The global rent gap of Lisbon’s historic centre

Abstract

This work deals with the ongoing commodification of Lisbon's historic centre under the pressure of mass tourism and transnational real estate investment. It applies a case-study research methodology combining the quantitative analysis of statistical data on relevant socioeconomic indicators with qualitative tools such as direct observation and structured interviews with key stakeholders. In the context of crisis and austerity, and taking into account the Portuguese financial dependency and peripherality within the Eurozone, this work argues that the rent gap triggering the current transformation of Lisbon's historic centre owes much to the global gap between purchasing powers on the internal and the external markets. With the former strangled by austerity policies that have impoverished the Portuguese society, the dramatic rise of housing prices in Lisbon's historic centre is a consequence of the expansion of demand on wealthier external markets, encouraged and guaranteed by an investor-friendly legal framework implemented in the context of the crisis. This policy set includes the new urban lease law, the non-regular resident tax regime, the Golden Visa programme, the special fiscal framework for the local accommodation business, and the tax breaks for real estate funds and refurbishment initiatives. Despite its undisputed success in bringing foreign investment and stimulating the rehabilitation of derelict properties in Lisbon's historic centre, this legal framework has triggered gentrification. Real estate prices are pushed above the financial capacity of most local households, and an enclave-type exploitation of the housing stock emerges in Lisbon's historic centre that jeopardizes the former's access to housing in that territory and in its immediate surroundings. However, grassroots movements and social initiatives advocating affordable housing and the right to the city have emerged in Lisbon.

Commodifying Lisbon: A Study on the Spatial Concentration of Short-Term Rentals

“…For these authors, tourism gentrification is the urban materialization of global forces boosted by local neoliberal housing policies. In Southern Europe, the geographic expansion of the tourist industry over the historic centers and other urban areas that have been or are being restructured according to the needs and interests of visitors and investors has attracted the attention of several authors (Arias-Sans and Quaglieri-Domínguez 2016; Cocola-Gant 2016, 2018; Franquesa 2011; García-Herrera et al 2007;Kesar et al 2015;Lestegás et al 2018;Mendes 2017;Vives-Miró 2011).…”

“…In the tourist cities of the Southern European periphery, the consumption capacity of visitors creates new opportunities for real estate investment and surplus accumulation that cannot be provided by the domestic market due to the fragility of the local middle classes-especially in times of crisis and austerity. By driving up property values above the economic capacity of the local population, visitors thus operate as drivers of gentrification (Cocola-Gant 2018; Lestegás et al 2018).…”

Culture and Tourism in Porto City Centre: Conflicts and (Im)Possible Solutions

“…To this we add, for example, "hop-on-hop-off" buses and "tuk-tuks", as well as the multiplication and homogenization of souvenir shops, among other retail, catering and hospitality establishments. These processes are affecting cities such as Berlin [29], Venice [46], San Sebastián/Donostia [14] and Barcelona [47], to which we add Lisbon [48] and Porto [18]. These socio-spatial changes appear in certain urban neighbourhoods due to the need to respond to the new demand profile of consumers, residents and visitors, who have a more significant purchasing power, as a consequence of a tourist gentrification [49].…”

“…At the same time, the search for private investment has promoted the proliferation of "charming hotels", the attraction of new "cosmopolitan" residents and the opening of new shops in the most attractive streets of Porto's city centre [62]. The municipal measures of attracting private investment were boosted during the 2008 economic crisis, when national measures to attract foreign investment to the real estate market were implemented [48]. As a result, many of the old and vacant buildings were transformed into hotel units and catering establishments, as well as short-term rentals or residences for students, especially foreigners.…”

Public Space, Tourism and Mobility. Projects, Impacts and Tensions in Lisbon’s Urban Regeneration Dynamics

“…However, its repercussions cannot be gauged simply in terms of residents vs. outsiders. The complexity of the urban condition, especially in a metropolitan core such as Lisbon's central districts -in the wider context of globalisation -requires a far more open consideration as to who counts as a Lisboner (Lestegás et al, 2018;Seixas et al, 2015). The controversy regarding the unbalanced process of urban renewal and gentrification can be framed under a widely acknowledged literature.…”