Lisbon’s Bairro Alto, with a view of the Castelo de São Jorge in the distance
Lisbon is known as the “white city” because of its clear, intense light, but the Portuguese capital, a patchwork of red roofs, historic buildings and secret gardens, is also a colourful place. Its position halfway down the estuary of the river Tagus, with a waterfront of about 20 miles, coupled with its cultural heritage, has long attracted visitors. But tourism has risen significantly in recent years – up 10 per cent in 2010 and 8 per cent in 2011 – improving the city’s holiday and long-term rental markets, which is good news for investors.
Frederico Mendoça of Abacus, a Savills’ associate, says he is mainly selling property to buyers from Germany, Holland, Brazil and a few from the UK. “The Angolans too are buying top-end properties or apartments in the best new developments, purely for investment. They might use the property for a few weeks a year but they are buying really because they want somewhere safe to put their money,” he says. There may be concerns over the ongoing eurozone crisis, but Europe’s historic capitals still hold an allure, and Angolans are drawn to Lisbon in particular because of the shared language. In general, overseas investors have shown a preference for apartments in new developments in good locations or, to a lesser extent, older apartments and houses that have been refurbished to a high level.
The agency is marketing Palácio Condes de Murça, a development of 24 apartments in the upmarket Lapa district, home to embassies, townhouses and boutique hotels. The old palace, on one side of the communal gardens, is being totally refurbished; on the other side of the gardens, a new building is being constructed. Here prices range from €400,000 to €1.75m for the one- to six-bedroom apartments.
In Avenidas Novas, in the centre of Lisbon, Mendoça is selling Fontana Living, a development of seven five-bedroom apartments, all of which are 340 square metres. Prices range from €1.1m to €1.5m. In the same area, three-bedroom apartments at a new development called Saldanha 25 are for sale from between €900,000 and €1.5m.
Manuel Neto of Engel & Völkers says he has seen more demand for investment property in the past three months than at the beginning of the year. “We have had enquiries coming from Russia and northern Europe – France and Belgium in particular. Vendors are more open to making deals, but values in good central locations such as Chiado, Principe Real and Lapa are holding up, especially for a quality property with a view and a terrace,” he says. The Lapa district is popular with the French because it is easy to reach the French School in Amoreiras from there. “The French typically buy a four-bedroom house with a little garden for between €1m and €2m,” says Neto. He is selling two large three- and four-bedroom apartments in the converted former British ambassador’s residence in Lapa for €1.6m and €3.2m respectively.
Museums and art galleries are plentiful. The best shops are around Rua Augusta, but for people-watching you need to go to the Chiado district, frequented by artists and intellectuals. Alfama, near the castle, is a more traditional area, and Bairro Alto, reached by climbing the steep hill or taking the funicular, has the best night life.
“Alfama and Bairro Alto are two of the best places in which to buy property,” says Paulo Sardinheiro of Winkworth International. “They have been tidied up, many of the buildings repaired and improved, and many of our overseas buyers want to live there. However, there is still work to be done and improvements to be made so there is still growth to be seen.”
Property in the top residential areas of Lisbon is not cheap, although prices have been pretty flat over the past few years. A two-bedroom apartment in the city centre costs about €400,000 and a large four- to five-bedroom penthouse in a newly renovated period building about €3.5m. Some properties have seen a drop in value of up to 25 per cent. “However, those that are in the best condition and in good, historic areas have only seen a small reduction in price,” says Sardinheiro. He is selling a four-storey house in Estréla – just to the west of Bairro Alto. The property has seven bedrooms and a garden, and is on the market for €4m.
A contemporary house in Estréla for €2.3m
Meanwhile, Engel & Völkers is selling a contemporary 1,200 sq m house, also in Estréla, built in concrete and glass and designed by architects Bak Gordon. The design won the FAD award for architecture in 2011. With four bedrooms, six bathrooms, swimming pool, gardens and parking for four cars, it is for sale for €2.3m.
Andrew Hawkins, head of international at Chesterton Humberts, says there is a growing demand among second-home owners for apartments in Lisbon. “This market has steadily grown over the past five years. As well as being a second-home hotspot among European buyers, the city is becoming increasingly popular with UK buyers as a result of increased accessibility,” he says. TAP Portugal has improved its service from the UK and from Sunday will be running daily flights from Manchester to Lisbon.
Hawkins is marketing Santa Catarina in the Bairro Alto district, 19 one- to five-bedroom apartments in the converted 17th-century Palácio Mesquitela, with communal garden and swimming pool. “With the buy-to-let market growing fast, a property in this building would make a solid investment as well as a beautiful destination for a second home,” he says. Prices range from €450,000 to €1.2m.
“The city has an amazing atmosphere, but there are still many streets with very old buildings that need much work doing to them,” says Sardinheiro.
• Flights from many destinations
• Good value for money
• Good rental yields Cons
• Old buildings that need renovation
• Properties are expensive in prime residential areas
• Many more apartments for sale than houses What you can buy for ... €100,000 A small modern one-bedroom flat in Bairro Lopes €1m A three-bedroom flat overlooking the marina in Parque das Nações