The Aga Khan and Lisbon’s fabulous property market – The Property Chronicle
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The Aga Khan and Lisbon’s fabulous property market

The Fund Manager

Lisbon, Portugal’s capital, is the best performing property market in Western Europe, a magnet for investors from the EU and 8,000 plus non-EU citizens who have taken advantage of the minority Socialist government’s “golden visa” program since 2012. PwC property analysts even ranked Lisbon as the world’s top city for investment and real estate development, up from the 11th spot in 2018. Even though Lisbon prices have risen 25-30% since I first profiled this investment theme in the GCC financial press in 2017, prices are still a modest fraction of those that prevail in Amsterdam, Zurich and Berlin, let alone post-Brexit London and gilet jaunes besieged Paris.

I still believe the risk reward calculus favors selective buying of homes, hotels, logistics assets and offices in Lisbon. The Euro, 1.38 in early 2014, has fallen to 1.10 now and made Portguese assets attractive for King Dollar investors from the UAE. This is the year I renew my love for the cobbled streets of medieval Alfama, haunted by the ghosts of Umayyad and Almoravid souk merchants, Sintra castelos from the time of the Moors, the lovely stone villages of the Algarve and the Douru, still the name of the courtesy title of the Duke of Wellington’s eldest son and heir. After all, this is where Arthur Wellesley’s redcoats beat Napoleon’s generals in the brutal Peninsula campaign long before Waterloo.

Portugal’s property bull market has structural, not speculative, roots. Affordable home prices, tax law changes that enabled Northern Europe’s pensioners/snowbirds to retire in Portugal, the wildly successful golden visa program, rock bottom ECB interest rates, re-development of thousands of derelict buildings in central Lisbon, new transport links and six successive years of economic growth have all been factors in the Portuguese capital’s property market renaissance. Portugal has also attracted tens of billions of dollars from the financial elite of its former colonies in Brazil, Angola, Mozambique, Goa and Macau/China. Chinese citizens constitute more than 50% of the 8,200 golden visa property investors, primarily in Lisbon and Porto.

 I thought Portuguese assets were dirt cheap in the early 2010’s after the collapse of Banco Espirito Santo and the Greece/Cyprus sovereign debt crisis. Yet as late as two years ago, it was still possible to obtain 8% gross resident yields in the coastal suburbs of Lisbon and 6% in some segments in the Avenida da Liberdade.

Lisbon, the oldest city in Western Europe apart from Pericles’ Athens, built on seven hills like the Rome of the Romulus/Remus legend, a city of funiculars, trams and melancholy fado music bars, with historic quarters like Baixa, Chiado and Belem. Above all, there is the magnificent Avenida da Liberdade, the spine of Lisbon and the current incarnation of the Roman Empire’s ancient Lusitania and the Marques de Pombal’s epic reconstruction after the horrific earthquake in 1755 cited in Voltaire’s Candide. I believe the beachfront villas of Cascais, 30 milometers west of Lisbon, are destined to become one of the world’s most exclusive expat enclaves in the Old World.

It is a myth that Lisbon property prices just skyrocketed only because of Prime Minister Antonio Costa’s golden visa program, even though it attracted EUR 5 billion in capital flows from abroad into Portuguese brick and mortar assets. There has been huge wealth creation in Portugal since the eurozone sovereign debt crisis in 2012-13 and the proportion of Portuguese buyers in affluent neighborhoods has only increased every year. Spain and Portugal are Europe’s fastest growing economies since 2016, thanks to banking/labour market reforms, an export surge and investment from Latin America. It is hard to believe that Portugal was only saved from certain sovereign default by a EUR 70 billion EU, IMF and Berlin bailout in mid-2011. I am amazed to see that Lisbon now boasts even wealthy Turkish, Indian, Pakistani, Russian, Arab and Chinese investors eager for a secure EU property hedge against the political chaos in their own countries. I have not been studying the Portuguese language since 2017 for only aesthetic reasons. Portugal and Greece are places where I have vivid memories from my admittedly misspent youth and where I would love to live out the sunset of my life.

Portugal’s role as a global tourism hub – Lisbon alone attracts more than 5 million visitors every year – means homes and villas in the country are eminently leasable on short term/Airbnb rentals. Portugal has some of the most expat investor friendly income tax and government legislation I have seen anywhere in the Med and a non-resident house owner’s rental income is not gutted by exorbitant service charges, municipal taxes and exploitative, high cost home mortgages from local banks.






The Fund Manager

About Matein Khalid

Matein Khalid

Matein Khalid is Chief Investment Officer of Asas Capital in the DIFC; he is responsible for global investment strategy and the development of the multi family office platform. He has worked in Wall Street money centre banks, securities firms and hedge funds in New York, London, Chicago and Geneva. In addition, he has been an advisor for royal investment offices in the Gulf for 8 years. Mr Khalid has four degrees in finance, economics, banking and international relations from the Wharton School, University of Pennsylvania. He is a director at the American College of Dubai and has taught MBA level courses in commercial/investment banking at the American University of Sharjah and British University of Dubai. He writes the Global Investing columns for Khaleej Times, Gulf Business and Oman Economic Review.

Articles by Matein Khalid

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