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Portugal Real Estate Market View

Andreia Almeida • 20/12/2021

Portugal continues to lead the worldwide COVID-19 vaccination rate, with 89% of the population fully vaccinated according to Our World in Data. Nevertheless, following the increase in the number of cases, the country moved back to the so-called State of Calamity and introduced new restrictions. Among these are the obligation to use masks in indoor spaces, mandatory PCR / antigen test for air travel passengers when entering mainland Portugal (not applicable to the islands of Madeira and the Azores); and an EU COVID-19 Digital Certificate to access restaurants, hotel accommodations and gyms. Additionally, to prevent a spike of new cases after the holiday break, remote working will be compulsory between 2 - 9 January, with schools only reopening on 10 January.
In terms of commercial real estate, the occupational markets continue recovering overall, although at a different pace among sectors:

  • Offices (January-November): take-up in Greater Lisbon in the period increased by 17% to almost 140,000 sq m in, influenced by what is likely to be the largest deal of the year - the future occupation by the Oeiras municipality of its new City Hall (whose construction recently started) with 30,500 sq m; by contrast, Greater Porto contracted by 13%, to just less than 40,000 sq m;
  • Retail (January-September): 380 new retail units opened during this period, reflecting a 10% YoY growth, with the food sector particularly active (80 new openings, nearly double when compared to the same period last year);
  • Industrial & Logistics (January-September): this sector continues to boom, with almost 410,000 sq m occupied (a 44% increase), of which 55% in Greater Lisbon and 48% in built-to-suit units; the future occupation by Garland of its 38,000 sq m Logistics Centre in Gaia (Greater Porto) deserves to be mentioned;
  • Hospitality (January-October): is gradually recovering, with overnight stays increasing 31%, to 31.3 million, partially supported by domestic demand (currently good for 53% of total demand).

On the back of substantial volumes of liquidity, institutional investors continue resuming their activity, with volumes until November currently at €1,470 million and the year-end forecast at just below €2 billion, a 30% decrease compared with 2020 (when the third historic high was reached thanks to two exceptionally large deals). The office sector is the most sought-after, accounting for 41%, followed by ‘others’ (including residential), 28%, and hospitality, 18%. The three largest deals thus far in 2021 reflect these market shares: Sixth Street’s purchase of 15 buildings in the Quinta da Fonte office park from Signal Capital for €125-€130 million; Azora’s purchase of the Tivoli Marina Vilamoura and Tivoli Carvoeiro hotels from Minor International for €148 million; and a confidential transaction of a portfolio of granular residential assets (PRS).


24 September

With almost 82% of the population fully vaccinated against COVID-19, Portugal is currently the country with the highest coverage rate worldwide according to Our World in Data. Since mid-September, masks are no longer mandatory outdoors (only in enclosed spaces and recommended when social distancing is not possible), with further easing of restrictions expected to be announced next week, as the 85% threshold for the third (and last) phase is reached.

In the commercial real estate sector, during Q3 headline market rents remained relatively stable, supported by a continued preference by landlords to grant additional incentives rather than rent reductions. Nevertheless, the lower availability among some of the better-quality office buildings contributed to a slight increase of prime values in Lisbon to €23.5 (€/sq m/month), remaining at €18 in Porto. Similarly, the industrial & logistics sector stabilised at €4.0 in Lisbon, registering a small increase in Porto, to €3.9. Conversely, the greater dependence of high street retail on tourism led to a slight drop in Lisbon, to €122.5, remaining unchanged at €72.5 in Porto; as well as in shopping centres (€102.5) and retail parks (€11).

Prime yields reflect a greater focus of investors on core assets in prime locations. Consequently, compared to 2020 prime yields contracted 35 b.p. in offices (to 3.75%) and 75 b.p. in industrial & logistics (to 5.25%); stabilised at 4.25% in high street retail; and increased by 25 b.p. in shopping centres (to 5.50%).


25 August

The vaccination rate in Portugal continues to increase, with 72% of the population now fully vaccinated, the third-highest rate of the European Union according to Our World in Data. Consequently, the 70% threshold for the second phase of restrictions easing was reached, bringing it forward to 23 August, while the country steps down into a State of Contingency. However, among the new rules, which include a capacity increase in F&B units, masks remain mandatory while on the streets due to bureaucratic matters.

The national economy also continues its recovery path, with GDP reaching a 4.9% growth in Q2 from the preceding three months, the highest of the Euro zone, which averaged at 2%, according to the National Statistics Institute (INE) and Eurostast.

As more countries update their travel restrictions on the back of these higher vaccination rates, foreign demand should finally pick up in the hospitality sector. According to INE, during the first semester this market contributed the most for the total year-on-year drop of 17% in guests and 21% in overnight stays, despite the noteworthy increase in domestic tourism (+24% in overnight stays), placing its share of total demand at 62% (vs 40% in 2020 and 29% in 2019 over the same period). Regarding the summer period, and according to the Pestana Hotel Group (the largest hotel chain in Portugal), booking rates are much better compared with 2020, supported by the domestic market, though at 50% to 66% of the high levels registered between 2017 and 2019.


11 August

As the vaccination rollout accelerates (near 60% of the total population has now been fully vaccinated) and the latest surge in infections slows down, the Portuguese Government announced late July a three-stage plan to ease lockdown restrictions. These will no longer be differentiated by municipalities, but applied countrywide, and include:

  • Digital certificate / negative test: required to stay in hotels, indoor consumption at F&B units (on weekends), and attend gym group classes and big events;
  • Phase 1 (from 1 August): lift of nightly curfew and retail opening hours restrictions; remote working no longer mandatory (albeit still recommended);
  • Phase 2 (from 5 September or with 70% of population fully vaccinated): no longer compulsory to wear a mask in outdoor areas (except in crowds); and
  • Phase 3 (October or 85% of population fully vaccinated): reopening of nightclubs; F&B without maximum person limitations.

Last month also witnessed significant investment activity, with €490 million transacted, just slightly below the total volume transacted in the previous 6 months (€561 million), a clear indicator that investors are resuming decision making processes. The office sector stood out, accounting for 62%, and includes the acquisition by Sixth Street, in partnership with Acacia Point Capital Advisors, of 15 buildings (of a total of 22) within the Quinta da Fonte office park from Signal Capital for an undisclosed amount estimated to be in the region of €130-140  million. Despite being among the hardest hit sectors by the pandemic, the hospitality sector also saw much activity with the sale by Minor International of two five-star resort hotels in the Algarve (Tivoli Marina Vilamoura and Tivoli Carvoeiro) to Azora for €148 million.


27 July

As Portugal continues fighting the COVID-19 pandemic, the Government extended the State of Calamity until 8 August, while circa 42% of the municipalities on mainland Portugal are now classified as ‘high risk’.

