What’s so sexy about Lisbon?

When Invest Lisboa was created in 2009 to promote Lisbon as an exciting investment destination, not even its CEO Rui Coelho could have imagined then the extent that Portugal’s capital would take off and become one of the trendiest business and tourist centres on the planet. 

Before it successfully bid to host the 1998 World Exposition (Expo ‘98) in 1992, Lisbon was a quaint European backwater with more of a provincial city status than that of a leading European capital city. In fact, in 1997, many more people could visualise Casablanca thanks to the famous film than they could Portugal’s first city and, from personal experience, no one I knew in the UK who hadn’t visited the capital could mentally picture a single Lisbon monument or landmark. Roll on 20 years and Lisbon has become one of the sexiest and most exciting cities in the world, crumbling old buildings have been restored, downtown cafés and restaurants are packed, and riverside bars and nightclubs are heaving to the beats of some of the best DJs in Europe.

In 2017, Portugal welcomed a record number of tourists – over 22 million – with Lisbon registering a 10% rise in hotel bookings. That same year, property investment turnover reached a high not seen since 2005 with 95 DFI (direct foreign investment) projects – up 61% on 2016 -, while the country became the 22nd most attractive investment destination worldwide, creating around 8,000 direct jobs as a result. The number of new hotels in Lisbon alone in 2017 and this year will have reached over 30, according to the Lisbon Tourism Association (ATL), not to mention the rise in short-term holiday rentals in Portugal called ‘Alojamento Local’), which has skyrocketed 3000% in 10 years from 259 in 2000 to 9,833 in 2017.

So what has changed? Why did Portugal’s capital suddenly take off after effectively being bankrupt at the start of the economic crisis in 2011? Rui Coelho, the CEO of Invest Lisboa, an agency charged with promoting Lisbon with investors overseas, says that even he was surprised and can’t pinpoint one single factor. Instead, he says, a number of happy coincidences converged over a decade which saw Lisbon successfully competing with other investment hotspots like Barcelona and Seville (Spain) and even Northern European cities like Stockholm (Sweden) and Copenhagen (Denmark).

Among those “happy coincidences” are the Golden Visas, which Rui Coelho says were fantastic for the city, and the non-habitual residents programme, which attracted property investment from non-EU investors and retirees from EU countries, particularly the French. Both the Web Summit and the Eurovision Song Contest created a buzz about the city while a plethora of international tourism awards from entities like the World Travel Awards also helped. The uncertainties surrounding the rise of terrorism and attacks in traditionally popular Maghreb markets also benefitted Portugal and funnelled anxious tourists to a safer haven known for its security.  “Investors used to say (back in 2009) that despite all the lovely things about Lisbon, they weren’t going to invest in the city because they thought Portugal would leave the euro and their investments would automatically take a 30% haircut,” says Rui Coelho. “They were wrong. They lost money precisely because they did not invest in Lisbon back then. Since then prices have risen, and by a lot, and those who did invest during the crisis have made the largest returns.”

 

Early days

Since its foundation in 2009, Invest Lisboa, created by Lisbon City Council and the Portuguese Chamber of Commerce and Industry with the support of Portugal’s foreign trade and investment agency AICEP, has helped over 3,000 projects – 520 in 2016 alone. The body employs just three staff and has an annual budget of €150,000.

A change in strategy?

Rui Coelho affirms that Invest Lisboa is one of the key pillars in Lisbon City Council’s strategy for promoting Greater Lisbon overseas as an Atlantic and European business hub and for attracting direct foreign investment to the capital. He says that successfully attracting companies, economic agents and new talent are all factors that have transformed the city and turned Lisbon into a viable and valuable international brand. “In terms of strategy, we’ve changed some things but maintained others. We have enjoyed great results from that strategy and now everyone wants to invest in Lisbon,” he says.

Promoting Lisbon as a startup capital

One of the most successful strategies that Lisbon City Council and Invest Lisboa has maintained since 2009 is putting the city on the international map as a startup capital, offering not only a wealth of highly-educated talent capable of speaking and working in English, but also offering one of the most advanced IT and telecommunications networks in Europe as well as an unbeatable lifestyle quality. Since 2009, the City Council has had a pioneering role in investing, promoting and supporting entrepreneurialism and innovation through the creation of brand entities like Invest Lisboa and Startup Lisboa, which are strategic partnerships in Lisbon’s drive for internationalisation and greater competitiveness.

