes away, is known for its offer of excellent restaurants, cultural events, etc. Furthermore, it is eco-friendly;
  • Family: Portugal is the 3rd safest country in the world (source: Global Peace Index 2020), it is the 5th EU country with the most schools in the ranking Financial Times (source: European Business Schools Ranking, FT), has excellent international schools. Portugal is the 7th country in the world with the best English proficiency (source: English Proeficiency Index 2020).

Why do so many foreigners choose Lisbon to live? Names like Alicia Vikander and Michael Fassbender, Eric Cantona, Monica Bellucci, Isabelle Adjani, among others. Like these famous names, there is a growing community of global citizens who live in Lisbon and work for the world.

In the current context of mobility resulting from the greater adoption of remote work, Lisbon could benefit from establishing itself as a remote working platform on a global scale, having to create the infrastructures necessary to attract global talent in the areas of technology, design, digital marketing, fashion, etc., to settle in Lisbon.

In short, in my opinion, it is essential that we seek to motivate foreign buyers to invest in Lisbon for intrinsic reasons of quality and not just for conjunctural reasons related to tax benefits.

Trends for 2021

  • Remote work and coworking: after the end of the pandemic, companies will continue to allow their employees to work remotely a few days a week or a month. It will be part of the benefits package. This will mean that homes will have to be increasingly prepared to have an office space, and will open the door to an increase in the supply of flexible spaces for coworking. For example, João has his company headquarters in Lisbon, lives in an apartment in Oeiras and uses the coworking space near his home whenever he is working remotely, as he has better working conditions in this space than at home;
  • Outdoor space and amenities: one of the things that always intrigued me the most was why there are so few houses with outdoor spaces in Lisbon, particularly balconies. The pandemic has increased the appetite for private outdoor space. On the other hand, contrary to what we see in large cities like London and New York, the number of buildings offering amenities such as a gym, indoor pool, concierge, is incredibly downloads with rare exceptions. Promoters are beginning to wake up to this need, with some ventures appearing with this type of offer;
  • Modern architecture: Lisbon City Council has been, in my opinion, extremely conservative in demanding the preservation of building facades in rehabilitation projects. Let’s face it, Lisbon has very ugly buildings (I know it’s subjective), and it would be a favor to demolish them and create better integrated projects. Some new developments with bolder architecture are starting to appear (eg Infinity Tower, Fontes Melo 41, Varino 03, Quarteirão da Portugália, among others), and I believe this could be a trend for the coming years;
  • Open kitchens: According to my experience there are around 40% of buyers who like social areas with kitchens open to the living room, but this is a growing number. More and more, the kitchen is seen as an activity with glamour. Before, we locked the guests in the living room and prepared the meals hidden in the mess of the kitchen. Today, the get-together starts in the kitchen, and not infrequently the guests participate actively, they sit with us while we prepare the meals. Talk, have a drink and have a snack. An open kitchen gives a feeling of wider space. With current fume extraction technologies, the issue of fumes in the room is no longer an excuse.
  • Interior decoration and “staging as a service”: I have no doubt that there is a huge opportunity to be explored in terms of interior decoration and staging (property staging for sale or lease). There is no developer who does not see the added value of having a model floor to show the customer what the look-and-feel of the apartment will be like, and for that, decorate and furnish the apartment so that the client can experience the sensation of inhabiting that space. Never forget that we buy with emotion and justify with reason. So I’m amazed that so many empty properties are sold without staging. In my experience, a decorated and furnished apartment dramatically increases the probability of success. What does it take for this to be a reality? There is a lack of “staging as a service” companies in the market that carry out the decoration project, rent furniture, and prepare the house. That is, the owner (or the real estate agent) pays a monthly fee for this service and the buyer may have the option to buy with or without furniture, and in the end the furniture and decoration is removed and can be reused in another project.
  • Ready to move furnished apartments: many of the apartments that were in the Local Accommodation moved to traditional rental, because of the pandemic. These apartments have These apartments usually have a very high standard of presentation, and are ready to move in (although they may not be prepared for long stays). Most apartments in traditional tenancy are bare, without furniture or decoration, because landlords assume that those who rent already bring furniture. Now this is profoundly wrong.
  • Construction for rent: small investors have awakened in the last decade to the advantages of buying apartments to rent to third parties, especially after the liberalization of rents in 2012. With average returns of around 5%, with low risk (the house is an essential asset and the demand is very high), there is no doubt that it is a very attractive option. Lately, the big players in the industry are waking up to this opportunity by betting on the construction of ground-breaking apartment blocks for rent (multi-family), in part also derived from the cooling in commercial real estate. It is to be expected that these big players will adopt tripartite professional structures: who builds the asset, who owns the asset and who exploits the asset. Therefore, I predict that leasing, both at the private level of small investors and at the institutional level, will be a reinforced trend for the coming years;
  • Professional rental management: contrary to what happens in many cities abroad, most rentals in Portugal do not include a professional rental management service. Many of my foreign clients are surprised that this offer is not common and is not required by tenants. On the side of tenants, the questions repeatedly arise: “if I have a problem, who do I talk to?”. The professional tenancy management service involves preparing the house (cleaning, inventory control), receiving the tenants, handling the utilities  contracts (water, electricity, TV/internet), insurance, maintenance (small repairs and conservation works), invoicing (issuance of receipts, receipts), follow-up (periodical courtesy phone call to assess tenant satisfaction), legal support, fiscal and tax management (condominium payment, IMI), control of inventory on departure of tenants and replacement of parts (with possible activation of the security deposit), reception of keys, etc… It is a value-added service that gives security to tenants and frees landlords from any worries and gives tenants the certainty any problem will be resolved quickly. I have no doubt that many tenants will recognize the added value of this service and will be willing to pay a premium.
  • The rebirth of the periphery: Lisbon’s peripheral areas will continue to be an investment in new quality real estate projects, as is already happening in Miraflores, Algés and Carnaxide (just to name a few). The constraints of rehabilitation projects in Lisbon do not allow, with rare exceptions at very high prices, to create housing solutions with amenities attractive for the new generations, at affordable prices. On the other hand, as I mentioned, the pandemic has made location less important, due to the possibility of remote work.

