What do you need to know about real estate in Portugal for investment?

Key aspects of the real estate market in Portugal

In this article we will analyze in detail the key parameters concerning the housing market in Portugal, as well as learn the reason for the increasing interest of foreigners in this country as an investment destination. We will focus on the most attractive regions for investment, such as the Algarve, Silver Coast, Lisbon, Coimbra and Estremadura, as well as Porto and the northern provinces. We will also discuss the specifics of buying real estate and the additional financial obligations that buyers may face.

Cultural heritage of Portugal

Portugal, with its unique cultural heritage, is one of the most dynamic and young countries in Western Europe. For much of the 20th century, it was in a state of certain isolation from the outside world. As the capital city of Lisbon, Lisbon's historical value and its status as one of the oldest cities in Europe only emphasizes the increased interest of people in this country.

Golden Visa Program

Interest in Portuguese real estate has been significantly boosted by the “golden visa” program, which has opened new horizons for foreigners willing to invest in the housing market. According to the current conditions, in order to obtain a residence permit when buying a home, it is necessary to:

• Invest over 500,000 euros;
• orpurchase an older propertyover 30 years old, for the sum of 350,000 euros.

An important point: such properties should be located in areas with a low level of development. Take into account that this amount includes not only the price of the object itself, but also possible expenses for its repair and reconstruction.

The process of obtaining a residence permit

It should be noted that in order to obtain a residence permit it is enough to execute a real estate purchase transaction for the amount of 500,000 euros. However, if your goal is to purchase a home with plans for renovation, you will need to prepare an impressive package of documents. And there is no guarantee that your application will be successfully accepted: meeting the minimum standards only means that your request gets to the immigration authorities (SEF), but the final approval is not ensured. For this reason, there is a parallel fact that only one investor has managed to take advantage of the opportunity to purchase a property for renovation during the entire period of the program.

Price thresholds and conditions

Moreover, the price threshold of 350,000 euros applies exclusively to housing that is more than 30 years old, otherwise it must be located in regions with a sparse population, such as the province of Alentejo.

Statistical data

According to statistics, since the launch of the golden visa program on October 8, 2012, more than 3 billion euros have been invested in the Portuguese real estate market. The program has attracted more than 4,880 investors who have been granted residency status, which together with their family members amounted to 7,896 new residents. Given these figures, it is safe to say that the program has been a great success against the background of similar initiatives operating in Europe.

Active real estate investors

Among the most active real estate buyers seeking residence permits are citizens of China, Brazil, South Africa, Russia and Lebanon. These countries constitute key markets for foreign investment in Portuguese real estate.

Traveling to Portugal

Today there are direct flights from Moscow to Lisbon offered by TAP Portugal and the Russian company Ural Airlines. Round-trip tickets cost around 20,000 roubles.

In addition, Aeroflot has plans to launch a new flight between Moscow and Lisbon, which will operate three times a week, with the prospect of increasing the frequency to six flights a week by the end of the summer season. Tickets are expected to start at 7,000 rubles, making it a convenient option for travelers.

Budget options for tourists

Travelers on a tight budget can consider low-cost carriers such as:

• Ryanair
• Vueling
• Wizz Air

However, in this case you will first have to travel to a European city such as Stockholm, Vilnius or Warsaw and then transfer to a flight to Lisbon, Porto or Faro. While this route may seem less convenient, tickets can start from as little as €9.99, making it an attractive option for budget travelers.

Development of low-cost air transportation

The steady growth of the low-cost air travel sector has significantly increased the number of Europeans wishing to visit Portugal. The main advantages are:

• Improved air service.
• It is possible for more than 350 million people in Europe to reach Portugal in just a three-hour flight.

State of the real estate market

Regarding the state of the real estate market, there has been a significant drop in housing prices in different regions of the country since the end of 2007. Despite a certain recovery in 2009, prices fell again by the end of 2010. The first signs of market stability appeared only in the fourth quarter of 2014.

By the end of 2016, the average price per square meter in Portugal was €1081. The most expensive properties are located in:

• metropolitan area (€1308)
• Algarve resorts (€1358)
• Madeira island, where the cost of one square meter reaches €1205

Luxury real estate

The cost of luxury properties in the Algarve is among the highest in the country, ranging from €3400 to €4000 per square meter. This means that prices have almost doubled since 1999. In the center of Lisbon, prestigious housing will cost between €2500 and €3100 per square meter, highlighting the growing demand for quality real estate.

Factors affecting the value of real estate

The key factors that influence the price of a property, in addition to its area and quality, are:

• Locationobject.
• Proximity to major cities or the beach adds significantly to the cost.
• The premium segment includes housing on the first line or near golf courses.

