Factors such as economic performance, asset availability, and talent attraction contributed to Lisbon's three-place climb in a list of 30 cities analyzed in a study by consulting firms PwC and the Urban Land Institute (ULI). This positions Lisbon ahead of cities like Frankfurt, Barcelona, Hamburg, Brussels, and Vienna, among many others.

Following the surge in interest rates and inflation between 2022 and 2023, European investors are now seeking a certain degree of normalization in the sector in 2024. Despite the ongoing uncertainties, including two wars near Europe in which the European Union is also involved on a macroeconomic and geopolitical level, it is time to adapt to new realities.

Investors and their partners are adjusting and assessing these new realities concerning interest rates and inflation, with a clear perspective on stabilization and a better evaluation of risk factors. Although these factors may remain high in 2024, cycles come and go, and the economic history of the world has witnessed phases of significant uncertainties before, leading to new opportunities for many investors.

The study introduces a new reference point for evaluating and anticipating real estate investment decisions from 2024 onward. How did Lisbon secure the eighth position in this crucial ranking for the real estate market in Portugal and Europe?

Lisbon has demonstrated an unwavering and growing appeal to international investors for the year 2024, climbing from sixteenth to eighth place, nearly doubling international interest in real estate investment in this location in just three years. Lisbon has thus become a significant hub for economic development in this part of Europe.

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Creating legal and housing policy conditions that address the most significant societal issue—housing shortage—would be crucial now. The study emphasizes that Lisbon's performance, asset availability, and the ability to attract talent were of paramount importance in the evaluation. However, the capital gains even more prominence in terms of real estate promotion and development.

One caveat is the lack of rental housing, as Portugal stands out only in the for-sale residential sector. Unlike Portugal, affordable and social housing, as commercial real estate investment products, is a robust industry in the rest of Europe, with private and public investors working hand in hand.

Another critical aspect is ESG (environmental, social, and governance) and the increasing importance investors place on this criterion. Today, it is a prerequisite that must be met before investment decisions for 2024, as highlighted in this study. In the view of many international investors, those who fail to meet Sustainable Development Goals—such as decarbonization of building construction and operation—will find it challenging to sustain their activities.

Data source: https://www.pwc.com/gx/en/industries/financial-services/real-estate/emerging-trends-real-estate/europe-2024.html

Author

Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes