October 29, 2019 by David Soares
Is Lisbon the Next Berlin?
“Lisbon is the new Berlin” has been repeatedly suggested one way or another over the past several years. Usually, statements like “city A is the new city B” make people from either A or B cringe or roll their eyes, and rightfully so. This case is no exception, although a few parallels can be drawn between the two.
November 9th 1989: thousands of East Germans donning mullets and washed out denim flocked across the breach in the Berlin Wall, ecstatic, incredulous, and unchecked by border control, eager to enjoy freedom, democracy, bananas (a symbol of the former GDR’s shortages) and other goodies.
These are some of the images that travelled through TV news worldwide. As new democracies blossomed around the globe as well, Berlin was at the epicenter of hope and would remain in the spotlight for the next few years. U2 opened their multi-million-selling album Achtung Baby, recorded in Berlin, with the track “Zoo Station,” the world revisited Wim Wenders’s films and reveled at the Trabant and the Ampelmann, and even German band Scorpions stank the airwaves with their “Wind Of Change.”
A certain euphoria is what characterized Berlin in the early ’90s. The city became a playground of newly-gained freedom for the whole population, scattered with plenty of squatting spaces for dwelling and partying, and a burgeoning club and techno music culture appearing in countless venues such as E-Werk and Tresor, the latter still active. Possibilities seemed endless, and Berlin attracted hordes of people again, after the few mavericks, artists and curious who had moved to the enclave West Berlin used to be.
At the same time, the overall mood in Lisbon was pretty optimistic too. The economy had been on an upturn for a few years and its effects were very palpable — possibly aided by joining the European Community in 1986, with Portugal considered a “good pupil,” hosting the presidency in the first semester of 1992. Foreign investment flooded in. Lisbon was preparing to be European Capital of Culture in 1994 and had just been awarded the organization of the 1998 Universal Expo.
In the mid-’90s, I lived for a stint in Cologne. The capital of a now reunified Germany was right in the process of being moved from neighbouring Bonn to Berlin. Cologne, along with Hamburg, was also losing some of the status it had gained in German pop culture. Many young Germans I met then, when asked where they would head next, would reply “Berrleen” with a twinkle in their eyes. And their options were not few, in what is a fairly decentralized country.
By 2000, the attention drawn by Berlin might have waned a little, but the pace of its transformation hadn’t quite slowed down. Potsdamer Platz — an area turned into an unjustifiably vacant lot with the removal of the Wall — was a forest of cranes on a ground of rubbles. Cranes which have been a constant feature in Berlin over the past decades, but at least the effort to turn it into a capital that could somehow rival London or Paris in the visitor’s eye was plain to see at that particular time and place, then deemed “Europe’s largest building site.” Many of the buildings erected there were to accommodate corporations among which were many in the so-called “new technologies.”
Portugal was living the fat years, experiencing the boom in new techs as well, with a continued confidence and largesse, that made the country take on the organization of another big event, the Euro 2004, a few years later. Coincidentally, 2000 was also the year when it presided over the EU again, taking it in stride this time. That was before the country was hit by the first austerity measures in 2002, which would accumulate over two governments, culminating in the bail-out and the troika’s interference a decade later.
So, at the turn of the millennium, in spite or because of its ongoing transformation, Berlin didn’t appeal much to me as a place to live, however fascinating and enticing I found it. There was — besides its climate in winter — something dreary and inhospitable about it, as though it reflected an underlayer of trauma from its recent past. It may have been all the signs in gothic font that evoked the would-be capital of the Third Reich or the bleak architecture left from the Communist era with its austere concrete blocks, the so-called Plattenbauten and endless dull broad avenues. Add to that, its location, a bit too east and inland for my Atlantic soul, as well as the fact that moving to Germany again at that point would have personally felt like going backwards. Paradoxically, this dreariness has always been part of what makes it exciting, like a place you want to keep diving into but getting fished out at any time.
Memories of Berlin from that time tend to get hazy now, though. I remember walking for breakfast into a smoke-filled café run by a man with a mullet (still) in the blue-collar area of Moabit, hoping in vain to get a coffee or tea — neither being Germany’s forte at the time — the way I liked them. I also remember going into several rather edgy bars in the dim-lit streets of Friedrichshain, then described by my host as the “Berlin equivalent to Bairro Alto” (when the latter was still an interesting place and not Albufeira’s night life on a larger scale).
Fast forward 14 years to my next visit and Friedrichshain looks more like Campo de Ourique, with cozy little restaurants, pleasant lighting, open-air seats and former punters of the area’s bars pushing buggies on the pavement as young parents. Cafés where one is spoilt for choice in coffee or tea abounded: hipster cafés — whatever that actually means to you, it will be close enough to describe them. Many of them had menus all written in English. Being used from my previous German days to eschewing English — as it was, at the least, frowned upon — I was surprised to hear my sentences in a German that had become a bit rusty in the meantime being completed in English by the owner. The typical Kneipen (pubs) gave way to cocktail bars. The old Trabis were being used for tourist rides. Even areas such as Neukölln, once dodged by many Berliners, has become an attractive neighborhood.
The whole feel of the city had naturally changed. One symbolic example of that is Tacheles: a squat in 1990 that started as housing and atelier for many artists, then later turned into an art gallery and tourist attraction with several amenities such as a theatre, cinema, and café, to finally succumb a few years ago to real estate development whereby plans now include offices, apartments, and a hotel.
Berlin lived a tourist boom and became an attractive place to live however temporarily for people from all walks of life. As a result, over the past decade, the average rent went up almost 50% (71% in the Friedrichshain-Kreuzberg area).
