In the Southern region and the Lisbon Metropolitan Area, significant reductions were recorded, with sales dropping by 27.9% and 25.3%, and transaction values declining by 18.9% and 14.8%, respectively. The North led in transactions, representing 30.1% of the total, while the Lisbon Metropolitan Area had 27.2%, marking a 2.3-percentage-point decrease from the previous year.

Examining transaction amounts by region reveals noteworthy patterns. Greater Lisbon contributed 40.8% of the total, amounting to around €2.9 billion, reflecting a year-on-year reduction of 1.3 percentage points. In the North and Centre, there were increases in values transacted compared to the previous year. The Algarve represented 11.8%, and the Alentejo 4.6% of the total.

The median value of the bank appraisal of dwellings in November decreased to €1530 per square meter, showing a €6 drop compared to October. However, in comparison to November 2022, there was a 5.6% increase. Regional differences were notable, with the Alentejo registering the most significant increase and the Algarve experiencing the largest decrease.

In certain municipalities, houses were worth less compared to the previous year, with Porto experiencing the most substantial reduction (€289 less). Lisbon had a more moderate decrease (minus €4). While Lisbon and Porto continue to lead in values, an analysis by municipality reveals variations.

Entering 2024, Portugal grapples with the persistent challenge of housing shortages, impacting 86,000 families. The approval of the More Housing package by the outgoing government raises uncertainties, particularly with the March 2024 elections. The PSD has expressed its intention to revise Law 56/2023, regulating the program, if victorious in the elections.

The commercial real estate sector for 2024, as per Deloitte, emphasizes the residential and hospitality sectors for domestic investors. Globally, the digital economy and construction-to-lease take the lead. The international scenario is marked by pessimism, reflected in negative macroeconomic indicators and concerns about GDP growth and interest rates.

The Israel-Hamas war and geopolitical uncertainty contribute to a cautious stance, leading investors to postpone decisions. Despite global concerns, Portugal maintains domestic optimism, sustaining asset stability.

Immediate challenges encompass construction costs, permitting, financing, and political instability. Sustainability emerges as a critical factor, with investors considering ESG (Environmental, Social, and Governance) criteria in investment decisions. Digitalisation and operational effectiveness gain prominence, indicating a shift towards more sustainable and efficient practices.

In summary, Portugal's real estate market confronts significant challenges, yet resilience is apparent. Adapting to global trends, prioritising sustainability, and addressing emerging housing needs will be pivotal in shaping the future of the sector in the years ahead.

Author

Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes