King of Georgetown Revamps Lisbon Palaces Eyeing End of SlumpHenrique Almeida
Anthony Lanier, the Washington developer who transformed a Georgetown alleyway into a European-style strip of trendy shops and cafes, now wants to replicate the project’s success in Lisbon. That may be a bigger challenge.
Lanier’s Eastbanc Inc. plans to spend 50 million euros ($69 million) renovating 17 buildings, including four 19th-century palaces, in Lisbon’s Principe Real quarter. Eastbanc already paid 50 million euros to buy the properties, which are set to be re-made into a hotel, luxury-apartment blocks, shops and cafes. With Portuguese real estate showing signs of a recovery after a six-year slump, the project has been on a slow road to fruition.
“I picked Lisbon not thinking that I was going to make more money than in Washington but because I could make a difference and be a bigger fish in a smaller pond,” Lanier, 61, said in an interview at one of the palaces this month. “When you look at Europe and say where are you going to revitalize a major city, every major city is done except Lisbon.”
Unlike Washington’s burgeoning real estate industry, Portugal has a long way to go before its property market undergoes a revival. The market is “completely illiquid” even if there may be some signs of a recovery, said Lanier. He cited lack of foreign investor interest, a glut of vacant buildings and pressure on rents as barriers to a resurgence.
The Brazilian-born developer, whose wife is Portuguese, likens the Lisbon project to Eastbanc’s redevelopment of Cady’s Alley and other Georgetown storefronts after real estate “rock-bottomed” in the 1990s. Eastbanc bought 60 buildings in Georgetown and converted them into 27 properties now valued at $300 million, almost double their initial cost, Lanier said.
Cady’s Alley, a pedestrian mall paved with granite blocks, consists of 12 buildings housing high-end shops between M Street and the historic C&O Canal. He estimates the company’s properties throughout the U.S. capital are worth about $600 million. One of its biggest projects was the Ritz-Carlton Hotel & Residences in Georgetown, which it co-developed with Millennium Partners.
Lanier, dubbed the “King of Georgetown” by local Washington media, said he plans to renovate one Lisbon building at a time to avoid having a large number of properties go onto the market simultaneously. One palace opened three months ago.
Eastbanc began buying in the Principe Real quarter in 2005, but plans were put on hold three years later when the global financial crisis hit. Portugal got a bailout from the European Union and the International Monetary Fund in 2011. Last year, real estate investment reached its lowest point in decades, according to Cushman & Wakefield Inc.
Portugal’s commercial property is showing hints of a rebound this year as investment almost doubled to about 235 million euros in the first nine months from the total for all of 2012, Jones Lang LaSalle Inc. said in a Dec. 12 report. That jibed with a Cushman & Wakefield report in September showing deals more than tripled to 161 million euros in the first half.
The market “is heating up” amid growing demand for prime properties from funds and foreign investors, Maria Empis, Jones Lang’s head of research in Lisbon, said in a Dec. 11 interview. “There’s also been a surge of Chinese investors who are buying property to get resident permits and EU funds which are returning to the market.”
With Portugal coming out of its longest recession in at least 25 years in the second quarter and real estate showing signs of a comeback, Lanier said he’s again ready to augment his Lisbon property holdings.
“While we are in difficult times, given the constant evolution of urban revitalization you can expect us to purchase other buildings,” he said.
There are about 4,300 empty or almost empty buildings in the Portuguese capital, the Lisbon City Council said in an e-mailed statement on Dec. 16.
Lanier compares the signs of recovery to a patient awakening from a period of unconsciousness. “It’s like you have somebody in a coma and they blink the eyelids and everyone says he’s coming back, but that’s not necessarily true and it can take a long time,” he said.
“The only thing that counts is to survive,” Lanier said. “If you survive you are a winner because many are not surviving.”
The Principe Real project will cater to a growing number of young people moving to the city center to live or start a business and who increasingly rely on nearby stores to shop, according to Lanier.
“People are coming back to the city,” he said. “They don’t want to drive, they don’t want to have a house, they don’t want a wife, they don’t want children. They want a job and they want to go out.”
One of Eastbanc’s palaces opened in September as a hub of clothing shops, home decor stores and a cafe. Some of Lanier’s other stores in the Principe Real area next to a public park have already been leased to retailers like Barbour, American Vintage and financial-services firms such as Deutsche Bank AG.
Pedro Miguel Alberto, a clerk at Portuguese clothing designer store Nuno Gama in Principe Real, said he’s seeing a lot more shoppers on the local streets than last year.
“We may still be in a crisis, but what’s happening in this neighborhood is proof that if you build it they will come,” Alberto said.