In 2015, Lisbon became the new location for the Web Summit, the largest international technology showcase in the world. In 2014, the Portuguese startup Codacy had won the Web Summit’s startup competition PITCH in the Beta category. “The entrepreneur behind Codacy had begun at Startup Lisboa. That was the first time that Web Summit knew anything about Lisbon as a startup capital. Now we have coworking spaces (Second Home being a case study), fab labs and incubators all over the city and suddenly everyone is talking about startups in Lisbon,” says Rui Coelho who points to Lisbon’s latest project, the Beato Creative Hub, on a 35,000m2 plot of land leased from the armed forces which will open in 2019.

Extending the Lisbon brand to Greater Lisbon

One of the key ways in which Invest Lisboa promotes the city and Greater Lisbon as a whole is by investing in stands and addressing investors at international trade fairs, particularly real estate fairs such as MIPIM in Cannes and Expo Real in Munich, where it acts as an umbrella organisation for 16 partner companies and municipal councils on both sides of the River Tejo. One of these partners is Baía do Tejo (Tejo Bay), which is a consortium involving four municipal councils – Barreiro, Almada, Seixal and Lisbon.

Baía do Tejo is a public company charged with regenerating former industrial brown field sites at Quimiparque (chemicals) in Barreiro, Siderurgia (metalworks) in Seixal, and Margueira (shipbuilding) in Almada. “International competition is very strong and Invest Lisboa gets behind all sectors of the economy and projects of all sizes. Baía do Tejo and its sites have all the right conditions for all kinds of projects of different sizes,” says the Invest Lisboa CEO. “We decided that we were not competing with any other region of Portugal, including Porto. It increasingly made more sense for us to collaborate at the Lisbon regional level and we now have a mandate with the City Council to extend the partnership we have with Baía do Tejo to all 18 municipal councils in the region,” he explains.

This means that Invest Lisboa is promoting the entire region internationally under the umbrella brand of Lisbon, which it believes is much more advantageous to the other municipalities. “We aim to attract investors and distribute them where they are best served. Of course, there are going to be investors who want to be in the centre of Lisbon, but others may not have that priority and can benefit from being outside while still knowing that, with our excellent road and rail infrastructure, they are a short travelling distance away,” Rui Coelho adds.

Solving Lisbon’s housing crisis

“Everybody moans that there is no affordable housing for the middle classes in Lisbon anymore and that foreign investors are snapping up the available property and changing the character and profile of the city,” says Rui Coelho. “But people forget that in 2009 the city was falling to bits. There wasn’t a single week that went by when a dilapidated building wasn’t collapsing. Lisbon City Council didn’t have the cash to restore them and neither did the landlords,” he said. Since then a number of urban rehabilitation schemes have been launched, allowing owners of rundown properties to apply for funding while benefitting from tax incentives.

But one major project that will go some way towards resolving Lisbon’s housing shortfall has been announced by the city mayor this year. A 25-hectare city-centre site once occupied by the Lisbon Fairground (Feira Popular) at Entrecampos is now available for housing development in what Lisbon Mayor Fernando Medina calls a “mega project”. The project involves 700 homes of various typologies, a 2.5-hectare park, leisure and social facilities, a huge office centre (Lisbon also has a chronic shortage of state-of-the-art offices) and shops. Some 279 houses will be for sale and the rest for rent on a 30-year lease.

Investment is great but talent is better

“We are living a fantastic moment and experiencing all-time records in tourism, real estate investment, entrepreneurship, company relocation, startups and talent attraction. We had this huge economic crisis and it was really tough for the country and its people, but we made reforms and have emerged in a better shape than we went in. “Of course, we still need companies and investors, but what has changed for me in terms of what is most important – and this wasn’t the case back in 2009 – is talent. These days I think talent is more important than investment because entrepreneurs and talent are what will sustain the city long term,” Rui Coelho concludes.