Lisbon Residential Market
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Prime Residential - August 2020 SPOTLIGHT Savills Research Lisbon Residential market performance The prime market Looking ahead Residential Market Prime Market Residential construction Prime values, at €8,400 in Lisbon surged between psm, are 80% below those 2014 and 2016 of Hong Kong Lisbon is a city that has risen fast on the global stage. An emerging tech centre Average prime property price and a tourist hotspot, per square metre (June 2020) this Western European A growing market Lisbon: global city capital is now established as a Solid economic performance, growing demand Despite strong growth over the past ten years, residential dynamic cultural and and market reform has driven the market in Lisbon property in the Portuguese capital still represents good value Hong Kong New York business hub. For €42,400 €23,800 residents, Lisbon offers a high-quality of life Market performance A Global context €11,200 psm as of Q2 2020. It is for real estate acquisitions, and with an appealing Lisbon’s residential market With a 98% increase in prime prices home to some of Lisbon’s most just under €4.9 billion has been climate and a low cost experienced a period of between 2010 and 2020 Lisbon has famous landmarks including invested in Portugal’s real estate of living, compared to exceptional growth between outperformed a number of cities Marquis of Pombal Square and market, the majority into Lisbon. London Shanghai other major cities. 2014 and 2019. A strong globally over the past ten years. This Restauradores Square, as well as A minimum investment in real €17,500 €16,800 Like many prime economy, rising tourist is well above many other European Avenida Da Liberdade, Lisbon’s estate of €500,000 grants the non- residential markets industry and policies to attract cities and second only to Berlin main boulevard and home of high- EU buyer a visa and, in the longer around the world, the foreign investors spurred new which grew by 127% over the same end retail. term, a route to an EU passport. Covid-19 pandemic development activity and period. Both Berlin and Lisbon Misericórdia, where prime values Foreigners need only be resident slowed activity in the Paris Beijing first half of 2020 and supported price rises. have benefited from fast growing average €11,000 psm as of Q2 2020, in Portugal for seven days in the €15,500 € 13,500 price falls were Residential construction in interest from both domestic and follows. Misericórdia is home to the first year of residency. Of the 8,389 recorded. However, Lisbon surged between 2014 and international buyers while values cosmopolitan area of Bairro Alto. permits issued since 2012, Chinese a broadening 2016 as a result, largely focused have risen from a low base. Parque das Nações is Lisbon’s third investors have accounted for the international demand around renovation projects in Prime residential property in highest valued district for prime majority (55%). Berlin Amsterdam base, supported in part the city’s historic centre. With Lisbon appears good value on a property as of Q2 2020, with an The Chinese share of total €9,900 €9,200 by the country’s fewer buildings now available global stage. Values, at €8,400 average prime price of €10,600 psm. permits has fallen over time, Golden Visa Scheme, for renovation, construction psm, are 80% below those of Hong This is the city’s most modern area, accounting for just 25% of permits will fuel the recovery. activity has since slowed, and This is different to Lisbon’s with over $105m raised in Kong (the most expensive city in transformed for Expo 1998, this issued in the first half of 2020, Longer term, Lisbon’s has slowed further as a result of experience during the Global venture capital for 2019-2020, the world for prime residential district is home to modern office compared to 83% of permits ascension on the global Lisbon Madrid the pandemic, but continues to Financial Crisis (GFC), when a substantial figure, considering property), they stand 65% below and residential buildings. issued in the first few years of stage, coupled with the €8,400 €6,900 value its prime markets outpace the national market. house prices experienced a $134m was raised in total in the New York’s prime prices, and are the programme (Oct 2012-Jan offer, should drive In the year to May 2020, new large and sustained fall, (down ten years prior. A number of around half those of London. Golden Visa and 2015). This is in line with a fall in future outperformance. build construction in Lisbon 21% from peak to trough, international companies have Non-Habitual Residents outbound investment from the was 8% above the same period according to INE). Following a presence in Lisbon and the Lisbon’s prime districts The Golden Visa scheme, initiated country as a result of increased the year prior, compared to 6% the