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One-Million-Euro Homes Sold on the Spot in Porto and Lisbon
9 May 2018
The “premium” real estate market is on the rise in the country’s two major cities, where supply is lagging behind demand. Some buyers invest small fortunes in homes before they are even built, while others are wary of a speculative bubble.
The largest Portuguese cities are in fashion, and more and more moneyed foreigners are choosing to live in Lisbon and Porto. They arrive willing to pay more than a million euros for an apartment, and in some cases, they are buying properties on the spot when the homes are still on spec and do not mind waiting a year or two before they can move in. In Porto and the capital, the main buyers are Brazilians. However, in Lisbon, the demand is more diverse, with many Arabs, Chinese and Nordic buyers. The truth is that the demand for luxury real estate has outstripped the supply, contributing to the current high price levels.
With the rehabilitation of buildings in the Historic Center in recent years, along with some new constructions, the “premium” market has skyrocketed, and properties have started to appear with prices that were unimaginable even two or three years ago, often more than million euros. Moreover, the sales are being completed in ever shorter timeframes. “The speed of market absorption has more than doubled or tripled in recent years,” says Ana Jordão, head of the residential department at Predibisa, a real estate firm in Porto.
The scenario in Lisbon is almost identical. The main difference is in the price per square meter, which is considerably higher in the capital. “We have clients who visit apartments for the first time and submit a proposal on the same day,” says Célia Aguiar, real estate agent at Remax Latina. In the case of Porto, urban rehabilitation has created a “prime zone” between the streets of Mouzinho da Silveira and Flores. There, two-bedroom apartments can go for 650,000 euros, and a three-bedroom flat, with a garage, on the Praça do Infante, sells for 900,000 euros.
Photos are often enough to sell a property
These prices are almost prohibitive for Portuguese families, although Predibisa has already sold apartments to Portuguese clients in the centre of Porto. What is surprising, however, is the ease with which some foreigners decide to acquire a property. “Some people fall in love with a property and buy it on the same day, often after only having seen images of the dwelling. Sometimes we can close a deal after just one or two meetings,” Ms Jordão stated.
Avenida da Liberdade is one of the most desirable areas in Lisbon, where the price of a square meter can reach 10,000 euros. Célia Aguiar gives the example of a one-bedroom apartment that has a garage. The flat is on sale for 640,000 euros. “It has 70 m2 and is on the best block of the avenue. It is a very attractive apartment,” she explained. Ms Aguiar highlighted that flats in areas such as Chiado, Rua Castilho and Fontes Pereira de Melo, and penthouses in Parque das Nações, can be worth up to one million and “sell very well.”
The market’s dynamism is positive, but we must be careful
The luxury market is not limited to the downtown areas. Ms Aguiar referred to the Jardins do Cristo Rei condominium, just off Moscavide, at the eastern edge of Lisbon, where five-bedroom penthouses (400 m2 of living space plus 200 m2 of terrace with private pool) cost two million euros. Penthouses in Porto are also attractive. Ana Jordão gave the example of the Edifício Essenza, where a duplex apartment, with private swimming pool, costs 1.8 million euros. “At the moment, of the 25 apartments that make up the complex, only six have yet to be sold,” she said.
The head of Predibisa noted that this scenario is “completely different from what happened three or four years ago.” “Since it is in a good location, with unfettered views of the Douro, they sell very quickly,” she said. She gave a penthouse on the Rua do Ouro, next to Foz, as an example. Construction started a week ago and the flat has already been sold for 1.5 million euros: “The buyer has signed the contract, knowing that he will only be able to move in 2020.” However, the fever that is affecting the market is causing some concern. Nuno de Sousa Pereira, a professor at the Faculty of Economics of the University of Porto and director of the Centre for Economics and Finance of the same institution, looks at the phenomenon with moderate optimism but adds caveats.
“Market dynamism is always a positive, but that does not mean that we shouldn’t be careful. It is good to attract foreign investment, but the problem is that if those buyers decide to opt for other destinations, the domestic market is unable to replace them,” he noted.
As for the effects on the banking sector, the economist is not particularly worried. “Most of these investments are made without using loans, so the pressure on the banking system, in this case, is not worrisome,” he concluded.
Original Story: Jornal de Notícias – Paulo Lourenço
Translation: Richard Turner