Is property in Lisbon overvalued?

Lisbon has been highlighted as one of Europe’s top cities for investment prospects this year. Yet property yields are already at record lows. And as Portugal’s weak economic fundamentals limit the scope for a positive shock to income growth, it is hard to justify the tight spreads between property yields in Lisbon and those elsewhere in the euro-zone. Thus, property in Lisbon, at least in the office and industrial sectors, seems overvalued.