Portuguese Technology Industry Fuels its Real Estate Market
Portugal’s property market seems very much alive and it keeps growing. One of the biggest reasons that underpin this growth is the country’s emerging technology industry. Lisbon as the capital of Portugal is the main promoter city of the industry in the country. Lisbon’s technology start-up scene is helping country’s economy greatly, and as a result, Portugal’s property market is benefiting from the growth, too.
According to Made of Lisboa which is an entrepreneur community in Lisbon, the city now has more than 50 co-working spaces. Rundown buildings around the town keep getting transformed by new start-up projects and the number of technology related businesses keeps growing daily.
Real Estate Market is Having its Share from the Development of Tech Industry
Newly-emerging tech industry creates demand for affordable homes and work spaces to rent which in turn makes tech workers renovate old buildings and put neighbourhoods back on the map. This phenomenon also increases property prices in unpopular and developing areas, and attract other businesses and investors into those mentioned areas.
Although the industry is only beginning to emerge, its impact is great. It has a total of 32 tech scale-ups (companies that have raised just under €900,000, or US$1 million) which make up 47% of the total number of companies in the city according to the Hubs in Europe 2018 report by Startup Europe, a European Commission initiative.
With its wealth of tech talent, both local and from overseas, and support from the public and private sectors in the form of tax incentives, grants and initiatives, the city is on course to become a leading tech hub in Europe. Along with tourism, it is set to underpin growth in the property market, according to the Savills Buying Guide on Lisbon, which was published last year.
EU Startup Monitor, a European Commission initiative, reports that “the start-up culture [in Lisbon] is no longer a mere trend” and that it is “one of the biggest hubs for start-ups in Europe along with London, Berlin, Paris and Copenhagen.”
New Jobs Create New Neighbourhoods
According to the entrepreneur community Made of Lisboa, the tech start-up industry of Lisbon is growing very fast. According to the community, only between 2014 and 2016, around 700 companies were created in the high-tech sectors. Last year, Google announced that it is opening a center in Oeiras which will create more than 500 jobs and further strengthen the real estate market around.
Now, the majority of the new businesses yearly are in software and IT services in the city according to the fDi Markets Portugal. João Borga, of Startup Portugal believes that this growth is due to the business and start-up friendly political atmosphere built in by the Prime Minister Antonio Costa’s government which came to power in 2015. João Borga says that “Successful professionals are investing back into the industry through funding and mentor programs, providing help to small businesses that you just can’t buy with money,”.
According to Vasco Pereira Coutinho, of Lince Real Estate, following the financial crisis of 2011, property prices in Lisbon had fallen 50% in the lower end of the market and 20% to 30% at the top end. After the bailout, demand for property in Portugal started to rise again, because the investors saw the potential of high returns once more in the country. With the country’s Golden Visa Program launched in 2012 and the residential lease reforms, Portugal suddenly became a great place for real estate investment.
Combined with the developing industries like the ambitious tech industry of Lisbon, the country and the capital started to lure big investors from around the globe and successfully revitalized its real estate market. Prime property prices in Lisbon have almost doubled since 2016, rising from €5,000 per square meter in 2016 to €9,500 per square meter in 2018, according to the same Savills report, while prices in Chiado, an elegant central district known for its traditional shops, cafés and upscale hotels, can exceed €14,000 per square meter.