Real Estate

Portugal is a Promising Real Estate Market

21 Sep 2024 min reading

There is ongoing debate about whether foreign investment in Portuguese real estate is a lasting trend or merely a temporary phenomenon driven by the country’s recent popularity. Some Portuguese, feeling the impact of rising property prices, believe that foreign investment has peaked and that further price increases are unlikely. However, based on observations from other countries like Spain, France, Greece, and Italy, I believe this trend is structural and here to stay.
To understand what attracts foreigners to invest in Portugal, we must recognize the country´s unique advantages: a mild climate, safety, economic stability, a lower cost of living compared to other European countries, and proximity to major European capitals, both in terms of travel time and cost. Many foreigners seeking investment opportunities in Portugal are drawn by a lifestyle that offers respite from hectic societies, social tensions, and high living costs, particularly in healthcare and services.
While these factors are not new, globalization has introduced additional reasons for this trend, including remote work and advanced internet connectivity. Not every country offers amenities like free 4G or 5G in seaside cafés, which further enhances Portugal´s appeal.
The end of the Non-Habitual Resident (NHR) regime and the Real Estate Investment Visa might have slightly reduced the influx of high-net-worth individuals, given the availability of alternative options within Europe. Nonetheless, the upward trend in real estate prices is expected to continue, reflecting the persistent attractiveness of the market.
Portugal presents a unique paradox for real estate investors. Although slow municipal processes can be challenging, they also prevent the market from overheating. The bureaucratic pace slows down rapid large-scale investments, contributing to market stability.
Some argue that we have reached the peak of property appreciation, comparing Lisbon unfavorably with cities like Milan and Madrid. However, it’s worth questioning the basis of this comparison. While prices in Lisbon and Cascais have risen significantly since the pandemic and are now closer to those in Madrid, the reasons for this increase are unique. Lisbon and Porto offer proximity to the beach, a mild climate, tranquility, and safety—attributes not found in many other European cities. The chronic shortage of "premium" properties further distinguishes Portugal’s market, explaining the more pronounced appreciation in recent years.
The slower growth rate can be frustrating, as it limits the pace of market expansion. However, this gradual pace acts as a buffer during economic pressures, contributing to a more stable and less volatile environment. Unlike other regions experiencing severe recessions, Portugal has maintained relative stability, supported by stronger economic fundamentals and a resilient market structure. This preparedness enhances investor confidence amid global uncertainties.
I firmly believe that investing in real estate in Portugal remains a prudent financial decision, both short-term and long-term, due to the country’s structural advantages. Nonetheless, it’s crucial to conduct thorough analyses and select properties with high appreciation potential. Even in a growing market, some properties may underperform.
For those still uncertain, I can confidently assert that investing in real estate in Portugal is an excellent choice. Based on recent observations and analyses, this trend is unlikely to change soon, and investment opportunities should become even more profitable in the near future.

Real Estate