Real estate valuations post -COVID Portugal for GV investors

This thread is meant to get feedback and thoughts about the value of real estate in the post-COVID environment, specially related to Golden Visa investors in Portugal. Any relevant input from southern Europe would be welcome here.

There are really one premise and three subtopics here:

Premise 1 - Due to COVID, the value of real estate will decrease in general. This is virtually a fact after discussing with multiple people in Portugal and seeing the impact on the tourism industry in Portugal.

Some have suggested that this can create some good opportunities for GV investors. Whether that is true remains to be seen. But it opens some points of discussion.

(A) When is the optimal time to buy to get the best values from the COVID related downturn in real estate market whether through funds or direct real estate purchase.

(B) with respect to investment funds, what types of properties will perform best post-COVID. Some funds focus on retail, some on residential, some on anything that is a good value. Which will prevail and when?

© For anyone on the ground in Portugal can you provide any anecdotes? For those owning or purchasing real estate in Portugal, can you offer any suggestions?

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Hi, Here living in Lisbon Portugal. With the Covid-19, yes, we are anticipating the property value to drop. Rent has already dropped, around 20% like many big cities around the world. But the price of property is still holding for the time being. One of the reason may be that the government has passed a law that no one needs to pay back their mortgage (principle and interest) until Mar 2021 (deferral of payment), and now it has extended to Sept 2021 (paying only interest). So many people still are not feeling the pain. We don’t know if the city or country will go thru another lock down, or if government will be putting out further relieving regulations.

However, you have to note that the government now is discussing about exempting lisbon and porto from the golden visa investment scheme by the end of 2020. That means, property in Lisbon and Porto will no longer be valid for applying the golden visa. This new change has not yet passed, and we still don’t know the extend of it (eg. if only the 500K will be affected, or the 350K also being affected, and if the deadline will really be Dec 2020). But it looks like they will try to confirm it pretty soon, within a few short weeks. If this is confirmed, the timeline for any investor going thru property purchase scheme to get the golden visa will be largely affected limited, because you need to submit your application before the deadline (that is if they really set forth the deadline to be Dec 2020). You can keep track on the development of this on this website: www.thegoldenportugal.com. We will post any new announcement from the government on the homepage.

We will have to see, and thus, we advise those who are interested in the golden visa scheme to look into asset funds. it’s easier (no need to come to portugal for property viewing), and it is not affected with the changes mentioned above. For the investment funds, that are different options and strategies. Finding a good reputable fund house is key. There may be some good opportunities for gain after the Covid-19 if there is an eventual market correction on prices.

Does this law about not requiring payment of principle and interest apply only to bank held mortgages or also to rent itself? If property owners cannot collect rental income, then any type of real estate investment or fund will perform very poorly and negative yields.

Hi,

it’s for any mortgage - rental property or self-use property. Not for rent, people still needs to pay rent!! However it’s hurting for those who rely on holiday let like airbnb as they are not getting tourist to rent.