For more than ten years Portugal’s property market has gone from strength to strength and the country’s capital, Lisbon, has become one of Europe’s hottest property destinations. By the deft use of well-designed legislation, the Portuguese government has shown the rest of Europe what you have to do in order to attract foreign investment.
Golden Visa Scheme
The Golden Visa scheme, first introduced in 2012, entitles foreigners, who purchase property over 500,000 euros, to obtain a renewable visa, valid for themselves and their family, allowing freedom of movement within the entire Schengen area. Foreign start-ups have been attracted by a 200-million-euro government fund which will help them with the cost of relocation and the tech hubs established by Google, Amazon and others exert a strong attraction for tech nomads from around the globe.
Add to this one of the cheapest office spaces in Europe, all year-round sun, great beaches, beautiful cities and thriving ex-pat communities and it is not difficult to understand Portugal’s relentless property boom. Relentless that is until now.
Coronavirus’ Impact on Portuguese Property Market
Property
The latest monthly data from Imovirtual, a Portugal based real estate company, gives an indication of the impact that COVID-19 is having on the Portuguese property market. Portuguese property prices declined in July 2020 by 1.7% but they were still 5% higher than prices in July 2019, an affirmation of the resilience of the Portuguese real estate market.
Rentals
It is in the rental sector that the impact of Covid-19 is really being felt. Rental prices have been falling since the start of the year and the price drop has accelerated since April. Rental property in Porto has seen one of the biggest price drops, at around 14.2%, whilst the cost of renting in Lisbon, the most expensive area in which to rent or buy, has fallen by 8.5%.
Portalegre, in north Alentejo, near the Spanish border is now the cheapest place in the country in which to rent a property. The average monthly rent in Portalegre is around 311 euros a month, which compares very favourably with an average monthly rent of 1,459 euros per month in Lisbon.
Portugal’s Coronavirus Pandemic Measures
Portugal was widely praised for the speed and efficiency with which it implemented a lockdown, enabling the government to open up the country to the foreign tourism, on which its economy is so dependent, at the start of the summer.
The price which the country has paid, predictable in retrospect, is an increase in the number of COVID cases. Whilst, thus far the travel corridor between Portugal and the UK, which accounts for so much of Portugal’s tourist trade, has remained open, the threat of mandatory isolation for visitors returning from holiday will doubtless have put off many potential travellers and acted to force down rental prices still further.
Despite the gloomy current situation, and the prospect of a wintertime second wave of COVID, economists at Standard and Poor predict a rapid recovery for the Portuguese property market and forecast strong growth by 2022.
Interesting related article: “What is the Coronavirus?“