Nevertheless, according to the National Statistics Institute (INE), consumer confidence continues to rise albeit moderately, with June registering the highest value post-pandemic. This is good news for the retail sector, further encouraged by the latest figures on transactions through the Multibanco (ATM) network, which grew by 17.4% YoY, with the number of operations over the last 2 months at pre-pandemic levels. New openings in the sector also reflect a recovery trend, with 100 new retail units opening in Q2 (+41% YoY), totaling 32,400 sq m.

In the office sector, the Greater Lisbon market registered a mere 27 new lease deals in Q2, totalling 26,150 sq m (-35% YoY), which includes the biggest deal of the first half of the year - the pre-let of circa 10,000 sq m to Critical Software in K-Tower, currently under construction in Parque das Nações (Zone 5). In Greater Porto, despite the increase vs Q1, take-up stood at 6,820 sq m (-24% YoY), with H1 figures at 9,560 sq m.

On the other hand, the industrial & logistics sector continues buoyant, with 153,900 sq m occupied in Q1 (+276% YoY), of which 47% in built-to-suit units, and with highlights being the leases by Rangel and Olicargo of 18,900 sq m in Merlin Properties’ new Northern Lisbon Logistics Platform. Levels of demand should remain high, also supported by the continued recovery of both exports and imports of goods (excluding fuel), by respectively +24.5% and +15% YoY.


14 July 

The surge in infections over the last weeks has led more municipalities into the “high risk” list, thus subject to stricter rules.  

Among these is a new measure, requiring indoor diners to prove a negative test or present an EU Digital COVID-19 Certificate (on Friday evenings and weekends only).  

This measure also applies nationwide to tourists accessing hotels or short stay accommodation

Private consumption continues to recover; up to May 2021 retail sales grew 3.3% YoY according to the National Statistics Institute (INE).  

This figure, although influenced by a base effect (as the comparison includes those months heavily impacted by the pandemic), current figures reflect a minor 0.6% homologous decrease on 2019 figures (with a 5.6% increase in the food sector and a 6.9% drop in the non-food sector). 

Institutional real estate investment picked up in Q2, with €354 million transacted in the quarter, taking the H1 volume to €556. This was highly influenced by the office sector (namely the Navigator portfolio sale for circa €120 million) and the alternatives segment.  

We anticipate real estate investment activity to pick up throughout H2, which so far includes the recent acquisition by Jamestown of the Entreposto (mostly offices) building for €98 million.  

Year-end estimates amount to near €2.2 billion (assuming the completion of hotel portfolio Project Crow, the largest transaction in the pipeline). 


01 July 

Due to the worsening of the pandemic situation in Portugal, particularly in the Lisbon region, the Government extended the State of Calamity until 11 July and suspended the planned easing of lockdown restrictions, while reinstating previous measures in some municipalities.  

Lisbon is among the few that take a step back, which includes earlier shopping closing hours, particularly at weekends. 

According to INE (National Statistics Institute), in Q1 the Portuguese savings rate reached a historic high of 14.2% (12.8% in Q4-20).  

The Bank of Portugal recently revised upwards the GDP growth forecast for 2021 to 4.8% (vs. 3.9% in March), on the back of an increase in exports and private consumption; reflecting a quick, albeit incomplete, recovery of the Portuguese economy. 

In the commercial real estate sector, despite the general slowdown in occupational activity, most Q1 prime market rents remained stable, supported by higher tenant incentives.  

In offices, Lisbon was an exception, with the prime rent increasing to €23.5/sq m/month, with Porto remaining at €18.  

In the more active industrial sector, rental levels stabilised at €4/sq m/month in Lisbon and grew slightly to €3.90 in Porto.  

In retail, rents remained unchanged in both high street (€122.5/sq m/month in Lisbon and €72.5 in Porto) and shopping centres (€102.5). 

Q1 prime yields reflect an increased focus on core products in prime areas, registering a 25 b.p. contraction in both offices (to 3.75% in Lisbon and 5.75% in Porto) and industrial (to 5.50% and 5.75% respectively).  

In retail, high street prime yields stabilised at 4.25% in Lisbon and 5.25% in Porto, and shopping centres further increased by 25 b.p. to 5.50%. 


14 June

On 14 June most of Portugal took a further step in the lockdown easing, with no more restrictions on retail opening hours (until 1am for food retail) and working from home, while still recommended, no longer mandatory. However, given the higher number of cases per 100,000 inhabitants, Lisbon is among the few exceptions that remain under stricter rules. 

Following merely a month of pent-up demand from British travellers, as Portugal became the most popular tourist destination on the United Kingdom’s ‘green list’, its recent transition into the ‘amber list’ (implying quarantine for 10 days on return) was a huge blow for tourism. This will be a setback for the sector’s activity which, according to the National Statistics Institute (INE), expanded in April but remains far from 2019 figures - on a year-to-date analysis, total number of guests were down by 67% and overnight stays by 70% compared with 2020 (and 82% and 84% respectively compared with 2019).  

Following much reduced activity in Q1, institutional investment is also gradually picking up: while total transaction volumes currently stand at no more than €266 million, year-end estimates amount to circa €2.1 billion, including Project Crow - the ca. €1 bn sale by ECS of its restructuring funds, with currently three investors (Davidson Kempner, Bain/Cerberus and Oaktree) in the final bidding round. 


02 June

The Portuguese Government prolonged the State of Calamity until 13 June, including compulsory working from home, with Lisbon (given increasing infection numbers) now among the few municipalities ‘on alert’.

Nevertheless, Portugal continues to have some of the lowest infection rates per 100,000 and corresponding lesser mobility restrictions in Europe. According to a survey by the National School of Public Health, 44% of the respondents now leave their houses daily or almost daily, which should continue to boost, among other, the retail sector. 

The office market received a boost by the recently announced lease of 10,000 sq m to Critical TechWorks, a joint venture between BMW and Portuguese tech company Critical Software. 

In the industrial & logistics sector, Merlin Properties launched their logistics park known as Northern Lisbon Logistics Platform, whose first occupants will be the logistic operators Olicargo and Rangel. The park will also host the future logistics centre of food retailer Jerónimo Martins.

In the residential market, the gradual shift in preferences, with an increased focus on working from home and outdoor living, is benefiting the high-end sector. For example, in 2020 the property sales segment of tourism operator Pestana Group was the only that grew (by 12%), thanks to projects like Tróia Eco Resort; and the luxury resort Vale do Lobo (Algarve) saw sales increase by 60%. For this trend also contribute the current programmes targeted at foreign buyers, namely the Non-Habitual Resident tax regime and the so-called Golden Visa, which saw growth of 4.5% YoY in Q1-21, also due to the announced restrictions on this programme to take effect next year.