GFC Portugal implemented city also hosts the annual Web Centrally located Santo António is in 2012, has been hugely successful. capital controls from China, as well Barcelona Cape Town for Portugal. New build activity structural economic reforms, Summit, the world’s largest the city’s highest valued district, As of June 2020, 8,389 golden visa as a broadening demand base as €6,500 €2,400 could present an opportunity to residential markets have been technology event (albeit to be where prime property averages residence permits have been issued the scheme has developed. Lisbon Source Savills Research developers going forward. With opened up, and a Golden Visa held online for 2020). has also benefited from demand Note: We define prime as the top 5% of the market in terms of value fewer renovation opportunities scheme introduced, attracting The city is also an appealing Golden visa scheme investors for residential property from EU Paul Tostevin there is also a growing need for significant inward investment. place to live. A Western citizens attracted by the Non ■ China ■ Brazil ■ Turkey ■ USA ■ South Africa ■ Russia ■ Other Director, World Research new housing targeted at the This puts the residential market European capital rich with Habitual Resident (NHR) scheme, Prior to the pandemic, +44 (0)20 7016 3883 middle class. on a much stronger footing and culture, Lisbon also offers 2012- 19 Jan to June 2020 particularly from the French. the government had proposed [email protected] Lisbon is forecast to outperform residents a low cost of living Portugal’s NHR scheme offers that from 2021 the acquisition Covid-19 and the many of its peers as activity picks and high quality of life. A tax incentives to EU nationals of any property in Lisbon or prime residential up once again (see Residential compact-sized capital with 18% who have not been a tax resident Porto metropolitan areas to 25% markets Market prospects). short commuting distances and in Portugal for the last five years. be excluded from the Golden 4% Like many prime residential a sunny climate (the average 47% NHRs are exempt from personal Visa scheme. These plans have markets around the world, Lisbon Lisbon’s appeal year round temperature is 17°C) 4% income tax on income from now been put on hold to aid the 5% 58% has felt the impact of Covid-19, Lisbon is Portugal’s business makes it attractive to those 13% non-Portuguese sources such as market in a challenging economic particularly as international and economic hub, accounting looking to locate for study, 11% pensions, rental income, capital environment. While granting interest remains a significant for over a third of national GDP, work and living alike. This is 18%7% income and capital gains, for 10 a reprieve, this suggests that driver of the prime market. In the according to Oxford Economics. particularly important as people years. (As of April 2020, the tax longer term the scheme’s future 3% first half of 2020, prime prices in The city has a fast growing reassess their work / life balance 3% 3% rate on the overseas pensions of as a market driver in the city is Lisbon fell by 4.3%. technology and start-up scene, in the wake of the pandemic. Source Savills Research using SEF NHRs increased from 0% to 10%.) uncertain. 2 3 Outlook Residential market prospects The Portuguese capital’s prime market offers value on the global stage, and the city looks set to outperform other European cities in the near term Economic prospects With opportunities for new entrants World Cities Prime Residential The global macro-environment is very in the short-let market limited, demand Market Outlook (next five years) different to that of six months ago. impacted by the pandemic, and a Outlook City Lisbon’s economy is no exception, shortage of long-term rentals, there is although it is forecast to hold up slightly opportunity to serve the traditional Amsterdam better than some of its European peers. rental market, particularly targeted at Berlin Lisbon Lisbon’s GDP is expected to contract professionals living in the city. Miami by some 9% in 2020, this is less than Paris the likes of Barcelona (-10%) and Paris From growth to maturity San Francisco (-11%), but more than London (-8%) and Lisbon is emerging from a period of Berlin (-5%). sustained growth as the city played Barcelona Beijing The recovery in visitor numbers, a catch up to its Western European Geneva critical part of the economy, is likely peers. Set against a challenging Guangzhou to be slow, weighing on the recovery. macro-economic environment, we Hangzhou Lisbon has benefited greatly from a expect to see a more moderate rate of Kuala Lumpur tourism surge in recent years, with over price growth in the near term, but still London Los Angeles 18.4m overnight visitor stays in 2019, high by global standards (see Market Madrid an increase of 5% from 2018 and a 133% Outlook table).