Buying and selling property in Portugal in 2022

Despite the current uncertainty about the real impact that the war in Ukraine will have on the economy, Cushman & Wakefield predicts a continued recovery of the real estate market in Portugal in 2022. In terms of prospects, the home buying and selling sector should continue to be marked by two distinct trends, namely the entry into the market of more product aimed at the middle and upper middle class and the gradual increase in difficulty in accessing credit, according to the consultancy's study. Keep reading to find out if buying property in Portugal is a good investment in 2022. 

"The Portuguese market should remain active, easing the impact of the recent end of the golden visa scheme in the metropolitan areas of Lisbon and Porto and in coastal areas," the statement sent to the press said.

Investment in build to rent in Portugal

The private rental segment in Portugal, according to the consultancy, continues to grow, "due to the scarcity of supply in urban centres and the occupational flexibility it offers, but also as a real estate investment product that, coupled with the lack of rental projects built from scratch (build to rent) has led many developers to position themselves to develop this type of product".

According to the study, rental housing in Portugal will continue to grow in 2022, "boosting the development of build-to-rent projects, whose expected future supply currently totals 10,000 homes (mostly municipal investment)". Even so, as these projects are usually defined from scratch for this use, "some delay is expected until their entry into the market provides an effective response to current demand", which has been the "main barrier" to the entry of international investors in the Portuguese real estate market.

In the short term, according to Cushman, the urban development and rehabilitation market is expected to continue to be marked by an increase in construction costs, as well as by greater delays in the licensing of projects in the case of the municipality of Lisbon. "The focus of developers will be incrementally on new-build properties, to the detriment of property rehabilitation," he points out.

Other real estate segments in Portugal in 2022

• With regard to the office sector of the market in Portugal, expectations point to a continued increase in occupation volumes in the short term, with the demand for quality space "justifying the higher rental values in certain areas, and there may even be residual increases".
• The retail market, meanwhile, is on a recovery path, with demand levels matching 2019. However, "recent military developments in Eastern Europe may reduce consumer confidence, and consequently temporarily suspend some decision-making processes due to occupiers' greater caution," the study said.
• Industry and logistics, which has recorded the greatest dynamism in the sector, associated with a "scarcity of quality supply," continues to drive investment in the rehabilitation or development of new projects. Following the growth of online commerce and given the scarcity of quality supply, it is expected that there will be continued pressure from operators in the area of urban logistics, particularly for spaces near the centres of Lisbon and Porto.
• In terms of hotel supply, 70 new units will open in Portugal in 2021, above the number registered in the previous year. It is expected that during 2022 national tourism will maintain its gradual recovery trajectory, with its main indicators registering new year-on-year growth; reinforced by the operators themselves, whose reservations for the current year are already above 2021. Even so, the current situation in Eastern Europe may have some impact on this evolution, namely due to the instability generated and the potential increase in prices, including fuel, again emphasised the consultancy.

Mortgages in Portugal in 2022

One of the main concerns for expats or foreigners investing in Portugal may be getting a mortgage, as Cushman's report highlights that 2022 will see a gradual increase in difficulty in accessing credit. While the Portuguese housing market is looking solid with good potential for future growth, mortgage interest rates will almost certainly rise which may put off potential buyers. When interest rates increase, affordability of home buying decreases which will certainly be the case in Portugal in 2022. 

Therefore, in a context of a gradual recovery of investment activity in the Portuguese property market, Cushman's year-end estimates point to a volume of around 3.2 billion, matching the historical maximum of 2019 and reflecting an increase of 47% compared to 2021. Therefore, in spite of market uncertainty due to the war in Ukraine and the end of golden visas, there are still plenty of investment options for investors, foreigners and expats in a stable Portuguese real estate market.