What Makes the Real Estate Market Resistant to Crises?
First of all, it is necessary to understand that the immovable property is responsible for satisfying a primary need of any human being, it is therefore a delicate issue for any human being in their decision making, and this decision is considered and strong.
In view of the pandemic scenario that affected the entire economy and still bearing in mind the catastrophic results of the last crisis in 2008, a complicated future was foreseen for the real estate market. Against all expectations, this market remained relatively stable, being highlighted as one of the markets that best withstood the pandemic crisis that haunted the general economy.
What are the reasons that justify such stability?
The attractiveness of the market and of Portugal, despite the circumstances in which we find ourselves, is always high and inviting to new investors, the great proof of this is the fact that Lisbon has higher rates of return compared to Madrid, Paris, London and Frankfurt (Source : Observador), or even that Lisbon was considered the main destination for real estate investment within Europe in 2019, by a study carried out by the company PWC and the company Urban Land Institute. The fact that Portugal is a country of high tourist affluence, with a pleasant climate, relatively accessible location, with competitive prices, from the perspective of cost of living and real estate, are also positive conditions that sustain the stability of the real estate market in our country.
Although the pandemic crisis has postponed the sale of significant properties, both in terms of their number and size and prestige, the market remained resilient.
Investment estimates for 2022 exceed those of the previous year, with a very promising number of transactions.
Take, for example, the office market. Adding to the constant interest of several companies in having offices in order to carry out their daily work, the theme of teleworking and new work methodologies has revolutionized the form and usefulness that offices have for human beings. Thus, the idea of the office being an exclusive place of work, with elements only and only focused on the development of the same, conceived and reinforced until the present day, gained an inverse trend with this pandemic situation, a change of mindset that made us look at this place in a different way: a space for creativity. In this way, the high demand was one of the factors that made this market able to withstand the crisis.
Due to all the complications involved in buying and selling the property, which can range from the high value of the product to the costs that these types of transactions entail, the time for it to convert into cash will, of course, be considerable.
The exclusivity and scarcity of a property can also be a factor that justifies the stability of the price of the same, the characteristics and value (objective and subjective) for the customer makes the value of the same obtain some stability. In this line of thought, it is important to mention that the location of the property can add/decrease value, its demand will be higher in the more populated regions.
The security and predictability of this market are also indicators that contribute to the stability of this property. As with all goods, there is variation in the price of the property, but the volatility is not as significant when compared to other investments.