Photo credit: Ivan Radford
Lisbon is lowering its property prices. Portugal's capital may be the country's biggest city, but the real estate market is seeing demand shrink.
Property sales this year are predicted to fall by 75 per cent compared to 2006
levels, with only 5,000 transactions taking place. As a result, agents are
cutting their prices to bring buyers back.
"Portuguese banks are not lending and there is the
threat of rising property taxes as values are reassessed," Frederico
Mendoca of Abacus Property told Homes
& Property. "Offers are routinely 20 to 30 per cent below even
reasonable asking prices."
Even in the prime area of the city, the price tag of a
three-bed apartment is down by 28 per cent, added the agent, making the
Portuguese capital a prime opportunity for property bargain hunters and prospective
investors.
Indeed, the city is "Europe's most underrated capital city",
according to the magazine, thanks to its history and uncrowded beaches in
nearby Troia and the Alenteho coast. And with sales sluggish across the
country, demand for rental property is on the up.
"The lettings market, meanwhile, continues to benefit from the
fallout in the sales market, as households who cannot access mortgage finance
rent instead," said the RICS Portuguese Housing Market Survey for August. "Indeed, tenant demand
continues to rise - albeit at a slower pace - and lettings expectations are
positive."
The buyers that are active in the recession-stricken city
are now looking at existing homes rather than new homes in an attempt to save
cash.
Between the last quarter of 2011 and the first three months
of 2012, 70 per cent of the properties on the market in Lisbon were pre-owned,
according to property publication Confidencial Imobiliário, as new builds'
reputation of being harder to trade drives up their popularity.
Meanwhle, bank-owned homes are also providing an opportunity
for investors to snap up cheap Portuguese property. Indeed, one of Portugal's
biggest banks, Banco Espirito Santo SA, announced this month a new division
called AGI devoted to selling repossessed property.
"We have many real estate assets," its CEO Ricardo Salgado announced.
"But if we have many real estate assets that is because we managed to recover
credit faster than our competitors."
Those assets are now being targeted at foreign investors
from countries such as China and Russia, according to Bloomberg.
With agents slashing prices and banks releasing repossessed
homes, Portugal is determined to attract bargain property hunters from abroad.
And the discounts may yet do the trick. Luxury real estate
in Portugal is still popular thanks to affordable price tags, according to high-end
agents.
"At the highest end, property prices have declined by just
10 per cent at most," Rafael Ascenso, chief executive of Christie's affiliate
Porta da Frente, told the Financial
Times. "Yet even the most expensive Lisbon-area properties, such as
Atlantic-front homes in nearby Cascais and Estoril, are still one-third the
cost of comparable real estate in most western European resort areas."
Ricardo Guimarães, director of Confidencial Imobiliário,
agrees. Prices have reached "historically low" levels, he told The
Portugal News. "It is getting hard to drop any further."
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