How tech is ushering in a new era for Lisbon
As more tech firms move into Lisbon, they’re helping to regenerate previously rundown areas of the city.
Lisbon’s newfound fame as one of Europe’s flourishing tech hubs is bringing a fresh edge to one of the world’s oldest cities.
A favourite among entrepreneurs, and increasingly among corporates, the Portuguese capital is now seeing formerly dilapidated areas get a new lease of life and new office districts emerge.
On the banks of the Tagus, the Criativo do Beato hub is helping to boost Marvila’s reputation as one of Lisbon’s up-and-coming neighbourhoods. Home to 3,000 specialists working for firms such as artificial intelligence firm Jungle AI and developers from German car manufacturer Daimler, the 35,000 square metre campus will soon be joined by swathes of high-end apartments aimed at affluent tech workers.
“Previously industrial areas, particularly along the river, which were neglected for years are now coming back into focus,” says Mariana Rosa, Head of Office Agency at JLL Portugal. “Developers are proposing coworking spaces, as well as a mix of restaurants, retail and offices alongside residential projects which will mark a significant change.”
While startups continue to search out space in Lisbon’s growing array of incubators and coworking spaces, corporates are turning their attention to areas such as the established high-tech district, Parque de Nações.
Projects such as the forthcoming 14-floor K Tower and the Exeo office campus are helping to satisfy demand for larger floorplans to service the digital operations of multinationals looking for access to skilled workers and lower office rents than in other European capitals.
In recent times, car manufacturers Volkswagen and Mercedes-Benz have opened software development centres in the city while Uber has also moved in.
They joins homegrown Portuguese tech success stories such as online fashion retailer Farfetch, estimated to be worth $8 billion, and software firm Outsystems, backed by Goldman Sachs and KKR. Student housing booking portal Uniplaces and IT service Codacy, both launched in 2012, continue to grow.
“Demand for offices today is very different to how it was in the past, with Lisbon now very much on the radar of big-name multinational occupiers,” says Rosa. “But there are still lots of start-ups companies looking to settle in Portugal for the first time, as well as those in expansion. It’s increasing demand for high-quality offices.”
Take-up of office space last year reached its highest since 2008, according to JLL, while 43 percent of next year’s office pipeline is already pre-let.
Furthermore, around 400,000 square metres of new offices are due to be built over the medium term, with the tech sector continuing to drive demand.
Inflow of talent
At the heart of Lisbon’s maturing tech scene are the skilled workers employed by start-ups and multinationals alike. Portugal’s Tech Visa program has brought 610 foreign workers into the country so far this year, with the majority holding a degree in computer science.
A high quality of life is one factor pulling in skilled workers. Lisbon’s temperate climate, easy access to beaches and vibrant social scene are big draws, not to mention a low cost of living compared to other European capitals.
Portugal is also looking to local talent; its universities have a strong focus on tech skills, with the Instituto Politecnico in Lisbon and UpTec in Porto sources of graduates. Meanwhile, Google has a programming school in the Portuguese capital.
“Portugal has suffered much less from so-called brain drain than other European countries in recent years,” says Rosa. “Nevertheless, keeping up both the supply of top talent and office space will be crucial if Lisbon is to build on its revitalisation since the 2008 global financial crisis.”
However, as the city grows and more companies consider options beyond its central business district, new areas will need good public transport links.
“There’s a pressing need for greater connectivity for both commuters and residents,” says Rosa. The city’s authorities are responding, with plans for two additional metro stations at Estrela and Santos and more buses and bus lanes.
Building for the future
For Lisbon, such infrastructure investments reflect, as well as support, the wider country’s renewed economic optimism; Portugal is expecting its first budget surplus in 2020.
Yet its popularity, especially with the tech sector, means the city is getting more expensive for residents, expats and companies. Prime office rents have risen from 12 to 17 euros per square metre in the past five years, and will rise further, says Rosa.
“Hopefully that won’t impact on the choice of location for businesses when relocating,” she concludes. “Naturally, higher rents attract more developers and investors, but hopefully rents don’t increase to the point that Lisbon is uncompetitive compared to its European peers.”