Foreigners Spend 40% More than the Portuguese To Buy Homes in Lisbon

2 December 2017

Foreign nationals pay on average €338,000 for homes in Portugal’s capital city, versus the €244,000 spent by the Portuguese themselves.

Lisbon is now on the map as far as real estate investment is concerned, with much of the urban rehabilitation and new construction geared towards wealthier buyers. But are those buyers only foreign nationals or are more Portuguese families also willing to pay high prices to buy homes in the capital’s centre? A study by Confidencial Real Estate (Ci) to which the Expresso had access, analysed the capital’s 11 most central parishes (Avenidas Novas, Belém, Alcântara, Ajuda, São Vicente, Santo António, Arroios, Santa Maria Maior, Campo de Ourique, Estrela and Misericórdia), cross-referencing notifications of pre-emptive rights to the municipality by owners when properties change hands.

Based on the data, it was determined that 51% of the houses with prices above €6,000/sqm in Lisbon was acquired by foreigners. And that 80% of the dwellings costing up to €3,000/sqm was bought by the Portuguese. In total, in these 11 parishes and in the period between January 2016 and June 2017, 7,300 houses were sold, of which 1,314 went to foreign nationals.

On the whole, foreigners were seen to have spent an average of €338,000 on the acquisition of a home in the Portuguese capital. That figure that is about 40% above the €244,000 invested, on average, by the Portuguese when they acquired homes in those same 11 parishes.

“This differential in the profile of acquisitions between domestic and international buyers is visible in the respective percentages of the total volume of investment and the number of transactions. While foreigners account for roughly 18% of the total of 7,300 residential property transactions made in this area in those 18 months, the weight increases to 24% when the analysis is conducted based on values. Thus, international buyers were responsible for around €446 million out of the total €1.9 billion in sales in the residential housing market,” the economist Ricardo Guimarães, a director at Ci, explained.

Which areas are attracting the highest number of foreigners? The share of international investment in residential transactions in the Alcântara-Ajuda-Belém area “is incipient”, the official stated, accounting for just 10% (€44.6 million) of the amounts traded. In the parishes of Estrela, Campo de Ourique, Avenidas Novas and Arroios, the value of foreign investment rises to an average of 19% (€85 million) of the total. In the historical centre, more precisely in the parishes of Santa Maria Maior, São Vicente and Misericórdia, the weight of foreign investment rises to 30% (€134 million).

According to Mr Guimarães, the misperception that foreigners are majority customers in these more central areas – contrary to what actually happens – stems from the fact that national investors often do not live in the houses they buy and eventually lease them, again to foreigners: “The purchase of real estate by the Portuguese in the historic centre is generally not intended for their primary residences… but rather as an investment, with the placement of the homes in the so-called local tourist housing market.”

Lisbon, the Benetton of the Real Estate Market

Ci’s study also found that in the last year and a half Lisbon attracted an ever-widening panoply of foreigners, literally from all corners of the globe – a total of 84 nationalities.

The French continue to dominate the market, accounting for 25% of the number of transactions conducted by international buyers. The Chinese were the second most prominent buyers, with 16%. But when the ranking is done by the total spent, instead of the number of transactions, the Chinese come out on top, accounting for 21% of the €446 million invested by foreigners in the 11 parishes of Lisbon. Regarding the amount spent, the French, with 20%, are followed by the Brazilians, with 10%.

Although in a lower number, the Brazilians, and now the Turks, are more and more involved in Lisbon’s frenzied real estate market. “In the most recent data, for the second half of 2017: the Brazilians have gone from 10% to 17% and have become the largest investors, surpassing even the Chinese.”

Lisbon’s attractiveness to its sister country continues to grow, attracting wealthy Brazilians, who spend the most on homes – an average of €548,000. The Turks are in second place, with average purchases in the order of €453,000. Next are the Chinese, spending €362,000, and the French, with €277,000. “This new reality, with 84 active nationalities in Lisbon, shows that the city can be resilient to possible shifts in demand from one source or another,” Mr Guimarães pointed out.

Original Story: Expresso – Marisa Antunes

Translation: Richard Turner