25 Sep 2018 - Lisbon (Portugal)
Charles Hector Whitmee
This week I am in the outskirts of Lisbon, where, despite it being September, it has consistently been over 30° C. I have been studying the residential market in two areas, namely, Amoreira and São João do Estoril. Amoreira is an up and coming location which has seen significant development over recent years with demand in Cascais and Estoril having outstripped supply forcing buyers and developers to look further inland. São João do Estoril, on the other hand, is a well-established, coastal location popular with expats and high-income Portuguese who work in the capital.
The residential property market in Portugal has seen a period of growth since 2014 with prices nationally having risen by 4.84% over 2017 alone - 3.26% in real terms. The average price for residential property is now EUR 1,144 per square metre nationally and EUR 1,386 in Lisbon. In fact, prices have risen in all of Portugal’s 24 urban areas over the past year with areas such as Amadora and Coimbra posting price growth of around 13% year-on-year.
Residential supply in Lisbon city has only recently begun to keep pace with demand over the past 24 months with a number of new large-scale apartment developments under construction, particularly in the centre of the city. In these areas there have been a number of old office buildings purchased with a view to either converting them or completely regenerating them into apartment buildings. Despite the lack of new office space and the fact that residential has a higher construction costs residential is favoured currently as a focus for developers.
In general, buildings for refurbishment are the asset most sought after, supported by several reasons. On the supply side, there are many buildings in need of refurbishment due to an urban leasing law that, for decades, led to the deterioration of a large proportion of buildings in the city centre and the incentives for urban regeneration.
The outlook remains positive for the residential property market in Portugal, as long as the government acts on its suggestions that it will make the country more attractive to investors. One area, for example, that needs to be addressed is the total lack of supply in the rental sector due to laws which heavily favour tenants and have kept investors away for years. However, as the country begins to reap the economic rewards from the move to market liberalism, it is foreseeable that the government will continue along the trend. Therefore, it is likely that Portugal will continue to attract developers, investors and second-home buyers in the short to medium term at least.
The River Tejo from São Jorge Castle