Lisbon moved up this year in the list of the most attractive European cities for property investment, drawn up in the Urban Land Institute's report "Emerging Trends in Real Estate Europe 2024", taking 8th place.
The Portuguese capital has now recovered from 11th place last year, having risen from 16th to 8th place in the last three years. Investors seem to be interested in the (relative) availability of assets to invest in, the regulatory environment and the attraction of talent in the city. These are all important criteria for those surveyed in the report when choosing a city to invest in.
Lisbon is particularly interesting for property development, the 7th most attractive in Europe for this purpose, as local authorities tend to look favourably on new urbanisation plans for less traditional areas of the city, and there doesn't seem to be as much resistance to changing the use of assets and land as in Spain.
However, some interviewees warn that the lack of housing supply across the country could impact on Lisbon's solid position in this ranking.
In this list, Lisbon surpasses Frankfurt or Barcelona. The ranking continues to be led by London, followed by Paris and Madrid, which is up one position on the previous year. Berlin, Amsterdam, Milan and Munich complete the list.
According to the report, throughout Europe property investment players point to economic performance as the main point to consider when choosing a city in which to invest and develop new projects. This criterion is closely followed by transport and city connectivity.
In recent years, investors have been betting more on new locations, considered economic hubs, and not just the big capitals. The big rises in Milan, Lisbon and Brussels are examples of this, a trend that may demonstrate the search for more liquidity and stability in times of greater instability.
At the top of the list, London seems to confirm the premium that investors place on liquidity. They believe that the fundamentals of this market continue to be resilient, and one of the investors surveyed, the CEO of a REIT, even says that "direct investors, sovereign wealth funds or pension funds and foreign capital continue to believe in the long-term benefits and wealth preservation that London provides".
The same trend is visible in Paris, in second place, with the weight of the forthcoming Olympics offsetting the less positive points of the recent social protest. In addition, it remains the world's leading tourist destination, according to the World Travel and Tourism Council.
Berlin and other German cities, on the other hand, are down in the rankings due to the economic slowdown this year and the weak growth forecast for next year.
ESG, valuations, technology and demographics: the main challenges and trends for next year
This survey shows that the importance of adopting ESG (Environment, Social, Governance) policies for all companies continues to grow. The decarbonisation of the economy is a particularly difficult challenge for the real estate industry, but increasingly the industry perceives ESG as an investment rather than a cost, important for maintaining value.
The valuation of real estate assets is one of the sector's main challenges for the coming year, according to the ULI report, as the recent downturn in transactions has had a destabilising effect on valuations across Europe. The climate of uncertainty and reluctance to adjust prices is likely to continue.
76% of those surveyed in this report believe that current valuations do not reflect as they should all the challenges and opportunities facing the property sector today, such as climate change, social impact or changing occupier demands.
On the other hand, artificial intelligence, technology and digitalisation are seen, just after the importance of ESG, as the "top trends" for the future of real estate. This is because artificial intelligence is increasingly seen as a tool for achieving ESG purposes, particularly in calculating climate risks or monitoring various uses and expenses.
95 per cent of respondents believe that AI can help their teams in various areas, not only in marketing or letting, but also in planning, Asseg Management, construction or investment.
Changes in European demographics are also seen as a particularly important trend for the sector in the long term. Europe is currently benefiting from an increase in migration, which is having a positive influence on its demographics and ageing population. But investors are also paying attention to the possible effects of climate refugees in the coming years.
Be that as it may, the arrival of baby boomers at retirement age is increasing demand for senior residences and healthcare facilities, and many of the investors surveyed are betting on these sectors for this very reason.