Who are the new people changing the face of Lisbon?

The personalities in the Lisbon property market have gone through a complete makeover in the last five years. None of the British, Spanish and Portuguese investors who were active in Portugal before the financial crisis are still around, and those who were active at the time of expo’98 have disappeared without trace. The only personalities from 30 years ago still around are agents like Eric van Leuven at Cushman & Wakefield or Pedro Seabra who moved from CB Richard Ellis to Explorer, project managers like Almeida Guerra or architects like Frederico Valsassina, Miguel Saraiva and Mário Sua Kay.

Text: David Sampson

FRENCH DEVELOPERS LEAD THE WAY
Claude Berda, founder of the French audiovisual AB Group, lives in Belgium, made a second fortune developing property in Switzerland and has recently become the largest individual investor in Portugal. He has bought more than a dozen buildings in Lisbon and the Algarve and is developing 1,500 apartments and villas. Last year he won the tender to buy the Comporta estate on the Tróia peninsula, on the coast to the south of Lisbon, through a joint venture with the Amorim family. The purchase price was €158 million and he plans to build 700 homes plus seven hotels.
The 92-year-old Pierre Castel was the first Frenchman to invest heavily this decade in Portuguese commercial real estate. His fortune is based on a wine company he founded in Bordeaux in 1949 and he made his first purchase in Portugal in 2015. Through a Singapore company, he bought one of the office towers in the Centro Colombo and followed this by buying the Lisbon law courts complex in the Parque das Nações. Last year he bought the Torres de Lisboa office complex and he has invested more than €400 million in Lisbon real estate.
Libertas has led the marketing and sale of apartments to French buyers with roadshows and its own brand name “Maison au Portugal”. The company is owned by Cecile Gonçalves and her brother Pascal whose father bought the company as a shell on his return from France in 1993. It had previously owned six prime buildings on the Avenida da Liberdade, but, like other Swedish developers such as Bygg Fast who poured into Lisbon in the late eighties, it lost everything when the local banks in Sweden turned off the financing tap. The company currently has 12 apartment blocks under construction, and recently reported that 27% of its total sales were made to buyers from France.
Paulo Loureiro, the son of Portuguese immigrants, who has lived most of his life in France, left his work in the New York financial sector in 2015 to come to Lisbon. He started by buying old buildings in central Lisbon for refurbishment and his Louvre group now has eight buildings with 110 apartments under construction.
Also looking to refurbish and upgrade Lisbon properties are the young duo Pierre Mattei and Cyril Garreau whose real estate fund Keyes Asset Management bought the LX former factory building in 2017. They plan to refurbish more buildings on the site and
to extend the current offer of shops, ateliers, coworking offices, street cafés and restaurants.
Geoffroy Moreno moved to live in Lisbon and speaks the language fluently. The Stone Capital Group, which he owns together with his brother Arthur, has 20 projects in hand, including the 435-room Student Hotel on the campus of the Universidade Nova in Carcavelos.
What unites all these investors is a feeling for Lisbon and its people, traditions and light. They all want to improve the city and make it a more attractive place to live, work and visit. They are all here for the longer term and to discover Portugal, not to make a quick profit and move on to the next country.

FRENCH COMMERCIAL INVESTMENT
There are also French commercial investors who see Portugal as good for long-term investment. The largest property investment last year was made by the real estate company of the French supermarket chain Auchan. It bought two shopping centres (Forum Sintra and Forum Montijo) and the Sintra Retail Park for €411 million. It plans a new development in Carnaxide on the edge of Lisbon, which will include apartments, two office buildings, a hotel, shopping, restaurants and communal spaces. The concept will be one of work, link,
eat, relax and sleep.
The Axa insurance group has bought the Dolce Vita Tejo shopping centre. It was originally developed by the Amorim Group who wanted it to become the largest shopping centre in Portugal. They sold it together with the rest of their Portuguese property portfolio to the Spanish company Chamartin, which went bankrupt in the financial crisis. The centre was sold by the banks in 2015 to Baupost, an American fund, which has now made its profit and is moving on.