Real estate profitability

When we analyze the rates of return on residential real estate in the present decade, it can be seen that the yields from the lease have been decreasing very gradually from year to year, maintaining very close to 5%, while capital gains (property appreciation) have increased significantly since 2013, reaching a maximum of 30.8% in 2017, and correcting since then.

When we discount the Euribor-12 to the lease yields, it appears that the return has remained constant, having even increased by 0.1% in 2020, despite the drop in the sale price.

In order for the market to continue to show sustained growth, it is essential that the yields discounted from the Euribor-12 remain close to 4 to 5%, to sustain capital appreciation.


Interest rates are expected to remain in negative territory for quite some time, probably a few years. Unlike the previous debt crisis, which was essentially a crisis limited to a few countries (the PIGS), this is a global crisis, and it affects everyone equally. The current funding mechanisms with the repurchase of securities by the ECB are solidary, and therefore it is less likely that there will be pressure directed towards some countries in particular, as was the case with Portugal. That doesn’t mean it can’t happen, because naturally we were and continue to be in a more fragile situation than others, due to our structural situation.Interest rates are expected to remain in negative territory for quite some time, probably a few years. Unlike the previous debt crisis, which was essentially a crisis limited to a few countries (the PIGS), this is a global crisis, and it affects everyone equally. The current funding mechanisms with the repurchase of securities by the ECB are solidary, and therefore it is less likely that there will be pressure directed towards some countries in particular, as was the case with Portugal. It doesn’t mean that it can’t happen, because naturally we were and continue to be in a more fragile situation than others, due to our structural situation.

We must pay particular attention to the end of the moratoriums, scheduled for September this year. We know that Portuguese banks are the most exposed to credit in defaults, and we know that the tap remains open for housing credit. What will be the impact after the moratorium ends if some of these families are unable to pay the debt? Contrary to the previous period, there are now different mechanisms and the risk level of banks is also lower. Just remember that in 2007 many banks financed loans 100%. It would be too optimistic to think that we will not have a potential problem on the horizon. However, the dimension of the same and the real impact is not clear. In any case, we should not forget that the real estate market crisis broke out in the summer of 2007 in the US and Portugal only really felt it in 2009, and more intensely in 2011.

Final message

I believe it will be a year of adjustment of expectations but also the year of Lisbon’s rebirth, after the current pandemic crisis. Lisbon has been moving from the status of an emerging city to a safe bet, managing to compete side by side to attract investment, talent, expatriates and Portuguese families, who believe that this is probably one of the best cities in the world to live in.

It will be a market that tends to be dictated by the buyer, who will be more demanding and look for quality at a fair price. Foreign investment will continue to invest in Portugal for intrinsic reasons of quality and not conjunctural reasons (incentives such as the Golden Visa), foreigners will continue to want to come and live in Portugal, the Portuguese will continue to look for houses that are more adapted to their needs. Everyone will demand quality at fair prices.

Prices in Lisbon may undergo a slight adjustment of around 5%, on average. There will continue to be strong demand in the central and outer areas of the city, in particular, on the axis Campolide/São Domingos de Benfica/Alvalade/Areeiro, and Benfica/Carnide/Olivais/Marvila strong>.

International buyers will continue to be active looking for quality and exclusivity in the historic area of Lisbon, and I believe that there may be a recovery in the volume of transactions in the prime segment. span>

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