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Read about the real estate market in the Algarve, Lisbon and Portugal. As the leading estate agents on the Algarve and in Portugal we can help you find property for sale in Portugal and find a mortgage.Overseas investment drives construction surge in Lisbon
Overseas investment drives construction surge in Lisbon
All hands on deck as the development rate in the Portuguese capitol reaches an all time high in 2018.
The number of people employed in Lisbon’s construction sector rose by 8% last year, suggesting a property boom in the Portuguese capital. According to Portugal’s National Statistical Institute, the industry had employed 310,000 people by mid-2017, compared to 287,000 the previous year. Along with estimates provided by Portuguese construction industry federation Fepicop, sector production increased by 5.9% in 2017, contrasting sharply with a 52% average slump over the past 19 years.
The swathes of construction work taking place in the city are comprised mainly of renovation projects, with building restoration accounting for over 80% of new projects. The surge in industry activity has been brewing since 2013, when “one building in three was empty, decrepit, or in an advanced state of disrepair” according to Luis Mendes, a researcher at the University of Lisbon’s Institute of Geography and Spatial Planning.
With a radical increase in renovation projects and planning permission following years of urban decline, Lisbon’s fading facades are undergoing facelifts behind the scores of cranes and scaffolding structures that have appeared across the city. Rui Campos, head of the Association of Civil Construction Industries and Public Works, said: “There remains much to do in the renovation market. “We are talking around one million homes requiring repairs in Portugal for a market valued at an estimated €24bn.”
What’s behind the dramatic rise in construction activity?
Mendes singled out the recent introduction of Golden Visas as the predominant driving force behind the raft of renovation projects. He also highlighted the preferential tax regime for non-habitual residents, whereby eligible foreigners are permitted to enjoy nearly all sources of foreign income, including pensions, tax-free in the first ten years of residency.
A Lisbon-based real estate brokerage confirmed this, saying “This investor allure has allowed the revival of districts which had been abandoned. It’s a one-off opportunity.”
A decades-long freeze on rents has also been lifted, and the government has brought in an abundance of fiscal measures encouraging people to invest in the city’s older buildings. For example, those who invest in old buildings earmarked for renovation are exempt from local taxes for five years, and eligible for a reduced VAT rate of 6%.
What is the Golden Visa?
The Golden Visa has been introduced across a number of countries to encourage foreign investment in European property markets. Non-EU nationals must spend a minimum of €500.000 in order to secure the Golden Visa, which grants them residency in that country and permits them to travel freely around the Schengen Zone.
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