25 May

Notwithstanding the much-improved sanitary situation in Portugal, the State of Calamity was extended until 30 May, as well as compulsory working from home. On the latter, the Government’s April ruling that working from home would remain compulsory until the end of the year in certain municipalities, expectations are now that this will be reversed in June, and a general return to offices will start taking place, subject to rules defined at a local or regional level. This will be good news for this sector, where the decrease in demand continues to impact take-up volumes, with January-April figures registering a year-on-year decrease of 43% in Lisbon and 80% in Porto, to 41,700 sq m and 4,100 sq m respectively. 

According to preliminary data by the National Statistics Institute (INE), tourism consumption in Portugal dropped by 50.4% in 2020, to €16.3 billion, the equivalent to 8.0% of GDP (vs. 15.3% in 2019). For the current year, expectations are that the gradual scaling down of travel restrictions will boost demand, notably now that Portugal is the only major Southern European destination among United Kingdom’s ‘green list’ (no quarantine needed upon return) of merely 12 countries, in addition to the recent lifting of the travel ban by Portugal to tourists from Britain. 


5 May

The ongoing improvement of the pandemic situation allowed Portugal to shift into a less restrictive (notwithstanding its name…) State of Calamity on 1 May, when most municipalities entered the fourth and final phase of lockdown easing. 

Retail stores now enjoy longer opening hours, including F&B units (allowed to operate daily until 10.30 pm); and gyms resumed group classes. This gradual evolution should help revert the strong impact the confinement measures had on the retail sector, which, according to the Portuguese Shopping Centre Association (APCC), led to the closure of 169 units in shopping centres in the first 4 months of 2021 (added to the historical record of 200 shop closings in 2020). 

By contrast, the industrial & logistics sector registered take-up of 102,220 sq m (+48% YoY) during the first quarter of 2021, with the main highlight the pre-let by Radio Popular of 30,000 sq m in VGP Park Santa Maria da Feira, near Porto. Following the recent completion of Merlin’s first 45,000 sq m warehouse in its Northern Lisbon Logistics Platform, the sector continues to witness the announcement of new projects, such as the future, fully automated logistics platform of Iberian food retailer Mercadona in Almeirim (60 km of Lisbon) on a 420,000 sq m site. 

20 April

With infection numbers drastically reduced after almost 3 months of lockdown, most Portuguese regions entered the third phase of lockdown easing on 19 April, with the reopening, amongst others, of all retail units, shopping centres and indoor dining. However, except the nationwide reopening of high schools and universities, stricter rules subside among the few municipalities with high transmission rates. 

Among the cities that will not progress into the third phase are popular tourist destinations Albufeira and Portimão in the Algarve. According to INE, after one year (March 2020 to April 2021) of the COVID-19 pandemic this region concentrated a third of total overnight stays in Portugal, which dropped 72% YoY. Given travel restrictions, domestic demand dominated with an expressive YoY growth of 30 p.p. to 60%. 

Given the cautious approach by tenants, the office sector also registered a slowdown in demand, with Q1-21 take-up in Greater Lisbon contracting 34% YoY to 29,200 sq m. Among the main deals are two pre-lets (totalling 6,000 sq m) in the Lumnia building (first of the Exeo Office Campus project), for delivery by year-end, demonstrating the continued interest in quality supply.

Also reflecting much reduced activity throughout Q1-21, institutional investment merely reached €166 million, the vast majority of which in the office sector, notably the sale of the Navigator portfolio (Maxirent fund), mostly composed by office assets, for approximately €120 million. 

9 April

After 2½ months of lockdown, the pandemic situation in Portugal has improved substantially and the country entered the second phase of lockdown easing on 5 April. Among others, this allowed more retailers, namely stores up to 200 sq m with direct street access, to resume trading, along with bar and restaurant terraces and gyms. 

These measures are expected to gradually improve the performance of the retail sector, one of the most impacted by the current pandemic. During Q1, the high street segment registered a slight decrease in Lisbon prime rents, to €122.5/sq m/month, and remained unchanged in Porto at €72.5/sq m/month; with prime yields stable at 4.25% and 5.25% respectively, given the scarcity of quality supply. 

In the office sector, prime rents remained at €23/sq m/month in Lisbon and €18/sq m/month in Porto, supported by the asking values in new developments, despite the lower take-up volumes over the last months. Notwithstanding this lull in occupier activity, investors continue keen to acquire core/core+ assets, namely in Lisbon and Porto Prime CBD, resulting in yield compression of between 10 and 15 bp, to 4.00% and 6.00% respectively.

The industrial and logistics sector continues gaining momentum, with speculative developments entering the pipeline and investors actively seeking opportunities. Consequently, rental levels stabilised at €4/sq m/month in Lisbon and €3.85/sq m/month in Porto, with an upward outlook; and prime yields contracted by 25 bp, to 5.75% and 6.00% respectively. 


25 March

Despite the renewal of the State of Emergency until 31 March, the improvement of the pandemic situation led to a 4-phases lifting of lockdown restrictions starting 15 March. Subject to fortnightly revisions, depending on the development of the health situation, highlights are: 

  • Basic rules: general lockdown until Easter; mandatory remote working (whenever possible); authorised retailers’ opening hours until 21:00 on weekdays / 13:00 on weekends and holidays (19:00 for food retail); and travel is forbidden between municipalities during the Easter week; 
  • 15 March: reopening of nurseries, prep schools, up to 4th grade schools and beauty salons; return of retail sales - and real estate agency activities; 
  • 5 April: reopening of up to 6th grade schools, stores up to 200 sq m with direct street access, F&B terraces (max. groups of 4 people) and gyms (without group classes); 
  • 19 April 19: reopening of secondary schools and universities, all retail units and shopping centres and F&B inside (max.  groups of 4 people or 6 in terraces); 
  • 3 May: F&B without closing hour limits (max.  groups of 6 people or 10 in terraces); gyms fully opened. 

Together with the recent removal from UK’s travel ban ‘red list’, this easement of restrictions is expected to pick up hospitality reservations in Portugal, which was recently considered the 8th preferred destination post COVID-19 for luxury travellers according to a Condé Nast Johansens study. 


9 March


Despite no signs of immediate impact on rental values, partly due to the current lack of quality supply, zones with higher vacancy may suffer a downward pressure on rents.


Landlords prefer to maintain headline rents and provide other types of tenant incentives.


Workplace concept is expected to change, reflecting an increase of both hotdesking (as more staff will work from home more frequently) and of common areas to accommodate teamwork, learning, and inspirational activities; the health and wellbeing of employees will be increasingly relevant.




The effects of the pandemic are likely to extend at least until the summer – assuming it is then controlled, we expect substantially increasing spending patterns.


Employment levels, consumer confidence and tourism flows will be the key variables to monitor.


Several businesses struggling with cash shortage will not survive without restructuring – room for consolidation and “survival of the fittest”.




