When Carlota Pelikan, Athena’s destination expert, joined Athena Advisers 4 years ago, the global buzz about Lisbon was barely a whisper. The regeneration and development of Lisbon’s historic centre was already well underway; savvy property investors had begun to catch on, as had foreigners drawn to Portugal’s honeypot incentives, such as the Golden Visa or Non-Habitual Resident program, but the bright light of Lisbon’s potential still blinked hazily in the future and the hipsters hadn’t even heard of it. Now, Lisbon and the golden lifestyle it offers is on every-one’s lips. It was voted Conde Nast’s hottest destination, Wallpaper’s design city, nicknamed Berlin-on-sea and hailed as Europe’s new tech hub. Make no mistake, the secret is well and truly out. But how has this affected the property market and what does the future hold? Carlota shares her insights into the recent evolution and how best to navigate today’s property market in Lisbon.
Lisbon has taken off in the past four years. How would you describe what has happened, what has been driving the boom, and how has the local government responded?
Several things have happened. The first thing to understand is that the Portuguese revolution was only in 1974 – my parents generation! Not even 60 years have passed since then. As a result, we were really far behind the rest of Europe, and in 2012, we were still dealing with the consequences of laws that were put in place during the revolution. One of particular note was the ‘frozen rent’ law, where landlords were unable to raise prices inline with the evolving property market. This meant that there was little incentive for them to invest in the up-keep and maintenance of their properties and the market stagnated. You would find older residents paying the equivalent of 30 Euros a month in prime locations. In 2012, the country was in a complete crisis, which was terrible on one hand, but on the other, it had its benefits. Before the crisis, Portugal was barely on the global map and we were regularly confused with Spain! Once our terrible crisis started, we picked up this terrible reputation along with Ireland and Greece as the pigs of Europe, but at least people were finally talking about us!
Then, out of the 3 countries, Portugal was the one that made the most efforts to accomplish the goals set by the European Union to pull itself out of the crisis. We were seen as the “good students”. Finally, in 2012, the EU obliged us to change our rental laws. Now, the law protects the property owner and not the tenant, which was a big push for the real estate market. All the old, abandoned buildings in Lisbon were suddenly amazing opportunities to invest in. They were super cheap and located in a European capital that had amazing potential for tourism and a great quality of life. Hand-in-hand with this measure, our government implemented some very smart measures, such as the Golden Visa program, the NHR tax regime, and substantial incentives for start-ups. They invested heavily in tourism, introducing tuk-tuks to help visitors navigate Lisbon’s steep cobblestreets and renewing all the squares in the historical centre.
When it comes to clients looking to buy property in Lisbon, how have expectations and questions shifted?
I have watched the evolution of my own city and the increasing interest of foreigners in our country. Questions and expectations have not changed much: all clients are looking for the same quality of life, good views and exterior space combined with low prices and either a visa or tax advantages. The only thing that has really changed is that prices in Portugal have increased and people are still expecting to buy at the same price as five years ago.
How has the market shifted in terms of the properties that are sought and the profile of the buyers?
The regeneration spark was ignited in key central neighborhoods like Chiado and Avenida da Liberdade, but now that these have been almost entirely refurbished, the focus is extending to other areas. Regardless of location, the concept remains the same: preserve the old façade and the charm of the original building while modernizing the interiors and bringing them up to “European standards”. However, developments tend to differ with the style of the neighborhood itself, so in chic Avenida da Liberdade, properties will have marble bathrooms and kitchens and high ceilings, while in the city’s most traditional neighborhood of Alfama, you can expect tiles and small balconies.
People like to tread carefully around the word ‘boom’, would you describe what is happening as a boom?
Portugal is really in a process of catching up with the rest of Europe. Real estate is picking up and previously abandoned buildings are being restored, tourism has increased and will continue doing so, and start-ups are multiplying by the dozen. In addition, Lisbon will house a Google headquarters, the city will also host the Web Summit for another ten years, Uber chose here to have its intelligence center. Not to mention Porto, which will be the headquarters of the first Amazon in southern Europe. Portuguese banks are lending money again, and foreigner consumption is adding liquidity to the market. It is not the real estate market that is booming, Portugal is.
There is the sense that Lisbon is prioritizing a path of more conscious development, with projects concerned less with making a fast buck and more about the legacy and effect of the project itself on the city and local neighborhood. Would you agree?
All developers are obliged to keep the historical features of the buildings and the city is benefiting from strict guidelines set by the local government. However, I feel that they would want to anyway – while Lisbon is being “renewed”, it is happening without losing its character and traditions. Most of the developers working in Lisbon are foreign, or a partnership between a foreigner and a local. I think another key reason why they are so careful to maintain the heritage it because this is what investors are looking for. They want the authentic experience, the 18th century azulejos, the high-stuccoed ceilings…
What are the neighborhoods that are emerging as ‘the ones to watch’ in your opinion?
I would pick Marvila, Alcântara, Comporta, Carcavelos, Setúbal, such as Intendente and Campo Mártires da Pátria. Of course, places like Chiado, Principe Real, Avenida da Liberdade and Lapa remain interesting, but you have to look harder to find a good, interesting deal as most of the buildings are already sold or prices have shot up.
Are there any specific insights you have learnt in the past two years for securing a successful investment?
Be careful who you buy from: there are many developers in Lisbon at the moment, but not all of them are trustworthy. Sometimes, cheaper does not mean that you will get a better investment. The main things to take into account are the location and quality, and that comes with a price. Always look to buy something that will stand out from the rest of all the hundreds of developments that are taking place. My suggestion is to always keep in mind what your main goal is, because there will be a point where you will have to compromise on something in order to stay within your budget; you cannot have everything!
What else is changing about the business scene and life in Lisbon?
Lisbon is buzzing, it is alive again. The Portuguese are back on the streets and enjoying exploring their own city, and you feel that the people are more confident and happy. Restaurants are full, hotels are booked and shops are selling.
How have property prices risen in the past two years?
30% in the historical centre.
Where is it still possible to find the best value for money on investment?
Look in up-and-coming areas such as Intendente, Marvila, Alcântara, Comporta, Carcavelos and Setúbal.
How do the locals feel about this change?
They are excited to see their city changing and they have finally understood how much our country can benefit from tourism and what a huge potential it has. However, prices in Lisbon are rising and salaries for the Portuguese remain the same, so some of them are scared. The Municipal government is conscious of this though and taking measures to protect the locals. For example, they recently launched 4 refurbishment projects in Lisbon offering affordable apartments to nationals starting at 90,000 euros.