Sometimes life is like making a film in which the director surprises actors and spectators at each take, changing the plot, without asking permission from anyone around him. This year and the COVID-19 crisis looks like one of those films! The award I just received as Individual Consultant No. 1, in the Top National of KW Portugal, is another unexpected but rewarding scene. Two months ago I would not have imagined this outcome!
When I started this year everything pointed to a 2020 characterized by small adjustments, especially in terms of prices in the residential resale market , the continued growth and interest of foreign investment in our country, the growth in the activity of building new properties, that is , a calm but dynamic year and consolidating the growth of real estate in Portugal recorded in the last 4 ~ 5 years.
Looking back and it was so recently, all of this has changed in the meantime! The film has been transformed and the plot has evolved from a musical with nuances of romance to a drama that I hope will not turn into a horror film !
With regard to my activity, real estate brokerage, it suffered a first impact at the end of March, resented in April, but resumed in force in May, coinciding with the first measures of deflation. June proved to be an exceptional month and will extend to July, however leaving questions in the air about the scenes of the next chapters.
Will real estate mediation suffer from the post-Covid economic crisis , but will it be able to recover in 2021? Will the housing market be able to adapt to this "new normal" , as long as a vaccine is not available? Has the interest and profile of buyers changed ? Will foreign investment and foreigners' interest in residing in Portugal continue? Will real estate mediation as it was and the number of professionals who work in it be maintained ?
They are all questions that only the evolution of this "film" will allow us to obtain the desired answers. However, there are already some clues about what could happen.
Foreign interest in the national mediation market
It is no accident that house prices rose 0.5% in Portugal in the 2nd quarter of 2020, compared to the 1st quarter, in the middle of the Covid-19 pandemic!
According to a study by Idealista , obviously based on the "asking price", the regions that saw a price increase in quarterly terms were the North (2.8%) and the Algarve (1.9%). On the other hand, they decreased in Alentejo (-1.6%), Autonomous Region of Madeira (-0.6%), and Metropolitan Area of Lisbon (-0.3%) and Centro (-0.2%), with special emphasis on the city of Coimbra. For now, this is good evidence that the real estate market is resisting.
The demand for properties in less urban regions, but with infrastructure, will be a constant in the coming years. The demand for properties in the Lisbon region remains high, only hampered by the difficulty of air connections, however the interest has not been lost. Portugal has gained popularity and recognition in recent years and it will not disappear. I still have inquiries and purchase intentions from Americans, English, French, Brazilians, Chinese, etc.
One of the facts that is also helping was the fact that the end of Visa Gold in urban areas appears to be suspended, let's see.
Buyers and the change in their interest profile
There are changes that I think are here to stay, in line with what was already happening in other European cities, namely in France, even before the pandemic. Many buyers are looking for housing or land to build, rather than buying or renting an apartment. Many of them are willing to relinquish urban centrality in favor of the areas and the possibility of enjoying outside space.
The confinement of COVID-19 and the adoption of a new mindset by companies and workers with regard to teleworking are the causes that are driving this change. The search for properties where the buyer can have a large office, the search for more calm and quiet areas where the urban pressure is lower, the search for houses with terraces or gardens, are the "new normal".
As a consequence, the number of transactions and the demand for apartments has decreased and it is in this type of real estate that greater pressure is being felt for lower prices.
And will the real estate mediation sector remain the same?
Well, this is a question that only the next few months will answer. For now, in conversations with professionals with greater connection to the sector, the information that comes to me points to an increase in the intention to close small real estate agencies, especially in areas such as the Alentejo and the Alentejo coast, inland, etc.
As for the number of professionals working in this area, according to INE figures, around 50,000 professionals worked full or part time in this sector. I have no doubt that this number will drop substantially.
- Firstly, because the closure of small branches that have more difficulties in resisting the shortage of cash and the reduction of revenues, will demobilize professionals to continue working in this sector.
- Secondly, because the market will shrink in terms of supply , both for new construction and used housing, at least in the next 12 to 24 months. This will hinder the activity of less prepared professionals, less entrepreneurs or with less connections.
In other words, the trend that had already been happening in recent years of greater professionalization in the sector, is here to stay.The major real estate franchising brands, such as KW Portugal where I work, continue to grow in number of consultants and in number of agencies / market centers during the COVID-19 pandemic.
For example, my Market Center: KW Sol , grew 20% in June compared to the previous year, in the number of transactions and the number of consultants!
On the other hand, we will most likely see a greater dynamic of change on the part of professionals in this sector. It has happened in the past, in other crises and also in this sector, and are a consequence of the tough fight that each professional will have to take in order to survive and look for the space that best serves the evolution of his career.
Nothing will be like before, that for me is taken for granted . Crises like this, which are transversal to the whole world and affect the economic and financial side, but also with people's heads, are events of destruction but also of regeneration.
The challenges are more than many! To survive and win in the post-COVID era, the effort will have to increase, at least for those who are willing to survive. And only the most qualified and those who are willing to change will win. A calm sea never made a good sailor! In times of storm it is important to keep the boat afloat, but above all to fight to keep the course .
Strategy changes only for the better, as these are not adventurous times but consolidation of the work done in the past. Whoever was concerned, before this crisis, to work hard anticipating the storm that many foresaw, is better prepared to weather the storm and keep going in search of the Mar da Boa Bonança.