The industrial sector’s resilience should continue to attract investment, with the shortage of quality assets in the country’s main logistic axes, representing an opportunity for developers.


Growth of e-commerce will result in higher demand for urban logistics, potentially bringing new players into the market.


Technology, transports, postal services, F&B, food and healthcare companies, will remain among the most active occupiers.




The general perception that tourism fundamentals have not changed remains true, and the market will rebounce eventually, especially taking into consideration the vaccination plan already in place.

However, Europe is being severely hit by the 3rd wave, and recovery will take longer than expected.

Hotel operators are nevertheless convinced that Summer 2021 will exceed 2020 but still only represent 50-60% of 2019.



Although the current crisis will continue to impact residential demand in the coming months, no major price correction is expected as the market fundamentals (supply / demand imbalance) are still valid, most developers are well capitalized and the moratorium on mortgage repayments were extended until September 2021.

When compared with other investment alternatives, the safety and returns oered by the residential sector continue to be attractive, and Portuguese residential prices remain competitive compared with other European capitals.


While there is uncertainty about the medium to long term eects of this crisis, investors, including foreign capital, want to keep deploying capital; thus, if vaccination programs progress well, H2 shall be more active than H1.

Risk premiums have risen and availability of finance has shrunk, impacting pricing across most asset types, compounded by the operational uncertainty on future performance, particularly of battered asset classes.

In this environment, core and core plus assets are at a premium; many investors are also signalling their interest in opportunistic deals, but the spread between bid and ask will remain significant for the next few months.

24 February

The Portuguese Government recently presented the Recovery and Resilience Plan, outlining the application of EU funds during the post-pandemic period, which foresees a €1.633 million investment in residential, of which €1.251 million on the Support Programme for Access to Housing. Additionally, loans from the Recovery and Resilience Instrument, amounting to €1.149 million, will be used to invest in affordable public housing (€774 million) and affordable student housing (€375 million). 

Complementary changes to the so-called Golden Visas were postponed until 2022, when real estate investment in the metropolitan areas of Lisbon and Porto, and some coastal regions like the Algarve, no longer qualify for the obtaining of a visa although investment in commercial real estate will be excluded from these future restrictions. 

The residential segment continues to attract investment, with the local co-living concept Smart Studios announcing plans to invest more than €130 million in new projects over the next 3 years, and Caledonian also looking to develop build-to-rent projects in Portugal. In addition, the sale of a large portfolio of 4,300 residential units by asset manager Norfin, on behalf of local lenders, is about to be closed. 

According to the National Statistics Institute (INE), the hospitality sector registered a 63% contraction in overnight stays in 2020 to 26.0 million. Notwithstanding, the sector may soon register one of its largest-ever investment deals, as the Portuguese private equity and restructuring firm ECS is marketing Project Crow, a portfolio of around 20 hotel units plus development land (and a few shopping centres), with a total GAV of €1.400 million. 


10 February

With the number of new cases escalating exponentially, and the pressure on the national health system leading Portugal to receive foreign aid, the country’s second general lockdown - closure of all retail establishments (F&B limited to home deliveries), compulsory homeworking, remote learning, border closures and travel banning - is proving more challenging than the first one. These measures will have a long-term impact on the economy, given the prominence of small and medium-sized companies and the high dependence on tourism.  

Nevertheless, current low inflation levels continue fostering investment activity, namely in real estate, the most recent example being the acquisition by a Singaporean listed fund (owned by French billionaire Pierre Castel) of a core and core-plus office portfolio from Rivercrown, for approximately €120 million. 

Two real estate asset classes continue to benefit from this context, namely the industrial and logistics sector and the residential rental market. Regarding the former, some developers have announced new speculative projects, including the recent purchase by VGP Parks of a 27,000 sq m land plot in Sintra, to build a 13,000 sq m logistic warehouse. In the residential rental segment (an historically under-supplied market), 15% of existing short rental accommodation in Lisbon and Porto have shifted towards long-term leasing given the strong reduction in tourism activity, according to the Portuguese Local Housing Association (ALEP). 


26 January

After entering a second lockdown starting 15 January, the deterioration of the pandemic situation in Portugal has been forcing the Government to step up measures, the most recent one being the interruption of all teaching activity for 2 weeks. 

With non-essential services closed and most people confined to their homes (except for the presidential re-election of Marcelo Rebelo de Sousa last Sunday), there is a renewed pressure on retail and hospitality. The retail sector will be helped by a couple of recently enacted bills including rent discounts of up to 50% on lost sales in retail schemes during Q1 (potentially extended to Q2)  and subsidised rent payments (with a cap of €2,000 for monthly rents up to €4,000) in high street retail. As for hospitality, and according to the Portuguese Hotel Association (AHP), with 80% of hotel units closed, the recovery of the sector is now not foreseen until 2024. 

In the residential sector, 2020 confirmed the anticipated reversion of price increases, according to Confidencial Imobiliário’s Residential Information System (SIR). In Lisbon, total (i.e. new and used) closing sales values for apartments contracted by 3% to €3,670/sq m and by 4% to €13.1/sq m/month in the lease market. As for Porto, the same indicators registered a contradictory behaviour, dropping 6% to €2,180/sq m (sales) but increasing 2% to €10.2/sq m/month (leases). 


14 January

Following the record high daily infections after the holiday season, Portugal entered its eighth State of Emergency with tighter restrictions, which could amount to a full lockdown depending on the evolution of the pandemic over the next days.

In the real estate occupational markets, 2020 YTD figures reflect the mixed impact of the pandemic: 

  • Offices (January-November): take-up contracted by 31% to 118,200 sq m in Greater Lisbon and, by contrast, increased in Greater Porto by 36% to 45,400 sq m; 
  • Retail (January-December): new openings amounted to no more than 370 stores (-56% YoY); 
  • Industrial & logistics (January-September): an impressive growth in take-up to 232,600 sq m (+111% YoY); and 
  • Hospitality (January-October): heavily impacted, with overnight stays at 19.2 million (-63% YoY) and total revenues decreasing to €1.15 billion (-66% YoY). 

Investment transactional activity reached €2.8 billion, the third-ever highest volume. More than half of this amount was represented by 3 large transactions - one each in the office, retail, and hospitality sectors, and with the latter two occurring in Q1, i.e. before the pandemic. For 2021, transactions currently under negotiation amount to some €1.8 billion, while another €1.8 billion are in the pipeline for this year or next. 


9 December

The State of Emergency was renewed for another 15 days starting 9 December with partial lockdown in the most affected areas (including Greater Lisbon and Porto) between 23.00 and 6.00, as well as from 15.00 on weekends. There is likely to be a degree of relaxation over the Christmas period. 

The 2021 Budget was approved by the ruling Socialist Party with thanks to the abstention of the Communist Party. Of relevance to the real estate sector is the fact that the controversial so-called Golden Visa regime (whereby non-EU citizens can obtain a residence permit, but not a passport, by investing in real estate or companies) has not been abolished for now, and that retail rents in shopping centres will be reduced by the same percentage as sales (up to a limit of 50%) during the first quarter of 2021. 

A recently-published household survey reflects the surge of online shopping in Portugal, notably the highest growth in e-commerce users, to 44.5% and a significant increase in both the number of orders and amount spent by order, including to 55.9% (+23.7 p.p. YoY) in orders equal or above €500 (based on 3 months analysis). 

In an apparent counter-cyclical development, average bank valuations of residential property reached once again an historical high in October of €1,131/sq m (+5.8% YoY) - €1,504/sq m in Lisbon and €1,131/sq m in Porto.


25 November

With Portugal reaching record high daily infections, the current State of Emergency was recently renewed until 8 December. 

According to the National Statistics Institute (INE), the information currently available reveals a slower pace of economic recovery during September and October. Notwithstanding, confidence levels continue to increase, including in the construction and retail sectors. 

The retail sector continues amongst the hardest hit by the recent restrictions. According to data from SIBS Analytics (main payment processor and ATM supplier in Portugal), following a slight recovery during the summer and October, the first half of November registered again a drop (-12% YoY) in physical shopping. Conversely, online sales continue growing, by 32% during the analysed period. 

The hospitality sector is also recording a slowdown, with a reversal of the recovery trend in airport passengers, which reached -69% YoY in September. Consequently, the latest estimates by the Portuguese Hospitality Association (AHP) foresee that over 70% of the hotel supply will remain closed until Spring 2021. 

Institutional investment activity reached the third record high transaction volume in Q3, although highly influenced by some large deals. Current year-end estimates are at €2.8 billion, no more than 5% and 12% below 2018 and 2019, respectively. 

11 November

Following a partial lockdown in 121 municipalities (with more than 240 cases of infection per 100,000 residents) since 4 November, which includes a civic duty to stay home, restricted retail opening hours and mandatory working from home, Portugal returned to a State of Emergency on 9 November. This enactment clears the way for the Government to introduce further compulsory measures as needed, including restrictions on movement of people, although so far a (nearly) total lockdown is not being considered.  

During Q3, and given the gradual reopening of economic activity, the sharp GDP decline in Q2 (-16.4%) eased to -5.8% YoY according to the National Statistics Institute (INE). Additionally, the European Commission recently revised its forecasts for Portugal, slightly improving the GDP drop to -9.3% in 2020, though still higher than local Government estimates (-8.5%).

Additional monthly indicators illustrate the pandemic effect in the commercial real estate: 

  • Offices: unemployment rate stood at 8.1% in August (+1.7p.p. YoY), but provisional September figures by INE point to an improvement to 7.7%; 

  • Retail: according to the Portuguese Shopping Centre Association (APCC), retail sales continue to recover, with a lesser contraction of 20% YoY in September;

  • Hospitality: INE’s quick estimates indicate that tourist activity did not recover in September, with worse YoY growth rates (-52.2% in number of guests and -53.4% in overnight stays) compared to August.


27 October

Like in most European countries, infection figures in Portugal have seen new spikes in recent weeks, reaching new historical highs.

Consequently, the country entered a State of Calamity, with mandatory use of masks in public spaces, stricter limits on gatherings and heavier penalties for establishments that break the rules, among others.

Further measures include the Government recently prohibiting citizens travelling outside of their municipalities during the All Saints national holiday period and imposition of a partial lockdown in three of the most affected cities in northern Portugal.

The 2021 State Budget is currently under discussion and envisages a GDP growth of 5.4%, following a drop of 8.5% this year. Few tax changes are anticipated for real estate, except, amongst others, that the end of the 3-year exemption period of IMT (Property Transfer Tax, usually levied at 6%) on the sale of the shares of SPV’s for the purchase and sale of properties. Additionally, residential accommodation taken out of the short-term rental pool will no longer be subject to capital gains tax (even if not channelled into long-term rental).

Leasing activity YTD Q3 reflects the negative impact of the pandemic crisis, particularly in retail, with new openings of merely 300 stores (-51% YoY). Take-up in the office sector shows a contradictory evolution, reaching 102,400 sq m (-30% YoY) in Greater Lisbon and 38,650 sq m (+28% YoY) in Greater Porto. By contrast, the Industrial & Logistics sector remains resilient, with an expressive take-up increase of 67%, to 184,600 sq m. 


15 October

With Portugal surpassing the threshold of 1,000 daily infections and reaching levels similar to the early days of the pandemic, the Government is expected to renew the State of Contingency from 15 October, though probably under more restrictive measures. 

Portugal’s central bank meanwhile recently revised its June forecast to a slightly less severe contraction for the year of 8.1% GDP, reflecting a better than expected recovery from lockdown. Following a drop by 9.4% in H1, given the restrictions still in place in some sectors and the slow recovery in tourism and services, GDP is expected to decrease by 6.8% during H2. 

According to the National Statistics Institute’s flash estimates, tourist activity continued to recover in August, mainly thanks to national residents, who registered a YoY decrease of only 4.7% in overnight stays (vs. -72.0% of foreign residents), and even increasing in some regions of the country. Additionally, easyJet announced the opening of a seasonal base at Faro airport for summer 2021, which will be its third in Portugal, thus strengthening its operation in the Algarve region. 

By the end of Q3, institutional investment activity registered a record high volume of €2.3 billion (+36% YoY), albeit highly influenced by the completion of a few large deals - including the recent acquisition of out-of-town business park Lagoas Park for €421 million by Henderson Park Capital Partners from Kildare Partners, who had acquired the asset in 2018 for €375 million. 


30 September

As the number of new COVID-19 cases continues to increase, the Portuguese Government extended the current State of Contingency until 14 October, while also implementing additional financial relief measures, including a further 6-month extension of the moratorium on loan repayments, to September 2021. 

In the student housing sector, the Government established a strategic cooperation with the tourism sector, currently facing lower tourist demand, to increase the supply of beds at regulated prices by 4,500. In the private sector, the decrease in foreign students is already leading some operators to offer rental discounts. 

The slowdown in activity is reflected in increasing tenant incentives, although headline rental values remain unaffected until now, with Lisbon prime rents stable at €23.0 / sq m / month in offices, €130.0 / sq m in high street retail, €105.0 / sq m in shopping centres and €4.0 / sq m / month in industrial. Prime yields, following a downward correction in the previous quarter, stabilised at 4.10% in offices and 4.25% in high street retail, whereas shopping centres softened by 10 b.p. to 5.10% while industrial hardened by the same amount to a pre-pandemic level of 6.00%. 

16 September

Following the increase of new cases and anticipating the start of the school year, from 15 September mainland Portugal entered a State of Contingency, with the introduction of new preventive measures, some of which only apply to the Lisbon Metropolitan Area and Northern region. 

