Nothing says Lisbon like crumbling, colourful chaos. This is particularly true of property in the heart of the city, where abandoned period buildings line the steep, cobbled streets in varying shades of sherbet: powder blue, pastel pink, acid green. The only thing uniform about them is their faded charm, which just adds to the aesthetic. Perfection, after all, has one big defect: it is apt to be dull.
But while the rustic look might add an element of authenticity that photographs rather nicely, the reality is that the majority of these buildings are in a state of decay so severe that they are uninhabitable.
And that’s where Lisbon’s best-known restorative developer comes in. Walking the fine line between complete restoration and retaining history and character, Stone Capital is transforming these dilapidated structures into some of the most sought-after homes in Lisbon – homes that are being snapped up for three times the £2,500 per sq m city average.
Here, co-founder Arthur Moreno talks about the restoration strategy that is driving the influx of overseas capital he believes will fuel a “healthy, sustainable” level of growth in Lisbon’s prime residential market.
“Lisbon is a bit untried. It is a bit unexplored,” Moreno says in Stone Capital’s central Lisbon offices above the newly launched Prada store. “But it has become the cool place to be. That is relatively recent.”
As wealthy Portuguese have upped sticks and moved to more modern properties in Lisbon’s suburbs, the city has been left with hundreds of empty, decaying shells. But Moreno knows just how to bring them back to life.
Stone Capital has been operating in the city since 2011 and has a portfolio of 30 buildings equalling around 800,000 sq ft. “We only ever buy up prime central property,” says Moreno. “And we also only ever take on something special. Something charming and distinctive.”
By restoring original features and brightening the trademark colourful façades before fitting out to the highest spec, Stone Capital has created an entirely fresh product in Lisbon, and one that is highly sought after. Properties are selling off plan for up to €8,000 (£6,700) per sq m. That’s three times the city average. But for many overseas buyers, the price tag remains a snip compared with the likes of London, Paris and Berlin.
And Moreno only sees Lisbon residential prices increasing. “I expect to see prices go up by 5-10% over
the next five years. There is definitely a rise in the number of people wanting to invest and buy apartments in Lisbon.
“There is strong outside potential and the breakdown is around 70% international investment and buyers, and 30% domestic. We are seeing interest from French, Brazilians, South Africans, Swedes, Germans, British. It helps that short-term rental yields are 5-7%. Long term, they are nearer 3-5%.”
Into the future
The question is whether this is sustainable. Moreno is convinced that the growth is built on a realistic model.
“Lisbon’s fundamentals are good,” he says. “Very strong. I think it will continue because this is not like a speculative wave you might have in Spain or Ireland. It’s more sustained. Healthy rather than crazy.
“We certainly walk away from anything we think is overpriced and we sell everything very early on, off plan. And we are selling off plan easily and with confidence. This city is cool. It’s where everyone wants to be and even the expensive property is cheap compared to other markets. Plus, we have the residential tax breaks. And, of course, there is the weather.”
Maybe perfection isn’t so dull after all.