Lisbon’s Quantico Sees Profits in Dilapidated Downtown Buildings

Investor Carlos Vasconcellos, a former board member at Portugal Telecom SGPS SA, is preparing to snap up as many rundown, vacant residential buildings in Lisbon’s historic city center as he can find, confident he can renovate and resell at a profit.

The property market in Lisbon, Continental Europe’s westernmost capital, offers high-return opportunities because of the “thousands of empty buildings available” after a 2012 decision to begin phasing out rent control, Vasconcellos, 57, said in an interview March 4.

Quantico SA, the real estate asset manager Vasconcellos set up in 2012, focuses on “projects that will allow investors to earn net income of more than 20 percent a year,” he said. The company raised 20 million euros ($22 million) last year to buy run-down buildings in prime Lisbon locations. Quantico has bought three properties so far and is considering another two or three, Vasconcellos said. Its first refurbished building is back on the market now.

Vasconcellos is now targeting pension funds, private wealth managers and institutional investors in London, Paris, Brazil and China to raise an additional 50 million euros to 100 million euros in 12 to 18 months.

Lisbon’s City Council estimates there are about 12,000 properties either in poor condition or in ruins after tenants moved out following the 2012 decision, making it one of the last major cities in Western Europe with so many vacant structures, according to Vasconcellos. As a result, average sale prices in prime locations run at an estimated 6,000 euros per square meter, compared with 9,000 euros in Madrid and 29,000 euros in London, according to data collected by Quantico.

“We have beautiful buildings in great locations at a fraction of the price of other European cities,” Vasconcellos said. “This is an opportunity for investors seeking high returns with practically no risk.”

Foreigners accounted for 90 percent of the 730 million euros invested in Portuguese real estate last year, almost three times more than in 2013, according to data compiled by Aguirre Newman SA, a real estate consulting company in Lisbon. Some of this demand was triggered by tax incentives to investors and the so-called golden visa program, Vasconcellos said.