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Construction work in the Baixa district in Lisbon.
Photographer: PatriciaDe Melo Moreira/Bloomberg
From the fifth floor of the Banco BPI building in downtown Lisbon, Chief Executive Officer Pablo
Forero can get a clear view of the transformation taking place in the Portuguese capital.
Outside the lemon-colored edifice, hundreds of tourists make their way along the cobblestone
pavements to the riverfront Praca do Comercio, once a hub for traders arriving on ships from all
over the world. New hotels, short-term rental apartments and stores that cater to a growing
number of tourists have been mushrooming in the area over the last few years.
Three major Portuguese banks sell their historic homes at once
Portugal 2018 property investment, prices to reach new records
Markets
By Henrique Almeida
August 3, 2018, 5:00 AM GMT+1
Banks Are Cashing in on Lisbon’s Property
Boom
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A tourist bus passes a former Banco BPI building in Lisbon. Photographer: Patricia de Melo Moreira/Bloomberg
BPI sold the 200-year-old set of buildings that occupy a whole block last month for more than 66
million euros ($77 million) to a German fund, joining the ranks of trading houses and goldsmiths
that have been moving out of the Portuguese capital’s famed Baixa quarter. Over the years, some
relocated uptown or to office parks on the city’s outskirts. Those that kept their buildings in the
downtown area are now taking advantage of a real estate boom that has sent property prices to
record highs.
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Pablo Forero Photographer: Hugo Coelho/Banco BPI
“Why did we sell?” Forero said to reporters at a press conference on July 24 on the top floor of
the BPI building. “We decided to take advantage of a very interesting moment in the property
market.”
About 300 meters away, Banco Comercial Portugues, Portugal’s biggest listed bank, and stateowned
Caixa Geral de Depositos are also selling their landmark properties on Rua do Ouro
street, which literally means “gold street.” Both lenders provided details about the planned sales
in July.
‘Seller’s Market’
While cutting costs is a key driver for the sales, it’s no coincidence that three of the country’s
biggest banks decided to sell some of their most prized property assets at the same time.
Investment in Portuguese real estate is forecast to rise to a record 3.5 billion euros in 2018 from
2.1 billion euros last year, according to Cushman & Wakefield. Foreigners accounted for 67
percent of that investment in 2017. Portugal recorded the third-highest increase in home prices
in the European Union last year, according to Eurostat
.
“The truth is that demand has never been stronger,” said Ana Gomes, a director at Cushman &
Wakefield in Lisbon involved in the sale of the Caixa Geral building. “It’s a seller’s market.
Anything is possible.”
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Augusta street in the Baixa district. Photographer: Patricia de Melo Moreira/Bloomberg
The revival in Lisbon’s downtown property market began after the previous government eased
long-held rent controls in 2011 and started offering residence permits and tax breaks to
foreigners. At the same time, a tourism boom fueled more demand for new hotels and rental
apartments. Average home prices in the historic center increased 60 percent over the last five
years, according to Cushman & Wakefield.
With the real estate stock available in the city center shrinking, investors are likely to continue to
pay top dollar for the last available units in the Baixa area.
Price Doubled
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“This has nothing to do with the market peaking in Lisbon,” said Jose Cardoso Botelho, head of
Vanguard Properties, a developer that recently sold a penthouse in the city for a record 22,000
euros per square meter. “Lisbon is attracting a new kind of investor that wants to buy something
special, regardless of the price.”
Hot Property Markets
Property price increase based on lack of supply, foreign demand
Annual house price index change in 2017 compared with year earlier
-5
0
5
10 %
Ireland Czech
Rep.
Portugal Spain Germany U.K. France Italy Greece
Eurostat
The BPI building, for example, sold for more than 5,000 euros a square meter. That’s more than
double the price investors would pay for a property in the same area three years ago, according
to Square Asset Management, a real estate investment firm in Lisbon.
“It’s crazy,” said Pedro Coelho, the CEO of Square, which has about 1 billion euros in real estate
investments. “There’s no doubt in my mind that this is a good moment to sell.”
As bankers and other property owners rub their hands with joy, some residents in the city
center are throwing their arms up in despair. They complain of being priced out of their
neighborhood homes and of noise from tourists and construction work as they try to go about
their daily lives.
No Bubble
“They want to buy everything we have,” Helena Jacinto, a 76-year-old pensioner, said as she
walked past Pastelaria Suica, a traditional pastry shop in the downtown Rossio square that’s
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expected to shut down in August after the entire block was sold to a foreign investor. “In a few
years, most of the landmarks that made this place unique will be gone.”
Customers sit outside Pastelaria Suica in Rossio square. Photographer: Patricia de Melo Moreira/Bloomberg
See also: Lisbon’s Hot Property Market Leaves Buyers Struggling for a Home
Even those on the far left of the political spectrum have been lured by the surging property
market. Left Bloc party member Ricardo Robles, who campaigned against real estate speculation
in Lisbon, resigned as a city councilor on Monday after mounting criticism about a deal
involving a building he bought in 2014 for 347,000 euros and later valued by a broker at 5.7
million euros after renovation work.
The Bank of Portugal said on June 6 that the rise in residential real estate prices has been
“particularly strong,” adding that in the second half of 2017 there were some signs, even if very
limited, of prices being overvalued. For some officials at Portuguese banks, talk about a possible
bubble makes no sense.
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“It’s true that there are certain areas where demand is very hot,” Banco Comercial CEO Miguel
Maya said on July 26. “But I don’t think at all that there is a bubble in the property market.”
— With assistance by Anabela Reis
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