Portugal and its opportunities for foreign nationals

Portugal, located at the very west of the European continent, may seem like its main neighbor is Spain. However, modern transportation systems have made traveling between continents much easier, especially for those who hold the so-called “golden visa”. This document opens up the possibility of five-year residence in Portugal for non-European Union foreign nationals, provided that they invest in the purchase of real estate in an amount from€500,000. In less densely populated regions, this barrier can be reduced to€400,000.

By purchasing a “golden visa”, its holders become entitled to:

• permanent residence
• employment
• in-country training
• Travel within the EU without restrictions

After five years, holders of temporary residence permits can switch to permanent status, and after another year they can apply for citizenship.

Buying real estate and costs

The legislation of Portugal does not impose restrictions on the purchase of real estate by foreign citizens. In addition, the costs associated with the acquisition process are relatively low. Attractive climate is another important reason why many foreigners, especially residents of northern European countries, choose Portugal to live in.

Winter on the coast here is quite comfortable, and the temperature is much higher than in some European countries. Even in rainy weather, residents and tourists can count on six hours of sunshine a day. Summer temperatures, thanks to the proximity of the ocean, rarely become unbearable, unlike in Mediterranean resorts.

Affordability of life

The affordability of life in Portugal also attracts the attention of foreign nationals:

• Although there has been a slight increase in prices recently, they are still much lower compared to most European countries.
• This is especially evident in the questions:
• real estate
• rent
• foodstuffs
• transportation services
• leisure activities

The Portuguese are famous for their warm attitude towards foreign visitors. Thus, even if there are language barriers, the locals are always ready to help and communicate with foreigners.

Culinary traditions

Portugal's culinary traditions can rightly be considered a true gem of a country. With 850 kilometers of Atlantic coastline, the region's gastronomy is largely based on seafood. But, in addition to this, the Portuguese also have a huge passion for meat dishes, which are prepared according to many unique recipes using a variety of local spices and herbs.

Their love for sweet desserts is evident in over 200 different culinary creations, with traditions dating back to the Muslim era. In summary, Portugal is a country with a great climate, friendly people and a rich cultural heritage, making it an ideal place to live and invest.

Wine in Portugal

Wine occupies a significant place in the culture and economy of Portugal. The famous island of Madeira is home to the world-famous Port wine, while the mainland is home to a wide variety of grapes. Local climatic conditions and fertile land create ideal conditions for the formation of high-quality and varied harvests.

Security and investments

Speaking of security, it should be noted that Portugal demonstrates some of the lowest crime rates, which makes the country very attractive both for permanent residence and for doing business. Each subsequent decade is characterized by a steady rise in real estate prices and an increase in the number of properties on the market, which indicates positive trends in this area.

This creates new investment opportunities and attracts the interest of both local and foreign buyers. At the same time, it is worth noting that the growth in housing prices is noticeably higher than the inflation rate, thus creating favorable conditions for rental income in the tourism sector.

Regions for investment

Potential regions for real estate investment are concentrated in several key areas of the country. While Portugal does not have a clear leading position among global investors, it does hold its own. Whether someone is looking for a residential space for permanent residence, a property for investment purposes or a holiday home, the market can offer a wide range of choices to suit even the most discerning international clientele.

• The most promising areas remain the Algarve and the vicinity of Lisbon.
• The largest amount of foreign investment is concentrated here.

Algarve region

The Algarve region can be divided into three key zones: central, eastern and western.

The central zone, surrounded by the gentle waves of the Atlantic Ocean, is the most popular among tourists due to its stunning beaches, picturesque bays and stable mild climate. It is also home to many golf courses and luxury resorts.

In terms of property prices, the central Algarve is the most expensive in the country, with some of its locations such as Albufeira and Vilamoura among the most expensive places on the European continent.

Albufeira

Albufeira has been attracting tourists for many years and is deservedly considered the “pearl” of the region. This charming fishing village, once a quiet corner, has now become the tourist capital of the Algarve.

Modern Albufeira is known for its picturesque harbor, busy nightlife and stunning rock formations along the coast. Each local beach has a distinctive atmosphere, making them unique to vacationers.

The steady growth in the real estate market is highlighted by the construction of new residential developments, golf courses, modern hotels, as well as marinas and modern apartments, reflecting the growing interest in the area.

Albufeira and the real estate market

Albufeira is one of the most popular places to buyreal estate, with a variety of residential properties such as villas, townhouses and apartments. The region has an active rental market, which makes it interesting for investors looking to invest in real estate. One-bedroom apartments here are priced from€90,000. For those wishing to purchase a townhouse, prices start at .€150,000and houses in Albufeira and neighboring areas can be found for prices from€250,000to€350,000.

