The numbers were included in the latest study from Cushman & Wakefield, which identified a total 35 deals of this type in both cities. It shows that the housing segment is the market’s great booster, which has contributed to the trading prices’ increase in buildings for renewal in both cities. In Lisbon, housing has a 67% share in terms of licensed construction and in Porto it also represents 67%.
Buildings are up to 27% more expensive
According to the consultant, as a consequence of this dynamic, the average transaction values for urban buildings in the city of Lisbon increased 27% until July for buildings with more than 500 sqm and 18% for smaller buildings. During this year’s second quarter, the price per sqm was between 2.760 and 3.320 euro, according to data from the SIR from Confidencial Imobiliário.
In Porto, within the Baixa area, buildings with more than 500 sqm registered a price of 2.756 euro/sqm and within the Historical Centre the prices were 1.735 euro/sqm.
More investment outside the city centres
Urban renewal is still the predominant activity within the market, especially in the city centres, but the study from C&W revealed that the demand’s greater geographical coverage has taken developers to more peripheral areas for their investments.
Ana Gomes, director of Development and Urban Renewal at C&W, explained that «demand for opportunities for urban renewal and development in Lisbon and in Porto was never so high and this trend should continue in 2020. However, this demand is increasingly more directed to less central locations where investment was lower during the last three years».
On the other hand, «the city’s expanding areas have also been the target of a strong interest, with a particular emphasis on the Alta de Lisboa, which in the coming years will contribute to a very considerable increase in terms of the city’s housing product offer».
However, the increase in terms of construction costs and the uncertainty about the period of time needed to obtain licensing have negatively impacted the renewal and real estate development market, despite the number of projects under approval remaining high.