MERCATO LIBERO

The ornate 18th-century Palácio Chiado in central Lisbon, which reopened this spring following a two-year renovation, is emblematic of Lisbon’s revival. Now home to seven restaurants, a bar and private dining rooms, the Palácio is brimming with wealthy Lisboetas and expats alike. Similarly, after decades of decline, Lisbon’s city centre has become a bustling, upmarket hub, with new cafés and boutiques opening and international brands such as Cartier, Prada and Bulgari launching stores.
The appetite for rejuvenation has affected the residential market too. Period homes that had been abandoned and were crumbling away as wealthy Portuguese moved into modern houses with better facilities in suburbs, such as Estoril and Cascais, are now among the most sought after in the capital.
“As a capital city, Lisbon is an anomaly in Europe,” says Arthur Moreno, co-founder of Stone Capital, which buys and refurbishes old buildings in prime locations. “It has many beautiful buildings in the centre that are in very poor condition. But the prime real estate market here is changing fast.”
Stone Capital has 12 developments under way, including several in the central Chiado district and others on Avenida Liberdade, often referred to as Lisbon’s Champs-Elysées thanks to its upmarket shops. At Liberdade 12, a late 18th-century property is being converted into 27 apartments with underground parking, gardens and terraces. Three-bedroom flats are being sold there off plan from €1.8m.
Athena Advisers, an international property investment company that began working in Lisbon in 2008, is marketing a range of developments in the city centre. These include Conde 35 in the embassy district of Lapa, featuring 12 apartments with river views, parking and gardens. Prices range from €350,000 for a one-bedroom flat to €985,000 for a three-bedroom one. The same company is selling the 17 apartments at Liberdade 71, all of which have access to a communal roof terrace and pool. The top-priced units are four-bedroom duplexes, on sale for €3.5m. The development is scheduled to be completed in March 2018.
“The property market in Lisbon only started to develop a buzz in 2014, but it’s in the last six months that we’ve seen a big rise in numbers of investors,” says Roman Carel, Athena’s founder. According to the company’s own research, prices in prime locations in Lisbon rose 22 per cent in 2015, while inquiries jumped 30 per cent in the first quarter of this year.
It is a revival that has come on the back of significant growth in tourism. Following a bumper year in 2014, Lisbon’s hotels recorded year-on-year revenue increases of 15.5 per cent this February. Property development has followed suit, with new cafés, bars and housing going up in the Alfama, Baixa, Lapa and Santos, among other areas.
According to local agents, most buyers are based in western Europe, in particular French, Swiss and Swedish investors, who are buying property in Portugal because of the country’s tax-friendly non-habitual residents (NHR) programme. This offers people who are moving to the country for the first time reduced tax rates or tax exemption for 10 years on certain income. “The NHR scheme is attracting European executives, who are moving here with their families,” says Frédéric Desage-Bonnet, of developer Ran Capital. In his experience, buyers tend to be aged between their late 30s and late 40s. “It’s not the over-65s,” he says. In Lisbon, Ran Capital is redeveloping Sacramento 28 in Chiado, where a three-bedroom apartment is priced, off plan, at €1.85m.
Yet as demand grows, the existing housing stock is running out. “If you are happy to buy off plan there are quite a few opportunities in Lisbon. But if you want an existing property with a view and a terrace in a prime location, it’s no longer easy to find,” says Miguel Tilli, co-founder of HomeLovers, a Lisbon estate agent, which is selling a three-bedroom, 620sq metre duplex in São Vicente with traditional hand-painted azulejo tiles for €1.6m.
While sales are up in the centre, outer areas — especially those linked to the domestic market — are still suffering. Unemployment is falling but remains high, hovering at about 12 per cent, and home prices in some areas are still 10 per cent below their pre-crisis peak.
For now, locals are largely pleased to see the centre of their city come alive again, with an uplift in service-sector jobs. But as affordability for locals becomes a bigger issue, it remains to be seen whether being priced out of the heart of their own capital by international buyers will generate a backlash.

Buying guide

● Property prices in Portugal have been rising since 2014 as the economy recovers and banks resume lending
● Prices across Portugal increased by 3.66 per cent year on year in January 2016 to an average of €1,047 per sq metre
● Lisbon prices average €2,464 per sq metre, rising to €6,000 per sq metre for prime city-centre developments
● Buyer taxes and stamp duties add up to about 15 per cent of the sale price
● Developers and agents cite rental yields of 5 to 7 per cent on short-term lets and 3 to 4 per cent on longer-term lets

What you can buy for . . .

€350,000 A one-bedroom apartment in Lisbon’s embassy district
€1.2m A three-bedroom apartment with a terrace and river views in the heart of the old city
€3.5m A penthouse apartment with a balcony and rooftop pool on Avenida Liberdade, the premier shopping area

Lisbon: tiles ahead

When the 1755 earthquake destroyed most of Lisbon, the seismic shock was so extreme it generated a tsunami that reached the Caribbean, writes Melissa Lawford. It also began a revolution in the city’s architecture.
Azulejos, the brightly glazed ceramic tiles first brought to Portugal in the 16th century by the Moors, originally only decorated palaces. But they were cheaper than stone. After the earthquake, demand for cost-effective materials rose rapidly and Lisbon quickly became a radiant mosaic.
Originally a roof-tile factory, Sant’Anna was soon making nothing but azulejos. Although it is 275 years since the company was founded, electric kilns are the only innovation it has introduced in that time. The clay is shaped, air-dried and then fired at 1,100C before it can be painted. Sant’Anna workers use the Dutch majolica technique, hand-painting designs over a white-glaze background. Many of the company’s 45 artisans have been working there since leaving school. “It’s like they breathe tiles,” says Francisco Tomás, the sales manager.
Azulejos spread across the globe with the Portuguese empire and can today be found adorning buildings from Brazil to Macau. While other aspects of colonial legacy fade, “the tile will be the links of Portuguese government all over the world”, says Tomás. Sant’Anna is now working on a number of global restoration projects, including a school in Angola. Along with government money, Sant’Anna’s Portuguese public-sector work dried up during the recession but the company was not hit hard, Tomás says. It caters primarily to private clients and exports 85 per cent of its tiles.
Tile-maker Viúva Lamego, founded in 1849, also maintains traditional techniques but since the 1930s has focused on working with contemporary artists. Their tiles decorate Maria Keil’s bold murals in Lisbon — the work often credited with rejuvenating the azulejo as a modern art form.
Photographs: Paolo Giocoso/SIME/4Corners Images; Teresa Rosas/Getty Images; Paul Bernhardt/Getty Images; Danita Delimont/Getty Images/Gallo Images; Jean-Pierre Lescourret/Getty Images