Or, as the current mayor of Lisbon, Fernando Medina, has stated repeatedly over the last years: ‘Lisbon is a vibrant city’. A city which, thanks to an almost exploding tourism sector and international events such as the Web Summit, has become one of the top destinations in Europe. Jessica Verheij looks into the implications of this success.

Portugal’s capital is often included in rankings such as ‘the 10 best cities to visit’, ‘the world’s most fun cities’, ‘the most beautiful cities to visit’ and the like. Last year the same Fernando Medina stated in an interview with El País that thanks to tourism, the historic neighbourhoods in the old city centre have regained their life after years of losing residents. Besides, because many of the buildings in these areas are council-owned, the city ensures the availability of low-rent housing, he said. His spokesman added: “We want to retain our influence (…) so the city doesn’t lose its identity.”

View of Alfama, one of the historic neighbourhoods | Photo: Julio Gago, CC BY 2.0 (Flickr) 

It would be great, would it be true. The historic centre of Lisbon consists of a number of neighbourhoods characterised by old buildings, narrow streets, emblematic squares, a high level of cultural heritage, beautiful viewpoints and proximity to the river Tejo. These neighbourhoods, including Alfama, Mouraria, Chiado, Bairro Alto and others, give Lisbon its character and imaginary. Also, they are perfect places for urban tourism. Due to a significant growth in the Portuguese tourism sector, together with a growing availability of (foreign) capital and a so-called ‘boom’ in rehabilitation and redevelopment projects, this area has witnessed a transformation. This is mainly related to the rising presence of short-term accommodation destined for tourism.

Alojamento Local

This type of accommodation, called ‘Alojamento Local’, has a specific legal status and allows for almost any house or apartment with basic facilities to be transformed into a guest house, a holiday home or an Airbnb apartment. From January 2014 to December 2017, 10 214 places were registered as ‘Alojamento Local’ in Lisbon alone, with most of these concentrated in the historic centre. Adding to these numbers, a significant part of short-term accommodations are not registered anywhere.

This is problematic because of the already low availability of rental housing in Portugal. During the last decades of the twentieth century, Portugal was mainly a country of house-owners: in 2001, 21% of the housing units were rentals whereas 75% were privately owned. With the economic crisis kicking in from 2008 on, and unemployment levels starting to rise, rental housing became the only viable option for many people. Since then, rents have been rising both in Lisbon and in Porto, in part due to the fact that the supply of rental housing has not been enough. Rents in the Portuguese capital have risen by 32% since 2011. A two-bedroom apartment now costs on average €700 per month, or possibly double as much if located in one of the historic neighbourhoods. With salaries often not exceeding the €1000 per month, it is not hard to imagine the struggle. While more and more apartments are being transformed into ‘Alojamento Local’, few options are left for local residents.

Not only has housing become unaffordable; evictions have spread through Lisbon, mainly concentrated in the historic centre. According to data from the Ministry of Justice, the number of evictions in Portugal rose by 91.7% from 2013 to 2016. However, many of the evictions are not reported so it is difficult to know the exact numbers. Stories about people receiving eviction orders are wide-spread on mainstream and social media. Most of these people are elderly without the financial resources to find a new home in the same neighbourhood. Others are indirectly evicted, with a rise in rent which they cannot afford. Several studies indicate that the evicted residents are replaced by tourists once the buildings have been rehabilitated.

The policies that made it happen

You might have heard this story before, especially if you are familiar with the situation in Barcelona, Amsterdam, Venice and other popular destinations for urban tourism. But what happened? How did we get here?

It would be too simplistic to refer only to a growing tourism sector to explain the rise in property prices and the lack of affordable housing in the city. For Lisbon, the story starts in 2012, when the national government approved a new legal framework concerning the rental market and the obligations between landlords and tenants. This framework (called ‘Novo Regime de Arrendamento Urbano’ or ‘NRAU’ in Portuguese) was part of the agreement Portugal made regarding its bailout by the IMF and the European Central Bank. It allowed landlords to increase the monthly rents of contracts signed prior to 1990 (which was not possible before), in order to adjust these to current market values. A commission was also established to facilitate evictions by replacing the previous bureaucratically-difficult and time-consuming process. Besides, it allowed landlords to break the rental contract in case structural maintenance works were needed (or considered to be needed) or in case the landlord wished to use the property for own residence.

The framework was meant to give property owners the freedom and legal support to rehabilitate and renovate old buildings located in the city centres. Prior to 2012, Portugal’s rental market was known to be extremely regulated and protective, leading to many rental agreements being frozen without much benefits for landlords.