Retail is once again one of the most affected sectors, given the reintroduction of restricted opening times - most units can only open after 10am and will have to close between 8pm and 11pm (in accordance with the local council decision) - and the limitation of people gatherings to a maximum of 10 - with groups in shopping centre food courts and F&B units near schools limited to 4. Regarding the return to the workplace, a set of guidelines will be defined in order to avoid concentration of people, including the rotation between homeworking and working at the office. 

The tourist sector was further penalised as the spike of new cases over the last few weeks led the UK to remove Portugal from its ‘no quarantine’ list from 12 September, although the restrictions do not apply to the islands of Madeira and Azores. 

The impact of the pandemic on the real estate market is well reflected in the institutional investment activity, with preliminary numbers indicating transaction volumes of no more than €219 million between April and August, a considerable drop of 82% YoY. 


3 September

The Portuguese Government recently announced that the country will enter a State of Contingency starting 15 September, allowing for the implementation of new preventive measures to fight the COVID-19 pandemic during autumn, particularly given the return to both school and workplace. 

During Q2, the economy was significantly impacted, with GDP decreasing 16.3% YoY. However, according to National Statistics Institute (INE), July figures indicate a lower contraction, with both economic climate and confidence indicators increasing.

Tourism, which has such an important role in the national economy – and whose abrupt stop contributed the most to the 39.5% YoY decrease in exports during Q2 – was given a late boost with the much-awaited UK’s decision to include Portugal in its air bridge list. Since the announcement, both accommodation and flight reservations have picked up, particularly in the Algarve, with some airlines already increasing flight frequency.

The municipalities in the Lisbon Metropolitan Area were recently allowed to extend retail opening hours, with several resuming pre-pandemic schedules. The impact of the earlier limitation severely impacted the region’s shopping centres – according to the Portuguese Shopping Centre Association (APCC), turnover and footfall respectively contracted 40% and 47% YoY in July in Greater Lisbon, which compares with a decrease of 25% and 30% respectively in the rest of the country.


19 August


While the number of active cases in Portugal continues to decrease from its peak in mid-July, recent publications by the National Statistics Institute (INE) demonstrate the significant impacts of the current pandemic: 

  • During Q2, the labour market registered a decrease of the number of hours worked by 26.1% YoY, the largest drop since 2011. This evolution is mostly associated with the increase of employees absent from work (particularly given temporary contract suspensions and layoffs), estimated at 22.8% of total population employed, nearly four times above the same period in 2019; 

  • According to a survey on homeworking, 23.1% of the employed population (in excess of 1 million people) reported having worked ‘always’ or ‘almost always’ from home during Q2, with the Lisbon Metropolitan Area registering the highest share (36.0%) and the vast majority (91.2%) reporting the COVID-19 pandemic as the main reason for this change in their workplace; 

  • In the tourism sector, June figures improved slightly, mostly given a lower drop in domestic demand - on a YoY comparison, total number of guests decreased 82.0% and overnight stays 85.2%. Among the latter indicator, Portuguese residents diminished 59.7% and foreign tourists 96.2%. According to a survey, most of the establishments planning to operate from June to October anticipate occupancy rates of less than 50%. 


5 August

With the number of active cases in Portugal reducing over the past few days, further easing of the lockdown measures took place, particularly in 19 boroughs of the Lisbon Metropolitan Area, with the entire region now under a State of Contingency. 

On 25 July, the Government supplementary budget came into effect and, among others, suspends until year-end the payment of fixed rents by shopping centre tenants, who will only pay turnover rent and service charges. 

In the real estate market, the H1 indicators generally reflect the impact of the outbreak, which was particularly felt in retail (with the new opening of merely 150 stores; -64% YoY), and hospitality (with 9.5 million overnight stays until May; -60% YoY). More resilient, industrial only registered a slight decrease in take-up, to 64,400 sq m (-9% YoY); and the office sector provided a mixed picture, benefiting in both cases from the good performance during Q1 - take-up reached 84,400 sq m (-23% YoY) in Greater Lisbon and 28,400 sq m (+38% YoY) in Greater Porto. Conversely, investment activity registered a record high volume of €1.7 billion (+50% YoY), albeit influenced by the largest deal ever recorded (the €800 million transaction of 50% of the Sierra Prime portfolio in Q1), thus compensating the mere €87.5 million transacted during Q2 (-88% YoY). 


22 July

The Government recently presented the Economic and Social Stabilisation Program, which includes further fiscal measures that, alongside the already implemented measures and the European aid package, should assist the country in responding to the effects of the pandemic and help spur a recovery. 

According to the Directorate-General for Health (DGS), the spike of new cases has stabilised over the last days, with a substantial improvement in the Lisbon Metropolitan Area. Nevertheless, several countries have excluded Portugal or Lisbon from their ‘COVID safe destinations’, with the Government ensuing diplomatic contacts to revert this situation. This is particularly relevant for the hospitality sector in the Algarve, where UK tourists represent a relevant share, and for Lisbon and Porto, among Europe’s most popular city break and corporate events destinations. 

In the retail sector, the Parliament recently approved the principles of a bill to suspend payment of fixed rents by shopping centre tenants who will pay turnover rent only until year-end, although we are still awaiting further details as to how this will be implemented. The measure has already created a war of words between tenants and investors, with the latter complaining rightly about changing the essence of private contracting. 

8 July

Easing of lockdown measures took a further step on 1 July, with most of the country now under a ‘mere’ State of Alert, except for the Lisbon Metropolitan Area, where the spike of new cases led to 19 boroughs continuing under a State of Calamity. 

May indicators show a slight recovery trend, with lower reductions compared with April: 

  • Retail: retail trade index decreased 12.0% YoY (7.4 p.p. above April) and purchases through automatic payment terminals per inhabitant 14.1% YoY (22.7 p.p. above April); 

  • Offices: number of jobs created dropped 38.2% (33.7 p.p. above April) and number of new unemployed grew 25.3% (45.0 p.p. below April); 

  • Industrial (June figures): confidence in the manufacturing industry index registered the greatest increase of the series (YoY growth 211% p.p. above May); 
  • Hospitality: total number of guests decreased 93.9% (97.4% in April) and overnight stays 95.0% (97.0% in April). 

Regarding the all-important tourist sector, on the positive side it is worth noting the lifting of both land border restrictions with Spain and commercial flights with EU, Schengen and some other countries (including China), and on the negative side the major impact of the recently announced exclusion of Portugal from the British ‘travel corridor’ (thus requiring a 14-days quarantine in the UK when returning from Portugal). 


