Lisbon – Resurging from slump to success

Writer: Tan Chui Hua

From a city dotted with abandoned and decrepit buildings and marked by high unemployment, Lisbon has transformed itself to become a trending destination through partnerships with stakeholders and strategic interventions, demonstrating how urban regeneration can be achieved despite resource constraints.

Cities mentioned in this article:
Lisbon

Praça do Comércio at Lisbon's riverfront © sopotniccy/123RF

Just a decade ago, Portugal was deep in economic stagnation, with unemployment peaking at 17.5 percent in 2013 and youth unemployment at 40 percent. Its capital, Lisbon, bore the brunt of the economic slump and was marked by dilapidated buildings, with one in five buildings either abandoned or decrepit. From 1991 to 2011, the city lost around 20 percent of its population. Traffic congestion, pollution, and noise plagued the city as over half a million workers commuted from neighbouring cities daily.

Lisbon today, however, bears little semblance to the troubled capital of the past. In recent years, it has undergone a dramatic revival. Population trends have begun to stabilise with the number of resident households increasing. It has been receiving accolades in the press as a highly liveable and healthy city, often dubbed the 'Capital of Cool'.

What makes Lisbon’s remaking even more remarkable is how it has taken place despite Portugal’s ongoing economic challenges. By banking on strategic interventions, innovative approaches, and partnerships, Lisbon demonstrates how cities can achieve more despite resource constraints.

Leveraging private capital

Since the 1990s, Lisbon has been successfully leveraging private capital in urban renewal and public projects, whether through public-private partnerships or programmes to incentivise private development. Its first large-scale public-private partnership project was a 12-kilometre vehicular bridge over Tagus River commissioned in 1991. To finance the Euro 645 million (approx. USD 690 million) works, Lisbon relied on European Union (EU) funding, private loans, and a concession granted to the developer. The contract allows the developer to collect toll revenues for two bridges crossing the river until 2030 and the exclusive right to explore future river crossings near Lisbon for 28 years.

Lisbon likewise relies on private capital when it comes to the long-standing issue of rehabilitating degraded buildings. In 2018, reports showed that Portugal had around a million derelict buildings, of which at least 44,000 were in Lisbon. Recognising that public funds alone would not suffice in rehabilitating these buildings, the city exercises various schemes to catalyse private involvement in urban rejuvenation.

In 2015, the government established IFRRU 2020 (Instrumento Financeiro para a Reabilitacao e Revitalizacao), which brings together different sources of funding such as European Investment Bank loans to support private investment in urban rehabilitation. Loans with interest rates below market rates are granted to developers to rehabilitate buildings aged 30 years or more, abandoned industrial spaces, or private units integrated in a social housing building. Since its launch in 2017, IFRRU has availed some USD 688 million to finance 130 rehabilitation projects in Lisbon.

Street festival in Alfama, Lisbon © dudlajzov/123RF

Another example of how Lisbon catalyses private development is through rejuvenation of historic districts. In Alfama, a hillside neighbourhood on Tagus River, the city provides financial aid up to 65 percent of the costs of preservation and repair works on buildings in a state of disrepair. Between 1988 to 1993, 82 rehabilitation projects were carried out. As Alfama regained its charm, private developers began coming on board to rehabilitate their buildings, converting many of them into hotels and rental establishments.

In the case of Mouraria, a quarter once infamous for prostitution, drugs, and crime, the city government launched an extensive renewal process in 2008. The initiative saw the renovation of public spaces, such as the pedestrianisation of Intendente Square from former parking lots and the creation of spaces to host outdoor performances and markets. Similarly, the renewed Mouraria drew private developers who further invested in rehabilitating their buildings for commercial, retail, and tourist accommodation purposes.

Capitalising on strategic interventions

A Fado band performing on the street of Alfama, Lisbon © Sopotnicki/Shutterstock

Small but strategic interventions go a long way in remaking Lisbon. In 2017, Lisbon launched ‘A Square in Each Neighbourhood’ programme, where the city works with residents to create or revamp public and green spaces. For instance, in the neighbourhood of Campolide, the city widened the pavements, created playgrounds and outdoor seating areas, and eliminated a road lane.

