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Portugal Real Estate: Lisbon, one of the most attractive cities in Europe

Lisbon, a small capital on the European scale, is far from being the most attractive city for foreign investments but this does not stop investors from recognizing its great potential. 

Uncertainty and instability are among the most commonly mentioned words in the latest study carried out by PricewaterhouseCoopers (PwC) and the Urban Land Institute (ULI) on the trends of the European real estate market. Even in this tumultuous scenario, duplicated at the Portuguese level, Lisbon has managed to maintain an honorable 7th place in the table of the most attractive European cities to invest in according to the new edition of Emerging Trends Europe 2017.

A group of 781 representatives from large real estate funds, private equity funds and family offices graded 30 cities in Europe according to the real estate opportunities they offer, their number of assets and their potential for return growth. This year saw a big change for many cities compared to the previous study’s rankings.

The most significant change is the emergence of German cities in the top 5 of the best cities to invest in, taking four of the top five spots with: Berlin, Hamburg, Frankfurt and Munich. Another important change is the huge drop of London and Birmingham, penalized by the “Brexit” phenomenon which clouds investor expectations (the study does not yet reflect the Trump effect).

Lisbon, which “only” attracted two billion in investments over the last 12 months, one of the lowest amounts in Europe, still manages, proportionally, to perform well in terms of the potential it offers investors. “Despite being a small market, Lisbon is in this position because investors consider the price of real estate assets to be low. Unlike other Iberian cities such as Madrid and Barcelona where prices are much higher,” explains Jorge Figueiredo, partner at PwC, reminding than other questions hang over Spain, such as the pro-independence referendum in Catalonia.

Lisbon has followed a unique path over the past three years in this assessment of investors. In 2014, it was in 26th place (out of 28 countries assessed) then reached 9th place in 2015 and was 7th in 2016, staying in this position in 2017 thanks to its growth potential. Risky investment funds and traditional funds can find assets in a city where the rates of return are among the highest in European capitals. Indeed, Lisbon offers an ideal return potential for those who are willing to take risks, according to the study.