Lisbon Real Estate Market Snapshot 2017
Lisbon, the perfect city to live
Urban rehabilitation in Lisbon
Lisbon is probably one of the best cities in the world for a global citizen establishing your base strong>, one who makes the world his home, constantly traveling from country to country, whether for business or pleasure. Examples of global citizens who chose to establish their base in Lisbon are Alicia Vikander and Michael Fassbender, Madonna, Eric Cantona, Monica Belluci, among others.
But apart from the famous, there are many other profiles who choose Lisbon to live for various reasons:
Why are prices going up in Lisbon?
This report focuses on Lisbon’s Urban Rehabilitation Areas (ARU), which can be seen as the city center in a broader sense. It is in these areas that most of the activity in terms of urban rehabilitation has been concentrated, which is allowing the city to be renewed, through magnificent architectural projects that preserve the fascinating old design in buildings equipped with modern amenities.
One of the most discussed issues currently is about the possibility of a bubble forming in real estate in Lisbon. In our opinion, the factors that explain the price increase are:
Future Perspectives and Opportunities
Having said that, what are our perspectives for the coming years? We believe that the current expansionary cycle can be maintained for another 2 to 3 years. It is natural that there is some slowdown in terms of capital gains, because the quality “delta” is already less noticeable. From now on, it is necessary to be aware of the speculative effects on the supply of medium and lower quality (where this effect is more noticeable).
The stock markets have already started to show signs of saturation and, typically, the real estate cycle reverses 2 years after the end of the stock market cycle.
What will happen to those who buy now? From our perspective, Lisbon continues to be very attractive for:
We hope this analysis can be useful to support your decision process, and we are available to delve deeper into any subject and advise on your investments.
On average, in Lisbon’s Urban Rehabilitation Area (ARU) (covers 11 out of 24 parishes in Lisbon), prices have increased by 14, 1% on a quarterly basis (between the 3rd and 4th quarter of 2017) and 26.8% on an annual basis (between the 4th quarters of 2016 and 2017). In other words, these are very significant increases that show the strong momentum of the real estate market.
Lisbon parishes with the best quarterly performances were: Belém (+37.9%), Arroios (+23.9%) and Santo António (+20.4%).
In terms of annual variation (2016-2017), the parishes with the best performance were the same, with only one change in the first 2 positions: Arroios (+36.7%), Belém (+35.7%) and Santo António (+33.6%).
The average price at ARU was €4,392 on a quarterly basis and €3,910 on an annual basis. Note that this difference is due to the effect of considering only the quarterly average on a quarterly basis, and the annual average on an annual basis. The fact that the highest value is the quarterly is due to the prices having increased throughout the year.
The parishes with the highest prices per m2 are: 1) Santo António (€5,853), 2) Santa Maria Maior (€5,037) and 3) Mercy (€4,852).
The average premium segment price for the ARU is €7,446, ranging from €4,329 for Ajuda to €9,255 for St. Antonio.
If we divide the ARU into 3 tiers, we can summarize our findings for the 2-segment medium and premium quality in the following table:
|Tier||Middle Segment||Premium Segment|
|Tier 1 – Sto. Antonio, Sta Maria Maior and Sto Antonio||4,800 – 5,500||8,100 – 9,300|
|Tier 2 – Arroios, Avenidas Novas, Campo de Ourique, Estrela||3,100 – 3,800||5,300 – 6,500|
|Tier 3 – Ajuda, Alcântara, Belém, S. Vicente||2,500 – 3,500||4,300 – 5,800|
Since the lowest point, during the 2012 crisis, prices in Lisbon grew 81% in the real estate segment premium and 71% in overall average, which means that the premium segment grew faster than the average, which supports the conclusions we shared in the previous chapter, in our perspective on the real estate market.
When we extend the analysis to other municipalities in the district of Lisbon, with greater international demand, Oeiras, Cascais and Sintra, it is concluded that the price increase was more relevant in Lisbon, for the reasons explained in the previous chapter.
Investors should regard prices per square meter as merely indicative, as they do not fully reflect what is happening on the ground, particularly for new developments that are about to be launched and that will influence price dynamics. We advise you to consult us to discuss these aspects.