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How Portugal’s Banks Are Cashing in on Lisbon’s Property Boom

3 August 2018

Bloomberg reported that “it’s no coincidence” that three of the country’s largest banks have decided to sell some of their most valuable real estate assets at the same time.

In recent weeks there have been several reports that the largest Portuguese banks have sold or intend to sell part of their real estate portfolios. Bloomberg dedicated an article on Friday to that theme, showing how banks in Portugal are cashing in on the property boom, motivated in part by the steep increase in tourism.

BPI was one of the last to announce a deal. Last month, the bank led by Pablo Forero sold its oldest property in the capital, the Augusta Lisbon, to a German fund for 66 million euros.

“Why did we sell?” Forero asked at a press conference. ” We decided to take advantage of a very interesting moment in the property market.”

In addition to BPI, BCP and Caixa Geral de Depósitos also announced property sales in the capital, which has witnessed a sharp rise in prices. The bank led by Miguel Maya agreed to sell the 6,000-square-foot Rua do Ouro building to Sana Hotels for an undisclosed amount.

The state-owned bank wants to get rid of three buildings, including the block that it owns on the same street in downtown Lisbon.

While cost-cutting is a key factor for sales, Bloomberg reported, “it’s no coincidence” that three of the country’s largest banks have decided to sell some of their most valuable real estate assets at the same time. Investment in Portuguese real estate is expected to rise to a record 3.5 billion euros in 2018, compared with 2.1 billion euros last year, according to Cushman & Wakefield. International buyers accounted for 67% of the investment in 2017.

“The truth is that demand has never been stronger,” said Ana Gomes, director of Cushman & Wakefield in Lisbon, quoted by the news agency as saying that Portugal had the third-highest increase in home prices in the European Union last year, according to Eurostat.

” This has nothing to do with the market peaking in Lisbon,” said Jose Cardoso Botelho, head of Vanguard Properties, which 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.”

Bloomberg noted that the BPI building, for example, sold for more than 5,000 euros per square meter, more than double the price investors would pay for a property in the same area three years ago.

Original Story: Jornal de Negócios / Bloomberg

Translation: Richard Turner