Golden Triangle

If you move west from Faro, you will find yourself in the so-called “golden triangle”, where prestigious resorts such as Vilamoura, Quinta do Lago and Vale de Lobo are located. Vilamoura is one of the largest tourist hubs in Europe, offering its guests:

• luxury hotels
• luxury apartments
• casino
• bars and restaurants
• great golf courses
• picturesque beaches

Quinta do Lago and Vale de Lobo are famous for their golden beaches, green golf courses and beautiful lakes, making them some of the most expensive areas in Portugal.

Real estate prices

Five-bedroom homes, which also have a private pool and garden, can cost up to€2 millionIn Vilamoura, the average price of a one bedroom apartment is around 1,000 per month, if they are close to the beach and Faro International Airport.

Eastern Algarve: A beautiful corner of Portugal

The eastern Algarve, stretching from the regional capital Faro to the Spanish border, is considered the most unpopulated and quiet corner of Portugal. The opening of a new highway linking this part of the country with other regions, as well as the construction of a bridge over the Guadiana River, has made access to this scenic spot much easier for many travelers using Faro Airport or seeking to reach Spain.

These changes have had a tangible impact on the area of tourist infrastructure and caused a rapid increase in real estate prices. Those who have not had time to invest in housing in the last five years still have the opportunity to take advantage of the changes - experts predict further price increases.

Promising areas for investment

One of the most attractive locations for investors isOljanThe largest fishing port in the Algarve, which, despite its rapid development, has retained its unique North African charm. There are daily markets selling :

• fresh fish
• local vegetables
• fruits

Local restaurants offer fresh seafood specialties with an amazing variety of dishes. According to experts, the average price of apartments in the area is about€110,000while a square meter of housing costs about€1100for apartments and€1660for houses.

Silver Coast: Chic and Nature

Silver CoastCosta de Prata, known as Costa de Prata, is located in central Portugal and has become accessible thanks to the new highways that connect it to Lisbon in just two hours. This region, although less developed than the Algarve, welcomes tourists with beautiful beaches, a pleasant climate and a rich history.

In recent years it has been built here:

• luxury resorts
• golf courses
• welfare centers

However, strict building codes have allowed the natural beauty and unspoiled atmosphere of the coast to be preserved.

One of the added benefits is that real estate on the Silver Coast at approx.30%cheaper than their counterparts in regions such as the Algarve and Lisbon. For example, a new townhouse in the Obidos area can be purchased with an average price of approx.€1500per square meter, which makes it possible to buy a new home with three bedrooms, a private garden and a small swimming pool for just€250,000.

Coimbra: Education and investment

CoimbraLocated far from the ocean coast, it is not suitable for resort real estate, but it is home to one of the oldest universities in Europe - Universidade de Coimbra. This feature makes the local real estate interesting for parents of students seeking to provide their child with a quality higher education in a famous institution.

Home prices in Coimbra range from.€1000to€1500per square meter, which makes it possible to buy an apartment for€170,000and at home for€255,000.

Conclusion

Thus, housing in and around the Eastern Algarve is a very attractive option for those who want to make a real estate investment, enjoying all the delights of life by the sea, an abundance of cultural heritage and developed infrastructure.

With its amazing scenery and comfort, this region continues to be one of the most desirable places to live and vacation in Portugal.

Lisbon, the capital of Portugal, is delightfully situated on seven hills near the mouth of the Tagus River, which divides the country into two parts. The city offers many fascinating neighborhoods, among which Bairro Alto, Santos, Lapa and Chiado are considered the most interesting. Lisbon's historic center also attracts a large number of tourists due to its rich cultural heritage and unique architecture.

The real estate market in Lisbon

As for the real estate market in Lisbon, prices for one-bedroom apartments here start from€130,000. However, if you are interested in housing in newly renovated buildings in the heart of the city center, the price can range from .€400,000to€2 millionfor luxury six-bedroom apartments. Just outside the capital lies the town of Cascais, which was once a small fishing port and is located just a short distance from the capital.25 kilometersfrom Lisbon. This picturesque little town is surrounded by the Serra de Sintra mountains, which protects it from the cold north winds. Cascais is famous for its upscale residential developments, which have become home to wealthy Portuguese and their foreign neighbors. The region also offers extensive sporting opportunities, including many golf courses.

Popularity of real estate by the sea

Properties on the coast and around golf resorts are constantly in demand. The prices of such properties are comparable to those seen in more famous regions such as the Algarve. For example:

• The price of a two-bedroom apartment is no less than€250,000.
• For a four-bedroom villa you will have to pay more than that€1 million.

