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Prices on the Avenida da Liberdade at €10,000 per square meter

11 November 2017

The Chiado/Santa Catarina area is in second place, with prices ranging between €5,500 and €8,500 per square meter

Avenida da Liberdade is the most expensive area of the capital, with values ranging from €6,000 and to €10,000/m2, followed by Chiado/Santa Catarina, where prices can be found between 5,500 and 8,500 per square meter.

The data are from the real estate consulting firm Quintela & Penalva (Q&P), which focuses on Lisbon and Estoril, principally in the luxury homes segment. The rise in prices is not limited to the central areas of Lisbon and Porto, but can also be found throughout the country. The higher costs are causing buyers to begin to move to other, previously less sought-after areas such as Penha de França and the Avenida Almirante Reis, in the case of Lisbon, notes Francisco Quintela, one of the consultancy’s partners.

“If the current tourism and investment scenario continues, Lisbon has the margin to grow regardless of whether construction has room to grow as well,” the company’s other partner, Carlos Penalva, stressed.

2017 has been a good year for the real estate market and especially for the luxury segment. Q&P managed to reach a sales volume of €117 million in the year to date, after reaching a total of €84 million in 2016. Portuguese customers accounted for more than half of their business and the average sales price for residential properties has already reached €833,000 when last year it stood at €795,000.”

There is a lot of talk about foreigners, but the Portuguese represent 59% of our revenues”, Mr Quintela explained, who, in 2004, together with Carlos Penalva opened their company, which specialises in the sale and lease of premium real estate, mostly in the residential area. This number is justified, in Carlos Penalva’s opinion, by the fact that the Portuguese view real estate as a good investment, with more attractive rates of return, compared to other assets.

Although Q&P has a strong domestic customer base, foreigners have been gaining ground, accounting for 41% of its business, accounting for only 26% in 2016. “The Brazilians, French, Swedes and Angolans are among our top customers,” Mr Penalva stated. But the company has conducted negotiations with buyers from close to 30 different countries, including, beyond those already mentioned, places like the Dominican Republic, Morocco and even Malaysia. Q&P’s founding partner believes that it is because Portugal is an attractive country with excellent quality of life, a pleasant climate and safety and is still cheaper compared to other European countries. These are factors that continue to attract foreigners, not just for existing homes but projects under development as well.

Portugal’s Attraction for Foreigners

Q&P’s partners say that, among their clients who are looking for real estate to rehabilitate or land for construction, they have Iranian, Israeli, Lebanese and Libyan investors. “Their wallets are larger than the Europeans’, though they often want to buy in quantities that are simply not available on the market, making the process of investment more difficult,” Mr Quintela explained. The prevalence of funds from the Middle East in the luxury segment is due to the investors’ desire to find new niches in the market where it’s possible to withdraw capital if need be and more diversified and secure port for their investments.

But for foreigners to continue to view Portugal as a viable investment locale, the partners believe that it is essential that the Portuguese government continue their policies of fiscal stability, since any turbulence in this area may alienate potential investors in the country.

While prices remain relatively inexpensive compared with other European capitals, that does not mean that prices are uniformly low in Lisbon. However, the two executives are not convinced by talk to a real estate bubble and believe that there is still room for prices to grow in the capital. “We are in a phase where the market is nearing maturity, while prices are still rising since they began this cycle at very low levels,” Mr Quintela stated.

2000 Properties in Portfolio

Currently, Q&P has close to two thousand properties in its portfolio. In the view of the two partners, there is no shortage of product in Lisbon. They talk of properties to be finished and others that are still on paper. By the end of the year “we expect to announce between fifteen and twenty new developments, with an average of 15 to 20 apartments, all in Lisbon and only one in Cascais/Estoril, a place with some product shortage, and where whatever comes on the market is quickly sold out,” Mr Quintela said. This shortage is reflected in prices, where, in this market, the average value per m2 runs between five and twelve thousand euros.

Although they are not a priority for the consultancy, Q&P has some properties outside of Lisbon and Cascais. Considering the benign real estate investment environment in Portugal, foreigner nationals are looking at investments on the Alentejo coast up to Sagres, as primary residences, vacation homes, or just as an investment. About a month ago, Q&P opened its first office in Porto, in Boavista. “It’s cheaper than Lisbon, and there are a greater amount of properties available, principally buildings requiring renovations,” Francisco Quintela explained. Here too the partners are searching for investment opportunities for their clients.

Original Story: Expresso – Maribela Freitas

Translation: Richard Turner