"Foreign investors are driving up property prices in Lisbon."."

In recent years, the capital of Portugal has undergone significant changes, transforming from a dull city into a vibrant hub. The times of high youth unemployment, severely exacerbated by the global financial crisis, are now a thing of the past. Lisbon is experiencing a renaissance. Almost every street features a building covered in scaffolding, as owners and entrepreneurs renovate historical sites, encouraged by government grants. A dynamic startup scene is emerging.

Although Portugal has long been a popular destination for foreign investors, especially retirees, the tax reforms of 2009 put the "dot on the i." More and more foreign investors are heading to Lisbon, where real estate prices rose by 4.9% in November 2017, according to the Global Property Guide. The cost per square foot is now 1,400 euros ($1,707.79), according to information from the real estateagency Century 21 Portugal.

It all started with the global financial crisis," says Ricardo Souza, CEO of the real estateagency Century 21 Portugal. "When we began to notice an increase in demand, it was driven by foreigners. A new wave of international investors is eager to live specifically in Lisbon. The French used to frequently fly to Lisbon for weekends, but the demand is becoming increasingly diverse. Investors with over half a million euros are looking at the city center and its historic heart, as well as the Expo area, which is popular among Asian investors and has a lot of land available. Lisbon attracts people with its quality of life, modern infrastructure, climate, easy access to the city center, and its safety."

Sofia Rodriguez Nunez

The head of the real estate and planning department at Gómez-Acebo & Pombo Abogados Portugal agrees that foreign demand, in her estimation, accounts for a quarter of all real estate transactions and shows no signs of waning. In particular, the French are actively purchasing homes in the neighborhoods of Chiado, Príncipe Real, Baixa, Santos, Alfama, and Bairro Alto.

However, the growing trend of investing in the luxury market raises questions about limited supply and soaring prices, confronting social issues. Bloomberg and The Guardian have focused attention on the negative consequences of the real estate boom in the city. Souza agrees. "Over the past two years, we have seen that investors have concentrated on the luxury market. Strong international demand is a problem for the Portuguese because there is an affordability issue in Lisbon. We are observing that young families are being pushed away from the center, while prices are rising outside of it."

“We conducted a study among millennials, most of whom said, ‘I want to live in the city center and rent a place, but such an option doesn’t exist, which is why we see a rise in co-living, where 5-6 young people buy a home on the outskirts of the city.’ I ask Souza whether so much international interest is a positive or negative phenomenon. ‘I think the positives outweigh the negatives,’ he replies. ‘Many neighborhoods were lifeless, and now they have local shops and cafes, and they have come back to life. So I consider this a positive phenomenon.’