• Portugal FY21: Annual Review – Residential, Retail & Government Plans

    June, 2022

Following on our previous publication (Part I), the Residential and Retail sector also represent a significant market share in the Portuguese economy, with 2021 affecting both sectors in very different ways.


In 2021, c. 205,000 dwellings were sold (+26% vs. FY20) despite the “need to save” mentality adopted by Portuguese families given the pandemic and uncertainty regarding employment. The average sale price of homes, in the Lisbon metropolitan area, reached €4,245 / sq.m. for newly-built and €2,279 / sq.m. for second-hand units (+23% vs. FY19).

Contrary to expectations, unemployment remained low, sustained by government measures, resting at 6.6% in FY21. Interest rates for mortgage loans continued decreasing and reached 0.81% by Q4 21. With these favourable conditions for debtors, banks were able to grant up to €15.3 million worth of mortgage loans in FY21 (+34% vs. FY20 and +43% vs. FY19).

With regards to the Private Rented Sector (PRS), Norfin sold the “ZIP Project”, a portfolio of 4,400 homes (primarily in Lisbon and Porto) for c.€333 million to a consortium formed by Tikehau and Albatross investment funds, which agreed to acquire the portfolio at a 10% discount. The assets currently generate an annual gross income of €14.6 million and could reach €25.8 million if 90% of the homes were to be leased.


The pandemic accelerated the implementation of e-commerce, which was already on the rise. In FY21, Business to Consumer (B2C) online purchases in Portugal reached €4.4 Bn.

Of the total investment in FY21, retail parks and supermarkets accounted for almost 70% reinforcing this Asset class resilience. 

Although Covid had a significant impact on High-Street Retail, in FY21 a relevant number of units were inaugurated in Lisbon’s high street retail main axis, followed by the market achieving an increase in overnight stays from tourists (+45% vs. FY20).

Government plans:

We also shouldn’t lose sight of the “Recovery and Resilience Government Plan”, where c. €1.15 Bn will be destined to 1) the rehabilitation of vacant state-owned spaces for rent at affordable prices and 2) the construction and renovation of student residences. The implementation of this programme should boost public-private investment partnerships in order to develop the housing stock.