Airbnb finds love in Lisbon after cold shoulder from other European cities

Portuguese capital loosens the reins to keep tourist dollars flowing as it combats stubbornly high unemployment

PUBLISHED : Monday, 06 June, 2016, 5:12pm
UPDATED : Monday, 06 June, 2016, 5:31pm

On his way to work, Lisbon Mayor Fernando Medina likes to count the dwindling number of empty buildings. Thanks to a tourism and real estate boom, many are being converted into trendy apartments that cater to the growing number of visitors to the city.

As some European cities impose restrictions on short-term rentals via websites such as Airbnb to keep housing affordable and protect residents from noisy visitors, Lisbon is taking steps to make it easier. Government measures including phasing out rent controls and selling hundreds of those empty buildings at public auctions have helped support a rebirth of the city.

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“This is the first time that tourism is allowing many people to participate in the development process of the city,” Medina, 43, says. “We shouldn’t be scared of this new dynamic, we shouldn’t be afraid of growth. On the contrary, we need to prepare the city to take in even more tourists.”

While Lisbon currently requires all hosts to register their units as short-term rentals, it allows them to rent out their properties for an unlimited amount of nights per year. That’s less restrictive than the 90 nights allowed in London and 60 in Amsterdam for private owners. All three cities are still more welcoming than Barcelona – which stopped giving out short-term letting permits in 2014 – and Berlin, which all but banned the practice in May for landlords who want to rent out their entire properties to tourists.

The difference between Lisbon and those cities is that the capital needs the visitors. Two years after exiting its financial bailout, unemployment is still at a staggering 12 per cent and tourism is an increasingly important part of the economic recovery.

The number of nights spent by foreign tourists in a city known for its yellow trams rambling through cobblestone streets increased 21 per cent in March from the same month last year. Airbnb’s listings in the city have tripled since January 2014. The boom is turning homeowners into hoteliers and actors into concierges, while lining the country’s coffers with the 15 per cent tax it collects on each booking.

“Portugal is one of the leaders in Europe addressing the regulation of the sharing economy,” Andreu Castellano, Airbnb’s public relations manager for Spain and Portugal, says.

Getting others to follow Lisbon’s lead will be critical to Airbnb’s success in Europe. The region generated about US$3 billion in revenue for its hosts last year and accounts for more than half of both the site’s travellers and landlords, the San Francisco-based company’s chief technology officer, Nathan Blecharczyk, said last month in Amsterdam. The European Commission last week issued guidance to EU countries for how to tackle the “patchwork” of rules that collaborative platforms such as Airbnb face in the bloc.

Lisbon’s approach is helping people like Hugo Almeida. Two years ago, the 34-year-old moved in with his grandfather in Lisbon and began renting his one-bedroom apartment to tourists. He now makes more than 10,000 (HK$88,270) a year before taxes from his rental, about the same as what he earned as a butcher. He has since quit his job to learn how to be an electrician. When he’s done, Almeida said he “will probably end up renovating apartments for tourists”.

The boom receives its share of grumbling, of course, from locals who complain of being priced out of their neighbourhood homes and of noise from visitors on different hours than those of working people going about their daily lives.

“Nobody cares about the residents, they just want to get money,” says Jose Alves, one of the last original residents of a building in the foothills of Lisbon’s St George’s Castle, whose river view has made it a hotspot for short-term rentals. “The gentleman on the second floor died a few days ago. Let me tell you, the man’s son will end up renting the apartment to tourists or selling it for a fortune.”

Still, the gains for the city from the increase in real estate investment and tourists have been much greater than the drawbacks, says Medina. Tourism accounts for about 15 per cent of Portugal’s gross domestic product. In Lisbon, the number of guests who spend the night at hotels and other accommodations has grown at an average of 13 per cent a year since 2013, according to Portugal’s National Statistics Institute.

“This process creates a series of significant changes to the city,” Medina says. “Most of them are positive.”

It’s brought more foreign investment – non-Portuguese people accounted for 90 per cent of the record 2 billion (HK$17.65 billion) invested in the country’s real estate last year, double the amount in 2014, according to Cushman & Wakefield in Portugal. That’s helped push Lisbon property prices higher, increasing as much as 25 per cent in some areas since 2013. It’s also playing a role in helping Lisbon attract big conferences such as November’s “The Web Summit”, one of the world’s biggest gatherings of start-ups.

The challenge will be in finding the balance of keeping the city authentic while welcoming the incoming cash flow, says Daniel Silva, a 32-year-old actor and model who lives in the city centre. He has mixed feelings about the rise in short-term rentals in Lisbon, even though he has rented out his own apartment to tourists and done check-ins for friends.

The bakery where he works is finding the balance, delicately. “Our non-Portuguese clients, who represent more than half of our customers, feel that paying one euro for a custard cake is ridiculously low,” Silva says. Still, management decided not to raise the prices because it would make it difficult for locals to afford them. “What would become of a Portuguese city without any Portuguese?”