This sounds all too familiar to most Lisboetas.
Apart from tourism and the ensuing rents hike, a common trait shared by Lisbon and Berlin has been the appearance of many start-ups on one hand and digital nomads on the other — and they don’t overlap as much as it is often presumed.
Now, considering the surge in the cost of living, what is the net economic impact for the average priced-out local? Impartial comprehensive studies for either one of them are hard to come by, but it is fair to assume that start-ups contribute to at least boosting the economic ecosystem of a city. Digital nomads, meanwhile — made up mostly in Lisbon’s case of people from wealthier countries — less so, perhaps. But how many of them genuinely care for the city, with its culture, people, and society, beyond the entertainment and the cheaper lifestyle, before moving on to the next one?
There are certain differences between both cities though.
The renewed boost in tourism was much more sudden and consequential in Lisbon. It started in the context of a deep economic slump and ramping unemployment. The financial crisis had hit worldwide, and Portugal, like a domino effect following Greece, descended — in a self-fulfilling prophecy from rating agencies — into a situation where it needed a bail-out from the so-called troika (the European Central Bank, the International Monetary Fund, and the European Commission). Reforms were very necessary, but the bail-out program was a shock therapy with overambitious targets for a very short time frame, which made the country sell its silverware to meet them and shot unemployment to record levels. Although less obvious nowadays, the symptoms from these austerity cuts are still felt, for example, in nurses’ strikes, with hospitals operating at the seams, or even in the recent forest fires, which struck national parks that were short of forest guards.
A recent survey (source: Instituo de Ciências Sociais) showed that only about 30% of Portuguese people consider the crisis over.
In such a situation, it’s hard to avoid the subversive effect of having an economy veering excessively towards tourism-related activities. When a population struggles to make ends meet, the potential loss in character of their city might not rank high in their priorities. However, it is likely that segments of society who invested heavily in tourism were probably not the ones struggling to make ends meet in the first place, and job creation in that sector is made up mostly of precarious and low-paid jobs, with much of the qualified workforce having emigrated during the crisis.
Berlin, and the German economy, had more backbone to face any pressure coming from tourism — this in spite of the fact that Berlin is one of the very few, if not the only, European capital whose GDP per capita drags down the national average.
Another notable difference has been the attitude of the authorities. Both the Portuguese government and the Lisbon city council have been ambiguous to say the least. They’ve expressed concern over the side-effects of mass tourism, but also seem to relish any prospect of making it grow at any cost.
One of the major side-effects has been, of course, the rocketing of housing prices and consequent scarcity of affordable houses for the average local income, which in turn hasn’t kept up. Combined with soaring tourism, the effect of the so-called golden visas and tax exemptions granted to foreign investments, which were first welcome at the peak of the crisis, have since fueled real estate speculation dramatically.
Last year, a law was passed to cap at 25% the share of houses licensed for short-term rentals in each freguesia. One could argue 25% is too high as it is. Two of them had already exceeded that limit: Misericórdia and Santa Maria Maior, which cover roughly the neighborhoods of Bairro Alto, Madragoa, Castelo, Alfama and Mouraria. Santa Maria Maior had already reached 40% anyway.
This measure feels like too little, too late. Yet, as recently as early April, the city council proposed an exception to that rule, for houses that had been uninhabited for the past five years. There have also been ongoing, evolving talks, with various suggestions from several political parties to scale thresholds differently. This topic is clearly still under discussion among the authorities, so the coming months after this election year might bring some more news.
But whatever benevolent restrictions they come up with, my experience advises me to expect a weak implementation and large loopholes.
Another measure has been the planning of pockets (ghettos?) of real estate with controlled rent. But these areas are so scattered and small that they haven’t seriously addressed the issue so far.
It’s fair to say that Berlin authorities have been less hesitant: Since 2013, rents can’t go up more than 20% in three consecutive years (15% in areas with housing shortage). That limit is often not even reached. Since 2015, new leases can only go up to 10% above the area’s average. Furthermore, in April 2016, the city banned AirBnB for whole apartments in an attempt to curb “professional landlords” as opposed to landlords subletting a room in their first home. Although the law was often disregarded, the last two years saw a surge in the flow of apartments into the market. Two years later, the ban was relaxed — but the formalities and fines for breaking that ban were increased.
The Friedrichshain-Kreuzberg district had already made much use of the so-called Vorkaufsrecht (right of first refusal) to tackle real estate speculation by executing on its own terms a purchase option on housing about to be put in the market. Kreuzberg, which sits at the heart of Berlin’s gentrification, has a group of residents meeting on a weekly basis to assess how new developments affect the community. One of their pet peeves has been plans, shelved for now, by Google to build a 32,000-square-foot campus there, which would have probably put even more strain on the housing market and driven out most of the low-income residents.
Also, last April, thousands of Berliners demonstrated against rent increases, calling for the application of Article 15 in the German constitution and the expropriation of properties from funds owning large swathes of houses in the city. The idea found resonance among some members of the parties governing Berlin, and 670 flats have just been reacquired on Karl-Marx-Allee (funnily enough).
As recently as June, Berlin’s regional government also announced plans to introduce a five-year rent freeze.
Are all these measures drastic? Maybe. However, they’re still not sufficient for many Berliners, as they only slow displacement of the communities. But that’s sometimes enough for a city to keep re-adjusting — and to avoid irreversible mistakes that kill the soul of any city.
So, Lisboa, what will you be next?