Research article

Lisbon At A Glance

Lisbon has seen a surge in residential investment and development activity in the last two years

A distinctive city of hills

▲ A distinctive city of hills

Lisbon is a fast-rising city on the global stage. This European capital is Portugal’s business and cultural hub and largest tourist destination. For residents, Lisbon offers city living in a compact urban environment and relaxed Mediterranean lifestyle. A distinctive city of hills, Portuguese cuisine, nightlife and Atlantic beaches are all on offer.

The city is emerging from economic difficulties in a nation which underwent an EU and IMF bailout in 2011. Reform of Portugal’s residential tenancy laws, coupled with inward investor incentives, has spurred wide scale regeneration of the built environment, helping Lisbon to foster economic recovery faster than other parts of the country.

Some €1.56bn has been injected into Portugal’s residential markets since the golden visa programme was launched in 2012, the bulk of this has gone into Lisbon. New apartments are being constructed and historic buildings are being redeveloped to meet modern-day occupier demands.

Economic performance

Portugal is now emerging from recession. Austerity measures, imposed as part of the country’s €78bn 2011 bailout by the EU and IMF, coupled with improvement in the macro economic context, have paved the way to renewed economic growth. The national economy grew by 1.5% in 2015, and is forecast to grow by a further 1.4% in 2016, just below the Eurozone average of 1.6%. Unemployment now stands at 12%, down from a high of almost 18% in January 2013.

As part of its bailout package, Portugal was required to implement structural reforms to improve long-term growth, productivity and competitiveness while reducing its deficit. Portuguese companies have increasingly focused efforts to grow their business abroad. This has fuelled exports, which are up 29.3% since 2010. New incentives for inward investment into Portugal’s residential markets were developed, helping to revive the residential sector (see Figure 3 below).

One effect of the financial crisis was to foster greater entrepreneurship, and Lisbon has emerged as a centre for tech companies and start-ups. Affordable property and a high quality of life, together with a pool of young talent from the city’s universities, support a burgeoning tech scene. The Web Summit conference will relocate to Lisbon from Dublin in 2016, while the London co-working space provider ‘Second Home’ is expanding into the city.

Portugal also offers certain competitive advantages that are helping to fuel its recovery. The World Economic Forum ranked Portugal 36th (of 144 countries) in its 2015–16 Global Competitiveness Report, scoring highly for quality of infrastructure. The country ranked 23rd (of 189 countries) in the World Bank’s ‘Doing Business’ rankings, in which Portugal scored particularly high for ease of trading across borders.

Lisbon is Portugal’s wealthiest city. GDP per capita stands at €22,500, 36% above the national average. Average household disposable incomes are 15% higher than the Portuguese average.


Lisbon is Portugal’s largest tourist market, accounting for 30% of all the country’s overnight visitors. The city welcomed 5.2 million overnight guests in 2015, an increase of 47.3% since 2006. Passengers at Lisbon airport reached 19.7million in 2016, an annual increase of 11.6% and a doubling of passenger numbers since 2006 (Figure 1). The city is Europe’s fourth fastest growing international tourist market by growth in overnight visitors after Istanbul, Hamburg and Copenhagen.

Figure 1

FIGURE 1Lisbon tourism: growth in air passengers and overnight visitors

Source: Statistics Portugal

The catalysts for Lisbon’s regeneration

Together with an improving economic context, a number of policies have been instrumental in fuelling investment into Lisbon’s residential markets, kick-starting the city’s wider regeneration:

1. Market Reform

Historically Portugal’s leasing market was protectionist, pro-tenant and gave little incentive for landlords to enter the market. As a result, Portugal’s home ownership rate is high, with an owner occupation rate of 75%.

In 2012, the government introduced reforms to the leasing market, leading to greater flexibility in lease terms and, making the investment market more appealing to investors. This quickly attracted the attention of new developers and institutional investors. These included US developer EastBanc and Stone Capital, a developer and asset manager, for example. Stone Capital has undertaken more than 20 regeneration projects across the historic city centre.

Improved market conditions have also fuelled big ticket commercial investment volumes. In total, $1.96 billion (€1.71bn) was invested into Lisbon’s commercial markets in 2015, of which $1bn (€0.87bn) came from the United States. Investors from the UK, Spain, Singapore, Switzerland and Germany, among others, have also been active in the last four years.

2. Golden Visas

Portugal launched one of the world’s most successful golden visa schemes in 2012. A minimum investment in real estate of €500,000 grants the non-EU buyer a visa and, in the longer term, a route to an EU passport. Foreigners need only be resident in Portugal for seven days in the first year of residency.

By January 2015, the scheme had brought €1.56bn of new investment into Portugal’s residential markets – the bulk into Lisbon. Some 2,697 golden visa residence permits have been issued for real estate acquisitions, of which Chinese have accounted for 83%. Those from Brazil, Russia, South Africa and Lebanon are the next largest national groups (Figure 2).

The majority of golden visa buyers purchase for investment, but with a longer term view to make Portugal a permanent home. The scheme’s success has been attributed to its flexibility, reputation and residence in a safe and secure mainland European country.

Figure 2

FIGURE 2Golden residence permit programme investors (2012-2015)

Source: SEF

3. Non Habitual Resident

Lisbon is also benefiting from investment from EU citizens, attracted by Portugal’s ‘Non Habitual Resident’ (NHR) scheme, offering tax incentives to those who have not been a tax resident in Portugal for the last five years.

NHR are exempt from personal income tax on income from a non-Portuguese source such as pensions, rental income, capital income and capital gains for ten years (provided that income is subject to taxation in accordance to the Double Tax Treaty), for ten years. For those working in Portugal, NHR status offers a flat rate 20% personal income tax on those in high value-added scientific, artistic or technical jobs.

The scheme has been credited with further diversifying the demand base for residential property in Lisbon. NHR status has been especially popular with the French who, by comparison, face high taxation at home

Figure 3

FIGURE 3Lisbon’s residential markets

Source: Savills World Research

Many of Lisbon's historic buildings are undergoing regeneration

▲Many of Lisbon's historic buildings are undergoing regeneration

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