LONG TERM INVESTORS FROM SPAIN AND THE USA
Merlin Properties is a Spanish company quoted on the Madrid Stock Exchange which has been able to raise money from investors based on its status as a SOCIMI, the Spanish equivalent of a REIT. It started in Portugal by buying an office building in the Parque das Nações in 2015 and this year it bought two more office blocks there for €112 million. It also bought Almada Forum, one of the most successful shopping centres in the Lisbon area, for €406 million from Blackstone, which has been busy selling the former Multi Development centres at a substantial profit.
Like most of the current investors, Merlin are buying assets for the long term and are drawn by the steady income flow rather than quick capital gains. According to Hugo Moreira, the local director of Värde Partners, it is already time to sell assets in Portugal as the market peaked in 2017/8, but, in fact, the funds managed by Värde have made two substantial purchases here in the last year. They bought the Imopólis office portfolio, originally developed by the José de Mello group, from JP Morgan for €130 million and they have followed it up by buying the Torre Burgo, one of Porto’s leading office buildings.
But not all American investors who have made profits on sales have left Portugal. Last year, the American fund Oaktree Capital made a large gain on the sale of the Quinta da Fonte office park, but this year it announced that it is reinvesting all the proceeds and more in financing the expansion of André Jordan’s Lisbon Green Valley development in Belas.
Other American investors are the Kildare fund, which is run by Ellis Short. He was previously with Lone Star, the buyer of the former Banco Espírito Santo, and for some years he was the owner of Sunderland Football Club. In 2013, he set up a €2Bn fund to invest in
the European distressed property debt market held by banks and, in 2017, he set up another fund with another €2Bn to buy European properties. He is personally keen on Portugal and last year the fundbought Lagoas Park, the office park developed by Teixeira Duarte alongside the highway from Lisbon to Cascais, for €375 million.
William Blake Loveless is an American who recently set up Jackyl as a development company based in London with projects in France and Iberia. He used to be at Meyer Bergman together with Paulo Sarmento who has recently moved back to Lisbon as capital markets partner at Cushman & Wakefield. Last year Jackyl bought the iconic Pastelaria Suíça building in Lisbon’s Rossio as well as a large development site on the outskirts of Lisbon.

RESIDENTIAL MARKET BACK ON TRACK
The largest residential project in Lisbon is being developed by VIC Properties, which is headed by the Australian Alan Leibman and João Cabaça who worked in banking in London. Last year they bought the 650-unit Braço de Prata development fronting the river from the creditors of Obriverca, the original developer, for €150 million. They promptly issued a convertible bond to fund part of the price, backed by a promise to issue shares in the company to the public. Then, this June, they announced the purchase of a 20ha plot
between Braço de Prata and the Parque das Nações, on which they plan to build 2,000 more units. The chief operating officer, João Gamboa, was formerly with Obriverca and he has been involved in Braço de Prata from the beginning.
Another developer keen to attract local buyers and those from outside the EU is John Rabie, a well-known South African developer. He has already sold more than two-thirds of the 154 flats in the LX living project in Amoreiras which he bought in partnership with Swiss GMG Real Estate, and the development will not be completed till 2021. He would do well to follow the example of Anthony Lanier, who started coming to Lisbon in the 1990s and has had an enormous effect on the whole area around Príncipe Real. He has refurbished many of the buildings around the square and the local council has responded by upgrading the facilities. The challenge now is to maintain the quality of life for residents when there are so many tourists.
The residential property market has begun to cool in the first half of 2019, as the rate of increase in prices of both new and existing homes has slackened, but there is still no sign of reduced demand from foreign buyers who are the ones sustaining prices in the up-market areas. There is still demand for smaller properties which can be refurbished and prices of these have more than doubled since 2015.
Meanwhile, with 21 million tourists visiting each year, the hotel market has gone from strength to strength. In the last two years, 95 new hotels have opened in Portugal with about 6,000 new rooms, and it is estimated that by 2021 more than 180 new hotels will open. The hotel investment market has also improved with hotels being seen as more attractive to invest in.
Deutsche Bank sold the Penha Longa Hotel to a partnership of the Carlyle Group and the Portuguese-owned Explorer Investments for €100 million, and the Intercontinental Hotel in Porto was sold to Asian investors for €55 million.

NEW TRENDS
As bond yields stay so low, investors are looking for investments to give them a good return and property is a possible source. The level of investment planned for the eastern area of Lisbon, combined with the variety of alternative uses which are starting up there, such as coworking and co-living, make it an attractive area for future growth. The lack of available spaces has so far meant that the big
beasts of coworking, such as We Work, have not yet arrived in Lisbon, but it may be that Lisbon will lead the way in co-living. As the city becomes attractive to digital nomads, there is a growing list of places to “rest, create and linger”.
It is, however, recent legislation, which is likely to have the greatest effect on the property market in the medium term. After many years of pondering the issue and 10 years after Spain published a similar law, the Portuguese government has introduced the REIT concept. The shares in such property investment companies must be quoted on a Stock Exchange and at least 20% of their shares must be spread among smaller investors. The companies must hold each property for at least three years, must reinvest at least 75% of any capital gains and must pay dividends. Foreign investors will pay tax at only 10% on dividend income and it remains to be seen how many of them will wish to use this model.
The outcry in Lisbon at the number of evictions and the growing pressure from tourism have led to changes in the law protecting residential tenants. Firstly, tenants get additional protection against eviction and increases in the rent if they are aged over 65 or substantially disabled, and on the death of a tenant more members of his or her family will have the right to inherit the tenancy. Lettings must be for a minimum term of one year and, unless there is a legal justification, landlords must give five years’ notice to terminate. In July, a new Habitation Law was approved by the Portuguese Parliament and I hope that the government can strike the right balance between encouraging the refurbishment of old buildings and protecting people in their homes. Lisbon is a beautiful city with great old-world charm, but it still desperately needs lots of investment and that has
to come from outside.