People do not buy square meters; they buy the feeling contained within them.

Natural light, air quality, acoustics, thermal comfort, harmony of form, the aesthetics of finishes, and even the energy of a home itself—expressed through something everyone knows but cannot quite define.

Regardless of budget, size, or location, everyone looks for the same thing in a home, even if they cannot clearly describe it. This is why it is so difficult to know whether a particular property is right for us without visiting it. Even in a property intended for renovation or investment, there are features that hint at the energy it conveys, such as outdoor space, a garden, a river view, a tree-lined street, sunlight entering through the windows, distance from traffic, solid wood, architectural details from an old era, an elegant façade, or a friendly neighborhood. All these elements can influence our mood, behavior, health, and thinking. What they have in common is what unconsciously keeps us alive, healthy, and happy: contact with beauty, nature, and cultural identity. These are emotional layers that sustain life and combine to provide us with a particular experience.

It is within this framework that sensitivity and segmentation establish themselves as central tools in determining market value, enabling us to understand not only the price a property may achieve, but also the behavior of market participants.

By way of example, a few years ago I helped an American couple purchase a two-bedroom apartment in Largo do Calvário, in Lisbon. One hundred and sixty square meters with high ceilings, French windows with unobstructed views reaching the river, solid wood flooring, and hydraulic tiles in excellent condition. The ideal canvas for renovation. The real estate agent had undervalued the property and received twenty-five offers in a single day, one of them twenty-two thousand euros higher than the one I submitted on behalf of my clients. Yet this became one of the greatest achievements of our house-hunting service, as the owner chose LOBA’s clients despite receiving a lower offer from them.

Weeks later, the agent contacted me asking whether I had other clients interested in the adjacent five-bedroom apartment, which she had just listed and priced at the same value per square meter as the previous one. Unlike the earlier case, this property did not receive a single visit. I explained that, despite being in the same building—and even on the same floor—and in better condition, it would never achieve the same price per square meter. This was not only due to diminishing marginal value, but above all because solar exposure, views, and the buyer profile were entirely different. The two-bedroom apartment faced south with river views and a view of the 25 de Abril Bridge; the five-bedroom unit faced northeast, overlooking the building in front. Buyers of a two-bedroom apartment, like that couple, do not need as many rooms or as much space and typically fall within a broader budget range. Those seeking a five-bedroom property are generally at a more advanced stage of life and consider other factors related to comfort and logistics for family routines, such as parking—which that building, and even the street itself, did not offer.

Segmentation as a Valuation Method

For LOBA, segmentation is one of the most effective techniques for determining a property’s price, as it takes into account the specific attributes that define it. This approach is based on five fundamental dimensions: the function of the property, the need it fulfills, the income segment it targets, the current economic environment (taxation and interest rates), and the image it conveys. Unlike traditional approaches based on market averages, segmentation focuses on the profile of the potential buyer or tenant. This perspective allows for a more refined and realistic analysis, recognizing that each property is unique—not only because of its intrinsic characteristics, but also because of the specific moment in which it enters the market.

It is important to emphasize that segmentation is neither an exclusive nor a definitive method. Rather, it is an interpretative tool that requires a high degree of sensitivity, experience, and ideally independence, in order to help property owners understand the individual decisions of potential buyers or tenants and to position the asking price appropriately within its context.

Exceptional Real Estate Products

Within this segmentation logic, there is also a particular subset: exceptional real estate products. These are assets that, while belonging to a given segment—often the high-end segment—stand out due to unique characteristics that give them a singular position.

These properties distinguish themselves not only through their physical attributes, but also through symbolic factors such as the reputation of the developer, architectural signature, or their relevance within the urban context. Although they share characteristics with other buildings in the same area, developers have sought to create projects with a distinct identity, positioning them differently in the market, sometimes even through partnerships with luxury brands. This type of product corresponds to a very restricted market, both on the supply and demand sides, requiring each property to be subject to particularly careful and specialized analysis.

The Illusion of Perpetual Appreciation

Alongside technical analysis, a simplistic narrative persists in the real estate market: the idea that buying property automatically guarantees future gains. This circular reasoning—“I buy today because I will sell for more tomorrow”—ignores the distinction between cyclical appreciation and economic fundamentals. In Portugal, this speculative illusion has been sustained by concrete factors, including exceptional tax regimes such as the Golden Visa, the growth of tourism, the conversion of housing into short-term rentals, a prolonged period of low interest rates, and the influx of foreign capital driven by tax advantages. Added to these is a decisive structural factor: supply rigidity.

The urban housing market is characterized by limited flexibility in supply. The scarcity of buildable land, slow licensing processes, low productivity in the construction sector, and fragmented urban planning all contribute to a limited response to rising demand. When this inelastic supply meets stronger external demand, the outcome is predictable: a sharp increase in property prices, often disconnected from the evolution of household incomes. Thus, while the price per square meter rises, disposable income remains stagnant.

From an economic standpoint, this phenomenon translates into apparent wealth appreciation. However, these are often nominal gains that do not reflect real improvements in households’ financial capacity. On the contrary, there is a deterioration in income, whether through high rents or increased mortgage debt. We are therefore faced with an illusory form of wealth—assets that appreciate in theory but do not translate into greater purchasing power or economic well-being and which, with rising interest rates, may at any moment be subject to a real estate bubble similar to that of 2008, as I explored in this article: Interest rates an their impact on property prices

Conclusion

The Portuguese real estate market is currently experiencing a period of intense appreciation, driven more by external and financial factors than by solid economic fundamentals. Segmenting the profile of a property’s buyer or tenant—including their socio-economic dimension—emerges in this context as an indispensable tool for rigorous and contextualized analysis.

However, the persistence of speculative narratives and the replacement of structural analysis with promotional discourse aimed at meeting acquisition targets within the conflict of interests of the agency incentives that may be detrimental to clients represent significant risks, as I wrote here: Real estate brokerage behind the scenes

An economy that confuses market perceptions with real fundamentals may face abrupt corrections. Understanding the difference between price and value, between purchasing power and emotional value—without ignoring what truly drives people in their decisions—is essential for a more balanced and sustainable approach to the real estate sector.