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For more than a decade, Lisbon has been the place to be.
After economic near-death experiences in the early 2010s, Portugal used tax breaks, golden visas and inclusive social and immigration policies to attract foreign investors, digital nomads and surf-happy expatriates who formed a cosmopolitan class living it up on the low cost of living.
Luxury towers and hotels sprouted up over long-abandoned areas and graffitied streets often inhabited by poor immigrants who supplied cheap labor. The city’s most handsome neighborhoods, with their tiled facades and parks filled with people drinking cocktails at cafes over the sounds of bossa nova and English, became a modern-day Casablanca for creative types. About 30 percent of Lisbon’s population is not Portuguese.
That dreamy image of Lisbon as an innovative city on a hill suffered a jarring disruption this month. An iconic funicular — beloved by tourists for its old Lisbon charm — sped out of control on a steep incline and crashed into a wall. The accident killed 16 people, mostly foreigners.
Now, in the political hothouse of an upcoming mayoral election, advocates of increasingly alienated and frustrated locals have seized on the accident to ask what Lisbon has become and whom it is for. They argue that in its courting of wealthy transplants, Lisbon has created gross inequality and priced locals out of their neighborhoods. An administration focused on keeping alive the aura of innovation and growth, they say, has failed to maintain Lisbon’s basic infrastructure and character.
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“We are a victim of our own success,” said Rui Bochmann Franco, a left-leaning city councilor who lost a friend in the accident.
As Mr. Franco rode an elevator in the City Council building the other day, he pointed to an outdated inspection notice that he said he had told the mayor about. “Remind you of something?” he asked, meaning the funicular. The crash, he said, “shows that they invest a lot in showing off, but clearly not enough in basic safety standards.”
Investigators are still trying to determine the exact cause of the crash. Lisbon’s center-right mayor, Carlos Moedas, has rejected calls to step down.
In an interview, Mr. Moedas said the crash had been politicized and called that “disgusting.” He said maintenance of the funicular, which was subcontracted to private companies, was not the cause of the accident, but he also said it was necessary to wait for the findings of the investigation to explain what happened. He also said he had increased elevator inspections.
On one thing, at least, he and his critics agree. The main challenge facing Lisbon is managing its growth, and avoiding its becoming a city of foreign haves and local have-nots.
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“Lisbon became trendy and Portugal became trendy,” Mr. Moedas said. “I think that’s not bad.” But, he added, “we really have to protect the people of the city” and make sure that “people that are from here are not disadvantaged by people coming here.” He warned that pitting the city’s classes against one another was “very dangerous” and anathema to its cosmopolitan tradition. “Imagine I put a ban on people,” he said. “What would that change? Would that change for better? It would not.”
A center-right emblem of the new Lisbon, Mr. Moedas graduated from Harvard Business School, worked at Goldman Sachs and started an investment management company. He then oversaw a Portuguese agency that put austerity reforms in place and became a European Union commissioner for innovation. Elected Lisbon’s mayor in 2021, he has an office lined with contemporary art. His wife is of Moroccan and Tunisian descent.
He argued that it was vital for Lisbon to retain its inclusive character in a competitive global marketplace for entrepreneurs and companies that would create opportunities for homegrown talent to stay put and earn better wages. He had sought, he said, to “compensate” those the new economy left behind by providing public services and subsidies, including free public transportation for the young and elderly. His administration had also increased health services and put hundreds of millions of euros into housing. He said 12 percent of Lisbon’s population lived in subsidized municipal housing.
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But some in Lisbon’s middle class, earning lower salaries than many foreigners, take a dimmer view.
On a street behind the steep hill where the funicular crashed, Rodrigo Jesus, 26, works as an interior designer for a company that serves Airbnb and other firms catering to tourists and foreign residents. The development in Lisbon has been good for his company, he said, “but it’s not good for me.”
He said he was priced out of the Lisbon market and had to buy a house in another town. And he said it annoyed him that every time he walked into a store, people spoke to him in English because he had red hair.
Some tech entrepreneurs say Lisbon’s international vibe, and the preponderance of English as the new lingua franca, make them feel welcome.
Oliver Schmalholz, 53, a tech entrepreneur from Germany who spent 15 years in Austin, Texas, when it was the darling of the tech world, moved to Lisbon in 2021. He said he fell for the cosmopolitan city and didn’t feel like an outsider.
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He said he attended the mayor’s tech incubator, the “Unicorn Factory,” in a once-abandoned part of the city — and hired for his start-up 15 local engineers who might have otherwise left the country. He is engaged to a Portuguese woman and lives in the Infinity, a luxury high-rise. He said his neighbors were international and included “a lot of golden visa buyers,” who spent hundreds of thousands of dollars on real estate investments to gain legal immigration status in Portugal.
He worried that recent measures restricting such visas amounted to the state’s “killing the golden goose.” But he also acknowledged that people outside the tech sector, including doctors and nurses, were being priced out of Lisbon’s center.
“We need the locals,” he said.
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But many locals are leaving. One major reason is the high real estate prices, driven up by foreign residents and speculative investors. Locals have added to the problem by converting their own homes into Airbnbs.
“You hear the noise of the construction? That’s Lisbon now, poor immigrants working on luxury housing for rich immigrants,” said Ana Drago, a former left-wing member of Parliament and now a researcher in urban studies.
She argued that Portugal’s main export was its own real estate, that the wealthy foreigner class that moved here “seems cosmopolitan, but we know it’s not for us.”
“We feel like we are being expelled,” she said.
It was simply, said António Brito Guterres, a social worker active in one of the city’s hipster havens, “settler colonialism.”
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Still, many here say the city has improved enormously in the last decades. Where before there were open drug markets and abandoned lots, there are now gleaming hotels and pleasant plazas. More young professional Portuguese working for an influx of new companies have stayed instead of leaving the country.
But on a recent morning at the site of the crash, where memorial bouquets bore Canadian flags, R.I.P. notes for Americans and a toy Mini Cooper, some locals wondered what the accident said about their city.
“I don’t blame the rich people who move to Lisbon,” said Mario Rodrigues, 74, who said he had intended to vote for the mayor but now wasn’t so sure.
All the foreign investment, he said, “should be used for the protection of people who live in Lisbon.”
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Tiago Carrasco contributed reporting from Lisbon.
Jason Horowitz is the Rome bureau chief for The Times, covering Italy, the Vatican, Greece and other parts of Southern Europe.
