6 April, 2020

“Bondstone COVID-19 perspective”

It is beyond doubt that we face an unprecedent and challenging time with COVID-19. We are closely monitoring the impact of this pandemic on economic growth, consumer and business conduct and the repercussions on the global and Portuguese real estate market. It is still far too early to make meaningful predictions on how the market will play out, how governmental incentives will differ from the pre-crisis period and how central banks will adjust their monetary policy.

So far, COVID-19 has had a disruptive impact across the board, with dire consequences for the airline and hospitality industries. The real estate market is by no means immune, though it has been spared to some extent until now due to its lagged response and the industry being considered a safe haven for investors. Indeed, real estate has recently offered robust risk-adjusted returns relative to other asset classes.

How we perceive COVID-19 will impact specific asset classes in Portugal can be summarised:



  • Uncertainty will reduce new demand in the short term; nevertheless, occupancy rates should remain healthy as per previous quarters
  • Low vacancy across the board, coupled with low short-term pipeline supply may support current rent levels
  • Recent value-add transactions closed at aggressively low-risk premiums may suffer sharp drops in their medium-term financial returns
  • Alternative models with high people density, such as co-working spaces, will be tested due to the growing fear of social interaction


  • Multifamily will remain a promising sector in the medium-term, particularly demand from local Portuguese families, once the dust settles
  • New supply in the peripheries of Lisbon and Porto should prompt investors seeking properties with strong long-term fundamentals
  • The construction of new dwellings is expected to soften in the short and medium terms due to the current economic uncertainty coupled with the financial struggles experienced by some local developers


  • Weakening consumer sentiment may lead to increasing number of CVAs
  • Expansion plans expected to be deferred
  • Retailers expected to delay rental payments and slash rents
  • Less cyclical retailers, notably supermarket chains, expected to be more resilient


  • Slowdown in tourism will negatively impact occupancy rates and recurring RevPar figures
  • Considering that at least 70% of hotels in Portugal are family-owned and these are exposed to operational and management inefficiencies, there are likely to be many entering insolvency and forced to dispose of their assets, creating future investment opportunities
  • Hotel operators on leases may put pressure on rental payments

Industrial and logistics

  • Online retail is likely to do well as a result of epidemic, albeit reduced consumer confidence may have conflicting effect
  • Supply chains should see disruptions, particularly those dependent on the Spain-Portugal border, resulting in further CVAs
  • Intermediate goods to and from China as well as Europe, considering Portugal’s strong links, should continue to suffer restrictions


  • Student housing: authorised closures of higher education institutions coupled with the augmented use of online education platforms and travel restrictions will likely reduce demand
  • Senior living: continued investment is expected due to demographics and increasing need for healthcare facilities
  • Co-living: investments in assets with collaborative spaces (i.e. with increased social interaction) and short-term lease dynamics present immediate risks to income and, thus, may experience a fall in investment


In order to address our investors’ needs and worries, we will remain vigilant and diligent. We will continuously monitor the Portuguese real estate sector, we will regularly perform market research, we will persistently scan attractive market opportunities and, ultimately, we may steer the firm’s investment strategy towards distressed assets. With the continued support of our stakeholders, we are confident that the firm will overcome this unforeseen crisis and will be able to pitch new opportunities to its investors.

Duarte Ferreira dos Santos
bondstone. rock solid