Why have foreign investors fallen in love with real estate in Portugal?

Tourist boom, thriving tech sectors and affordable prices: real estate investors from around the world have plenty of reasons to be attracted to Portugal. In recent years, Portugal has taken the top position in the list of favorite countries for real estate investors around the world. International real estate publications and research institutes highlight Portugal as a particularly attractive investment destination. Real estate prices in Portugal have risen significantly in recent years, benefiting both foreign and local investors.

The reasons for the influx of foreign investors to Portugal are varied. This European country has enjoyed exceptional growth in the technology sectors, as well as the migration of educated populations stimulated by the state and authorities. Especially since the coronavirus pandemic, Portugal has positioned itself as a desirable location for remote work, mainly for high-tech workers and digital nomads. This strengthens the local economy and contributes significantly to its development.

When it comes to numbers, there is no doubt that the real estate sector in Portugal has experienced unprecedented growth. This year, Global Property Guide published a comprehensive analysis of the Portuguese real estate market, pointing to double-digit value gains in recent years. For example, between November 2021 and November 2022, the median property price in Portugal increased by an impressive 14%. INE, the Portuguese government's official research institution, reported that average prices in Portugal rose by 17.2% during 2022.

"Portugal has benefited greatly from two simultaneous trends: the boom in tourism and the arrival of tech giants and startups from all over Europe," explains Amir Talmi, CEO of Youropa Real Estate Portugal. "The demand for real estate in major cities, such as Porto and its metropolitan areas, exceeds the limited supply and this trend is expected to continue in the coming years, contributing significantly to price growth.

Youropa Real Estate is part of the Youropa Group, specialized in real estate entrepreneurship and real estate investor support in Portugal. To date, investors have successfully made hundreds of investments through the company totaling more than €120 million. The company has extensive local operations dealing with property searches, purchase assistance, financing plans for investors, and post-purchase asset management solutions to maximize returns. Youropa Real Estate offers its investors in Portugal a comprehensive, full A to Z service, from the early stages of finding the right deal, through the purchase and financing process with a local bank, to the actual management of the asset once it is transferred to the buyer.

Youropa Group also operates independently, through another subsidiary GAYA Capital, as an active partner in real estate entrepreneurship - a significant advantage for Youropa Real Estate investors.

The main focus of Youropa Real Estate's operations is the Porto metropolitan area in northern Portugal due to the relatively low property prices in the city compared to Lisbon, which has already experienced significant property price increases, it is expected that major price increases in the Porto metropolitan area are still to come.

Mr. Talmi also explains that returns on real estate investments in the Porto area are considered particularly high. "Let's look at a project where apartments are sold at an average price of around 230,000 euros. Estimated annualized returns range from 8% to 12% of equity. It is important to note that in Portugal, unlike other investment destinations in Europe, you can get bank financing for up to 75% of the value of the property. Thus, an investor will only need about 75,000 euros of his own capital to purchase the property and related expenses, obtaining high returns compared to other destinations in the world."

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