When visiting Lisbon for the 1st time, lots of Golden Visa Investors query what is the reason behind the fact that several buildings ( Real Estate ) with the best location and where the sqm price is the highest in all Portugal stay unoccupied and totally abandoned?In order to be able to explain that fact to investors, we would like to show a map that was published in 2009 by Lisbon City Hall locating every building in bad conditions and stay unoccupied inside the city. The result is tremendously shocking since it illustrates the fact that are 57.000 buildings in this conditions all over Lisbon.
In areas where sqm price ranges over 4000 Euro, it becomes difficult to understand the reason behind such conditions. It is important to understand that the buildings which are in those conditions are usually centenary buildings which will have to maintain the facade in case of reconstruction and will stay inside with the same division of property and type as the original development. Original development was thought and made more than 100 years ago, however the law restrictions in Portugal forbid the City Hall to change the original design of the building which in most of the cases eradicates the economic interest.
Developing by restoring and old building becomes extremely difficult if the output product to the market is not interesting at all. With time owners of such properties are waiting for conditions to change and for situation to become unsustainable to see if someone has the courage to modify the rules and regulations.
In the meanwhile the buildings are getting destroyed waiting to completely fall apart expecting that one day someone will allow the owners to develop a complete new project.
Another reason which have made several buildings remain is such poor conditions is the fact that lots of tenants with old contracts still remain renting those properties with ridiculous rents (some even under 50 euro / month) which is even less than annual tax the property owners are required to pay to Government. Being unable to change the rent price, only updated by price index (under 2% a year) it does not give an incentive to property owners to maintain in proper conditions the building structure. Those property owners are waiting for buildings to have extremely bad conditions to live in expectancy that tenants will move out so that they can have their assets restored and back into the market with proper rental income.
Those rental laws were gladly changed 2 years ago and within a period of 5 years is expected to have this problem almost erased. In five to ten years time you will have lots of old properties restored and back into the market in proper conditions, eliminating this fear factor for Golden Visa investors which have hard time to understand why so many old buildings unoccupied or badly maintained are polluting Lisbon global image. Some want to me positive and say this is Lisbon charm, gladly the charm of Lisbon will change to sophisticated in a couple of years.
