Real estate industry experts anticipate 2023 to be a year of unpredictability, due to the impact of inflation, increasing interest rates, potential economic slowdown, or energy crisis. Despite this, there are positive indications, particularly regarding property development in Portugal, with investors keeping a close eye on the country. A report by PwC and the Urban Land Institute (ULI) reveals that Lisbon has regained its position as the 11th most desirable European city for real estate investment, improving from its previous ranks of 16th in 2022 and 15th in 2021.
At a European level, the report "Trends in the real estate market", which was based on a survey of more than 1,000 experts in the sector, such as banks, real estate agencies and investment funds, allows us to conclude that international capital will concentrate on the most liquid and mature markets.
According to forecasts, in the coming months the slowdown in transactions will continue and there will be an adjustment in property values, although this scenario will also provide new investment opportunities, especially in large cities. "Investors are not taking risks and will look for stable markets, as well as more resilient assets," says Antonio Sánchez Recio, partner in charge of PwC's Construction, Real Estate and Services cluster.
Leading the ranking of the most attractive European cities to invest in real estate in 2023 is once again London (United Kingdom). Paris (France) and Berlin (Germany) are in second and third place, respectively. The top 5 is completed by Madrid (Spain) and Munich (Germany).
According to Richard Garey, partner in charge of the business division at PwC Real Estate, London continues to lead the European rankings due to its distance from the conflict in Ukraine, which is considered the primary social and political risk for major international investors. Furthermore, it is the largest real estate market in Europe.
Garey highlights that Paris, which moved up one spot in the 2022 rankings, is attracting significant attention due to its role as host of the 2024 Olympics and the resulting influx of investment. He also mentions that Berlin is favoured for its reputation as the safest country in Europe and minimal impact from the Russia-Ukraine conflict.
When it comes to Lisbon, the city's real estate market has seen growth in demand for both residential and commercial properties, driven by factors such as its favourable climate, historic architecture, and growing tech industry. However, the real estate market in Lisbon can be competitive and prices are steadily increasing, while it is crucial to consider factors such as location, property condition and rental demand when evaluating a potential investment. Overall, real estate investment in Lisbon has the potential for strong returns, and in spite of price increases, it is still one of the cheapest cities in Europe and the world to buy property.
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