Next to Cascais is the town of Estoril, which was once a humble fishing village but has since grown and developed considerably. Estoril is famous for its magnificent villas, beautiful promenade with palm trees and the largest casino in Europe, which forms a special atmosphere and makes it one of the most attractive places for a vacation in Portugal. At the same time, the cost of housing here is lower than in Lisbon or Cascais: an apartment can be found for prices starting at€117,000.

Porto: Portugal's second largest city

Moving north of the country, we meet Porto, the second largest city in Portugal, which is known for its wine and well-preserved historic center, a UNESCO World Heritage Site. The prices of accommodation in Porto are generally lower in the25%compared to Lisbon. In the city center, the cost per square meter is about€1500In more prestigious areas by the water or river, it reaches around€3000With a budget of€100,000You can buy a small one-bedroom apartment, but for a three-bedroom home, you will have to pay at least€150,000to€200,000.

Autonomous regions: Azores and Madeira

It is also worth paying attention to the autonomous regions of Portugal — the Azores and Madeira. While many Russian investors have doubts about the Azores, Madeira has long been of interest to foreign buyers. The real estate market here is becoming increasingly attractive. For example, you can purchase an apartment in the capital of Madeira, Funchal, with a view of the Atlantic Ocean starting at€75,000to€100,000This makes the region even more desirable for those looking for cozy accommodation in the picturesque corners of Portugal.

Real estate in the Azores.

In the Azores, particularly in the capital São Miguel — Ponta Delgada, the growing interest in real estate is becoming increasingly noticeable. In the areas of Canisu and Machico, known for their sandy beaches, the price of apartments starts at73,000 eurosthen for the house you will have to pay no less than150,000 eurosAt the moment, apartment prices in Ponta Delgada can reach approximately78,000 euroswhile houses cost around140,000 euros.

The process of buying real estate

The process of acquiring real estate in Portugal is quite simple and clear for foreign buyers. The country's legislation does not impose restrictions on the rights of foreign investors to purchase residential or commercial properties. However, it is important to remember that, in addition to the price of the property itself, there are additional costs that can vary from2% to 14%from the total purchase amount. These figures include taxes such as:

• property transfer tax — up to10%,
• expenses for legal services - from1% to 2%,
• registration fee — from0.2% to 1.2%,
• state duty —0.8%.

Real estate taxation

Regarding property, real estate taxation in Portugal depends on its type. If you plan to build a residential or commercial building for tourists on a plot of land, you will have to pay tax at the level of6.5%In the case of agricultural plots, the rate is lower —5%For properties used as permanent residences, the tax varies from0 to 6%It is also worth considering that for foreign buyers registered in low-tax countries, the rate may increase to10%If the property belongs to a company registered in an offshore zone, then the tax rate is7.5%.

Annual tax liabilities

Every year, property owners in Portugal must pay a tax, the amount of which is set by local authorities. The tax on vacation properties is0.8%...and for urban objects — from0.3% to 0.5%In a situation where a non-resident decides to sell their property in Portugal, they will have to pay a profit tax of28%.

Changes in tax policy

Inin 2017Prime Minister António Costa proposed to increase indirect taxes on real estate. This was done with the aim of raising pensions and salaries for public sector employees. It was planned that the focus would be on properties valued above600,000 eurosHowever, the initiative has sparked heated debates, as both officials and entrepreneurs warn that increasing taxes could deter investors.

New surcharge on municipal tax

Additionally, a new surcharge on the municipal property tax has been introduced in the country.IMIThis tax is calculated based on the taxable value of the property.VPT), which is located in Portugal. Such measures impose additional responsibilities on owners and require careful monitoring of changes in legislation and taxation.

Conclusion

In conclusion, I want to emphasize that optimal real estate investments in Portugal offer unique opportunities for both foreign buyers and locals. The diversity of regions, such as the Algarve, the Silver Coast, and Lisbon, opens up a wealth of possibilities for those seeking both personal use and rental income.

The process of obtaining a "golden visa" may seem complicated, but it definitely pays off due to:

• many years of experience
• the depth of the real estate market in this country

It is important to note that despite the high initial costs, the market is gradually recovering and developing, providing more and more opportunities for successful investments. Programs like the "golden visa" and the demand for real estate are supported by the growth of tourism and improved transport links, making Portugal even more attractive to investors.

Every day, more and more people are paying attention to this wonderful country, and I am confident that real estate investments here will continue to grow. It is important to be aware of all the nuances related to purchasing and to approach this matter carefully and thoughtfully.

PortugalWith its rich history and culture, it will undoubtedly meet the demands of even the most discerning investors. Good luck with your endeavors!