25 June

According to Portugal's central bank, GDP will contract by 9.5% in 2020, the largest drop since the Great Depression. Assuming the pandemic remains under control and restrictive measures continue to ease, economic activity should however rebound from Q3-20, with growth rates of 5.2% in 2021 and 3.8% in 2022. The bank expects a relatively limited impact on residential real estate, with the construction sector being one of the less affected by the pandemic; but a collapse in tourism-related services (60% drop in 2020), with persisting effects until 2022. 

The Government supplementary budget has recently been approved (in broad terms) by the parliament, predicting a spending increase of €4.3 billion, of which €2 billion concern employment policies. The underlying forecasts for the budget are less negative, predicting a drop of the economy of 6.9% in 2020 and an increase of 4.3% in 2021. 

In the commercial real estate sector, Q2 market values reflect the slowdown of activity. Although face values have remained unchanged, tenant incentives are increasing. Lisbon prime rents are stable at €23.0/sq m/month in offices, €130.0/sq m in high street retail and €4.0/sq m/month in industrial. Prime yields have however already registered some increase, to 4.10% in offices, 4.25% in high street retail and 6.10% in industrial (i.e., a 10 to 25 b.p. softening). 


18 June

As the easing of the lockdown measures continues, the Government plans to shift Portugal into a less restrictive State of Contingency on 1 July, with areas least hit by the virus, like the Algarve and Alentejo, possibly shifting directly into a mere State of Alert. 

In the retail sector, and according to the recently established lobby group Association of Retail and F&B Brands (AMRR), the first week of June registered an average YoY drop in sales of 39% in shopping centres and 37% in high street retail, based on data from 2,040 stores. This analysis excludes shopping centres and stores in excess of 400 sq m in the Lisbon Metropolitan Area, as these only reopened on 15 June (instead of 1 June in the other regions) given a spike of new cases in the region. 

Regarding the hospitality sector, the latest estimates by the Portuguese Hospitality Association (AHP) foresee a decrease in overnight stays between 40.6 and 46.4 million this year, as well as revenue losses of €3.3 billion. Nevertheless, domestic demand is evolving favourably, with an increasing number of reservations. This is particularly evident in the Algarve, where it is estimated that 60% of the hospitality units have already reopened. Foreign demand should also pick up, as airlines resume international flights to Portugal and land borders restrictions with Spain are to be lifted on 1 July. 


11 June

As the reopening of the economy continues, so does the implementation of new government measures including, among others, a new 6-month extension of a moratorium on the repayment of bank loans (thus totalling 12 months) and more state-guaranteed loans for companies.  

Regarding retail, and according to 31 May data from SIBS Analytics (credit card and ATM supplier), consumption levels are at 82% (vs. pre-pandemic index = 100), albeit at different paces among regions. Lisbon is the furthest behind, a trend expected to continue given the postponement (to 15 June) of the reopening of stores above 400 sq m and shopping centres in the region due to a recent increase in infections. 

In the hospitality sector, reservations are already picking up for the summer season, with land borders restrictions with Spain expected to be lifted on 1 July and airlines slowly resuming international flights to Portugal. 

According to a survey launched during a recent Cushman & Wakefield webinar hosted by the Portuguese Valuation & Advisory team, 60% of the respondents believe the Portuguese real estate market will resume normal activity within 12 months, with 40% anticipating that assets will return to 2019 values within 24 months. The most resilient sectors in terms of yields (increases of less than 25 b.p.) are offices and industrial, with no less than 96% of participants indicating a preference for considering new opportunities particularly in the residential and healthcare sectors. >>View the survey results.

3 June

The economy continues to gradually return to normal, with a further easing of the lockdown starting 1 June: 

  • Office - partial return to the workplace (combined with home working), with much lower density levels and several restrictions on the use of common areas; 

  • Retail - stores with more than 400 sq m and shopping centres reopened, although schemes in the Lisbon region may take longer given the recent spike of new cases in the area; 

  • Hospitality - after a 97% decrease in overnight stays and guests in April, mainly due to total closure or no guests, several units started reopening. Most operators, mainly those in beach destinations, will do it gradually over the next months, adjusting to demand. 

According to an Iberian survey launched by Cushman & Wakefield to both national and international investors, 66% of the respondents believe the Portuguese investment market activity will return to normal within 6 to 12 months. 70% to 90% of the respondents anticipate a softening of prime yields in the hospitality, office and retail sectors. Participants believe that the leasing market activity in the hospitality, retail and student housing sectors will most likely return to previous levels within 1 to 2 years, whereas healthcare, logistics and residential PRS appear to be more resilient, with an expected recovery of occupational activity within 3 months. 


28 May

The second phase of the gradual easing of lockdown is evolving positively, with most F&B units and stores up-to 400 sq m reopening, alongside with part of the schools. 

After a sharp decline in consumer confidence, and despite it still being too early to ascertain, consumers started returning to high street retail, signalling a potential increase on non-food retail (which registered a 19.1% drop in March). 

In the office sector, companies generally adapted well to remote working and most, starting 1 June, will see their employees combining homeworking with a return to the workplace, albeit at around 20% to 35% of the previous density. 

The hospitality sector will also gradually reopen from June onwards, with a ‘Safe & Clean’ seal promoted by the Official Tourism Board. Given the large amount of cancelled reservations and the uncertainty about the lifting of travel bans, hotels will mainly rely on the domestic market. 

According to a survey by INE and the Bank of Portugal, and comparing with pre-COVID-19 expectations, 77% of firms continued to report a negative impact on turnover during the first half of May - of more than 50%, for 35% of those companies. Consequently, tenants continue seeking to further negotiate rental payments with landlords. 

21 May

Given the encouraging results of the first, limited phase of lockdown lifting, the second phase has proceeded. From 18 May F&B units (with new social distancing rules) and larger shops (up to 400 sq m, with street access) could open. In education, nurseries and schools (albeit only the last 2 pre-university years) have also reopened. 

According to the latest estimates by the National Statistics Institute (INE), the economic impact of the COVID-19 pandemic was significant in March, affecting Q1 performance: GDP dropped 2.4% YoY, with exports (largely due to tourism), decreasing 5.1% YoY. 

In the occupational property sector, most deals are still on hold and there is virtually no new demand. Q2 completions will mostly include transactions that were already at an advanced stage of negotiation. The second half of the year might increasingly reflect the current standstill in the market, possibly leading to higher rental incentives provided by landlords, particularly in the most hampered sectors and/or secondary locations. As for investment, and despite Portugal’s continued presence on investors’ radar, the uncertainty regarding operating incomes and the lower availability of financing will potentially lead to a reduction in values and to some increase in required rates of return. 


14 May

After a six-week lockdown under the State of Emergency, with most non-essential services shut, the country entered the slightly less restrictive State of Calamity. Numerous small and medium-sized companies are already in distress, putting pressure on tenants to further negotiate with landlords and forcing the Government to implement additional assistance measures.  

In the retail sector, new rules allowed for the opening of small neighbourhood shops, bookshops and beauty services. Larger stores will follow suit, including restaurants, in phase two (18 May), but restrictions for most units in shopping centres are only likely to be lifted from 1 June. 

In the hospitality sector, several operators are preparing to reopen some units in the month of June. They will target the domestic market and hope that June’s various bank holidays will generate some business. Given the importance of beach tourism, particularly in the Algarve, bookings will be contingent on the announcement of new access rules to beaches. 

With remote working expected to progressively scale down, most companies are working on the adoption of new guidelines to allow a safe return of employees to the workplace


7 May

With the end of the State of Emergency, during which most non-essential services were shut down to contain the spread of the new coronavirus, Portugal's lockdown began to be gradually lifted on 4 May. Subject to the positive evolution of the epidemic, a timetable has already been defined for which sectors may further open on 18 May and 1 June. Consequently, an increasing number of businesses are already planning their return to operation

In the real estate market, the Q1 indicators already reflect some impact of the outbreak, namely in retail (with the new opening of only 85 stores: -53% YoY), and hospitality (with a preliminary estimate of 9 million overnight stays: -18% YoY). Although industrial also registered a decrease in take-up to 34,700 sq m (-18% YoY), this mostly mirrors the somewhat erratic behaviour of demand. Conversely, office take-up in Greater Lisbon reached 44,700 sq m (+6% YoY) and investment activity registered a record high volume of €1.5 billion (+273% YoY). 

The above indicators were of course influenced by the positive momentum that the Portuguese market was going through but, with most players currently adopting a cautious approach, the Q2 figures should register a general and substantial YoY decrease, following which a gradual recovery will depend upon the evolution of this pandemic. 


30 April

The State of Emergency will end on 2 May and is not expected to be extended for a third time. The Government is now working on the rules for a gradual and phased reopening of some retail establishments, services and companies. 

In the retail sector, smaller neighbourhood shops are likely to be allowed to reopen first, followed by small high street units, and only afterwards by larger retail stores. The rules of social distancing and hygiene measures will be particularly relevant to hairdressers / beauty salons and restaurants, with the latter expecting (at least) the reinstatement of the mandatory reduction of one-third of costumers implemented before the state of emergency. Tourism-dependent retailers will take longer to recover, with some operators already considering a delay in reopening. 

With most hotels voluntarily closed, the hospitality sector is working towards resumption of business and most units may start reopening in July (some in June). To address customer confidence / anxiety the creation of a ‘health guarantee seal’ is being discussed. There are major concerns regarding when and how travel bans will be lifted, given the sector’s dependence on foreign visitors. Consequently, operators will look to attract the local market in the first instance. Some units, particularly city-centre hotels, may remain closed for longer. 


23 April

The state of emergency was extended until 2 May, but already allows for a gradual and phased reopening of some retail establishments, services and companies. 

Most real estate players are adopting a wait-and-see approach, including the office sector. A substantial slowdown in new demand is being registered, while some tenants are requesting incentives, particularly rent-free periods. This trend is also occurring among industrial and logistics occupiers, where the supply chain of several industries is affected, although the logistics operators focused on servicing food retailers and the health sector are thriving. 

Although the current crisis is yet to impact supply levels in the residential sector, there is a clear decrease in demand, thus accelerating the price correction which had already started at the end of 2019. In the rental market, a clear increase in supply coming from units previously used for the short-stay market, contributed to a downwards price adjustment, particularly in the lower and middle market segments. 

In the institutional investment market, and despite the current uncertainty, active parties intend to resume deals as soon as the dust starts settling, albeit likely at different pricing levels. Many investors are signalling availability and willingness to do opportunistic deals, whilst more conservative ones are watching from the side-lines, but ready to return at a later stage. 

16 April

The State of Emergency is almost certain to be extended this week until 1 May. In addition, the Government announced that schools will remain closed for the rest of the academic year, with classes continuing through distance learning. 

In the retail sector, some landlords have decided to grant tenants a rent-free period. However, the majority is in a wait-and-see mode until a legal opinion is issued on the recently implemented moratorium on rents, which allows for no rental payments during the compulsory shop closure (to be clawed back pro-rata over a 12-month period thereafter).

With their revenue substantially affected, many retailers are applying for the simplified lay-off programme. This is also an increasing trend in the hospitality sector, where most units are closed by management decision and some institutional owners are considering postponing planned disposal programmes, in order to return to market with a stronger historical performance. 

In the investment market ongoing deals are not yet cancelled, but no new transactions are being initiated. Ongoing transactions were frozen by mutual agreement between sellers and buyers, with the latter remaining committed, albeit unable to progress due to operational difficulties and uncertainty about asset performance over the current period.

Despite record low base rates, risk premiums are rising and availability of finance to complete CRE deals is shrinking, which may impact pricing. 


9 April

The State of Emergency in Portugal was renewed on 2 April for an additional 2 weeks and includes further restrictions on travel during Easter.  

Parliament approved a moratorium on the payment of residential and non-residential rents for tenants facing difficulties, also safeguarding residential landlords who find themselves in economic need as a result of that, thus adding to the already implemented moratorium on bank credits. 

Tourism is registering significant drops in occupancy rates, and most operators have now temporarily closed their units.  

Retail is facing the challenge brought by the closure of non-essential physical stores, with tenants turning to online sales and the resilience of supply chains being tested.  

With the general implementation of homeworking, coworking operators are under additional pressure, whereas tech companies are gaining prominence. 

On the investment market, asset prices are likely to be revised downwards, due to:

  1. higher cost and limited availability of debt, 
  2. increased return expectations by investors in the most battered asset classes and 
  3. the probable drop in operating income, particularly in sectors under greater pressure.  

Regarding pipeline, construction works, and licencing processes continue, albeit at a slower pace than previously. Nevertheless, several future projects may be postponed or even cancelled given the current market uncertainty.  


2 April

In Portugal, a State of Emergency was announced on 18 March, allowing the Government to implement restrictive measures, among others a general duty of home seclusion, adoption of homeworking and closure of non-essential commercial activities. 

In a country heavily reliant on tourism and with a significant proportion of small and medium-sized companies, the effects of this pandemic are already being felt in the real estate market. Several measures announced by the Government are however expected to mitigate its impact. The latest a draft law (to be voted by Parliament) is to create a temporary moratorium on the payment of rents, mortgages and commercial loans. 

Players in the real estate market are adopting a cautious approach and, apart from transactions that were already at an advance stage of negotiation, most deals have been put on hold. 

The sectors currently most affected are hospitality and retail, but it is anticipated that the impact of the pandemic will broaden to the entire occupational real estate arena, with some tenants already requesting incentives (particularly rent-free periods).  

As for investment, Portugal remains on the investors’ radar and, despite the reduced availability of bank financing, there is still high appetite in the market, with opportunistic investors starting to emerge.  

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