Sofia Mourão, Municipal Director of Urbanism, Lisbon City Council, who spearheaded the programme, highlights the impact of the initiative, “The goal of the programme was to create liveable and friendly public areas to entice people to leave their house, enjoy the city, shop, and socialise. We design the spaces for pedestrian success, with new green areas. The construction of squares encourages further private investments, triggering the rehabilitation of buildings, boosting commerce, and creating jobs.”

The riverfront is one of Lisbon’s most iconic attractions today. Prior to urban renewal in the 2000s, however, much of it was inaccessible port-owned areas. While major projects such as new plazas and museums redefined the waterfront, smaller interventions too played a critical role. Green spaces, boardwalks, and walkways reduce car movements and provide continuous public spaces for pedestrians and cyclists to enjoy. On weekends, road closures on stretches along the riverfront add further to the vibrancy.

To celebrate and enhance the distinctive character of its neighbourhoods, the city taps on interventions such as street art and events. In Alfama, the city commissioned street artist Vhils to create a portrait of Amalia Rodrigues – a singer who popularised ‘Fado’ (a music genre originating in Lisbon) and had a song named after the historic district – using traditional Portuguese paving stones.

Martim Moniz Plaza, Lisbon © finkelsen/123RF

In Mouraria, new immigrants in recent decades give rise to a multi-ethnic character aside from the district’s Moorish heritage. In one of its plazas, Martim Moniz, the city established the 'Mercado de Fusao' (Fusion Market), where street food from different parts of the world is sold daily. The market not only acknowledges Mouraria’s diverse communities, but also brings in new visitors to rediscover the district.

"The goal [of the 'A Square in Each Neighbourhood' programme] was to create liveable and friendly public areas to entice people to leave their house, enjoy the city, shop, and socialise." — Sofia Mourão (Municipal Director of Urbanism, Lisbon City Council)

Committing to sustainability

The first Southern European city to be named European Union Green Capital, Lisbon's journey to become greener and more sustainable began during the 2008 global financial crisis, with a sustainable development strategy to create a better environment and reduce public expenditure. Its approach is often multi-pronged and targets long-term behavioural change for greater impact.

A case in point is the city’s efforts to tackle its transport issue. To date, as part of infrastructural investments, Lisbon has built over 100 kilometres of cycling paths and an extensive network of electric vehicle charging points. It works closely with private operators to integrate private supplies of transport, such as shared electric motorcycles and bicycles.

To effect long-term behavioural change, Lisbon engages companies to adopt sustainable mobility measures and comply with the city’s green goals and Corporate Mobility Pact. Under the pact, companies may adopt initiatives such as offering workers mobility credits for bicycles and transport passes and adopting electric vehicles in business fleets. The city discourages private car use through policies such as parking levies, road pricing systems, and reduced parking lots.

Furthermore, in 2019, the city introduced an integrated transport pass with a monthly price cap of Euro 40 (approx. USD 43), allowing one to use multiple transit modes via a single platform at an accessible cost. As a result, car purchases in Lisbon fell by 22 percent while train journeys between suburbs and the city centre increased by 25.7 percent in that year alone. In 2022, Lisbon approved free public transport for young people and seniors.

Lisbon’s solution to food wastage is another example. In 2016, the city implemented a policy strategy to repurpose food waste. It created an integrated digital platform, Lisboa Zero, that brings together stakeholders, including food producers, redistributors, and beneficiaries to separate bio-waste at source and redirect surplus food to the city’s less fortunate. The city also installed 4,000 domestic composters city-wide for household use, thus reducing food waste transport and incineration.

While Lisbon still faces other common city challenges such as housing affordability, neighbourhood gentrification, and economic diversification, the last decade has shown that the city is more than ready to find new and innovative ways to address ongoing challenges and reinvent itself to be even more liveable and people-centric.