Typical facade in historic Lisbon | Photo: gato-gato-gato, CC BY-NC-ND 2.0 (Flickr)

As such, particularly the historic centre of Lisbon was known for its physical deterioration: buildings were mainly inhabited by people with less financial resources, such as migrant communities and elderly people. In the meantime, the area was losing population, as the rate of unoccupied houses increased from 11.3% in 1991 to 29.7% in 2011. Through the new legal framework, the government intended to reverse this trend by making the market more dynamic. Together with the creation of many tax benefits for urban rehabilitation projects created by the municipality of Lisbon, the historic centre became increasingly interesting for private investors. At the same time, the framework of 2012 has been widely criticised for handing over too much power to property owners, and leaving too little in the hands of tenants.

The rent gap

Meanwhile, the transformation of Lisbon into a popular destination for urban tourism was not just a happy coincidence, but rather a successful marketing strategy. Tourism has been promoted by both the national government and the Lisbon municipality as one of the most important pillars of their economies. To create a competitive market for the tourism sector and to brand the city of Lisbon as a sunny, affordable, beautiful and convenient destination for so-called ‘city-breaks’ has been at the core of this strategy. Hence, the influx of foreign visitors into Lisbon all year round is nothing more than a sign of successful branding, helped by the expansion of low-cost flying routes to Lisbon’s airport and the growth of global tourism in general.

A deteriorated historic centre, in combination with a growing availability of (mainly foreign) capital, a liberalised housing market, a government actively promoting urban rehabilitation and a growing tourism market have led to the situation we are facing today: affordable housing is disappearing from Lisbon’s centre, many people without sufficient financial resources are directly or indirectly evicted, and investments are mainly oriented towards rehabilitating old buildings and using these as profit-making machines through tourism and short-term rents.

Unfortunately, this situation is not unique for Lisbon. In fact, Neill Smith, in his book Uneven Development, has theorised the so-called ‘rent gap’, referring to the difference between the current income (through rent) in a specific urban area, and the potential profit to be made in this same area. Once this gap becomes big enough, investors and developers start to become interested in rehabilitating the area, leading almost unavoidably to gentrification. This phenomenon can be identified in cities all over the world.

Which direction should we go?

The changes in Lisbon have not gone unnoticed, although there seems to be no agreement on what the contributing factors are and how these changes impact local livelihoods. Even so, the Portuguese government has recently approved a new legal framework regarding housing policies, optimistically called the ‘new generation of housing policies’ (‘Nova Geração de Políticas de Habitação’ in Portuguese). It creates several legal and financial tools, for example to assist those most in need in finding affordable housing, and to encourage rehabilitation projects that foresee the creation of long-term and affordable rental agreements.

The Lisbon housing market has been left unprotected against the speculative forces of the global real estate market.

Unfortunately, almost nothing is being done to question the economic structures that have led to where we are now. In the best-case scenario these new policies will provide some assistance to families in desperate situations. However, they will in no way change the structural problems. The Lisbon housing market has been left unprotected against the speculative forces of the global real estate market, as have the housing markets of many cities around the world. While the historic centre of Lisbon forms people’s life and how they go around, it also presents a financial opportunity for the world of global investment. And as economic profit gains the upper hand, the social dimension almost always loses.

The soul of the city

So why does this matter? Why should we care about this?

“Lisbon’s soul is shaped by these old neighbourhoods.” |  Photo: Matthieu Sévère, CC BY 2.0 (Flickr)

Because it is not just about the people that are being evicted without having anywhere to go. It is about the soul of the city. Lisbon’s soul is shaped by these old neighbourhoods, the narrow streets, the laundry hanging out of the windows, the smell of grilled sardines during summer, people hanging out of their window while talking with their neighbour. Change is inevitable, and so Lisbon will change too. However, by simply selling off Lisbon’s historic centre to the demands of the tourism sector, we are allowing this change to be shaped by money. The local population needs to make a place for temporary visitors. The city becomes a space for consumption. Through this process, it is not only the residents that lose: it is the whole city that loses a part of its identity and imaginary. The choices we make today will shape the change happening in the city for the next decades. What do we want our city to become?

Luckily, some people seem to be very well aware of the impact that current policies have. In the last months, a proposal to create a basic law regarding housing policies has been under discussion in the national parliament, on request of deputy Helena Roseta. The proposal defies the current regulations that allow housing units to be part of a system of speculation and global finance. Although still premature, this proposal is a sign that some politicians are willing to think beyond the city as simply a commodity.

If enough people raise their voice, it might actually be possible for Lisbon not to lose its identity and to remain the beautiful lively city it still is. 


Cover Photo: Fotos AvulsoCC BY-NC-ND 2.0 (Flickr)

  • retro

    Jessica Verheij is originally from the Netherlands but has spent a major part of her life in Portugal. After having spent six months in Ghana, she lived in Amsterdam, Berlin and Stockholm, although always returning to her favorite city Lisbon. She currently lives in Bern, Switzerland, where she is working on her PhD on urban and spatial planning in relation to sustainable development.

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