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.