Prospects for investing in real estate in Portugal in 2024
Situated on the Iberian Peninsula, Portugal offers a rich culture, rich history and a booming real estate market that attracts the attention of investors from all over the world.
Why do they love Portugal?
Portugal boasts a stable political atmosphere, low crime rates and a thriving tourism sector. As a member of the European Union, Portugal offers security and transparency regarding its legislation.
The property market in Portugal remains moderately active and will show stable annual growth, averaging 5% since 2014. This consistent growth, coupled with stable demand for quality properties in popular areas, makes Portugal a good place to preserve your capital.
What benefits will you get when investing in real estate in Portugal?
By buying real estate in resort areas of the country, you can enjoy your own vacation during your vacation, and be sure that your property will increase in price steadily and moderately. Of course, the property must be chosen correctly. Here it is worth paying attention to the Quinta do Lago area in the Algarve.
The yield when renting out real estate can vary from 2% to 6% per annum. But you need to understand that in Portugal, as in many other European countries, the cost of renting real estate depends on several factors, such as location, type and size of the property, and market conditions. At the same time, according to analytical data, the increase in prices for rental housing over the past year increased by approximately 23%.
“According to various studies, the structure of households in Portugal, especially in large cities, is changing towards an increase in childless couples and single citizens. Therefore, in order to obtain rental income, we recommend taking a closer look at apartment buildings in Lisbon and Porto.” - notes the head of analytics and investment unit VelesClub Int. Ksenia Shamitko.
Until recently, the purchase of real estate was included in the “Golden Challenge” program, which gave the right to obtain a residence permit in this country. Now the main channel for obtaining a residence permit for non-EU residents is investing in investment funds, cultural or research projects, and other legal methods.
If you are faced with the task of obtaining Portuguese residency, VelesClub Int. will help you with this.
Which areas of Portugal are the most interesting for buying property?
Lisbon region. It includes the capital of Portugal, Lisbon, the municipal centers of Setubal, Amadora, Cascais, Sintra, Estoril, and an area of fashionable oceanfront resorts called the Lisbon Riviera.
The capital of Portugal combines a tourist center, an ideal place for those looking for a comfortable place to live and one of the best options for real estate investment.
It should be noted that among other European countries, real estate prices in Lisbon are lower, and the rental rate is higher, averaging 5-7% per annum.
If you are pursuing a strategy of generating passive income from renting out real estate, you can consider both long-term rentals and short-term rentals during the tourist season. Outside the tourist season, you can perfectly use your property for wintering in a comfortable climate and a modern cultural center.
Also, don’t lose focus on commercial real estate. It is also popular with investors, as Lisbon is one of the top ten cities in the world that are attractive for remote work.
Porto is a large, lively city on the banks of the Douro River. It combines a cultural center with the preservation of centuries-old history and a place of active modern life. This city will be interesting for purchasing not only residential real estate, but also commercial real estate - mini-hotels, warehouses, premises for shops and warehouses. Each area will be of interest to investors in its own way.
The tourist flow here is formed not only due to external tourism, but also internal. At the same time, a comfortable climate and well-developed infrastructure create year-round interest in the region.
Over the past 5 years, Porto has shown one of the best dynamics of real estate value growth (more than 10% per year).
The Algarve is the southernmost part of Portugal. Being a tourist and sports center of the country, the area has a developed residential infrastructure.
This area, despite the fairly high cost of real estate, is always in demand and opens up great opportunities for investors.
It has everything: natural beauty, Mediterranean climate, stunning beaches, resort housing both for your own living and for generating passive income.
In this region, it is worth taking a closer look at investing in suites - small hotel-style apartments. It is better to give preference to the first coastline and developed infrastructure. Daily rent in this location will vary from 100 to 120 EUR per day. Despite the tourist focus, commercial facilities on the coast are also possible.
The Azores and Madeira are year-round resorts that attract tourists from all over the world for their unique climate, nature and volcanic origin.
Property prices in the Azores and Madeira are very different. So, in Madeira the luxury segment is valued and this is more an investment in comfort and status. While in the Azores you can buy good housing in the price segment up to 100,00 EUR.
What additional costs does an investor bear when purchasing real estate in Portugal?
When we talk about investing in real estate, any strategy must take into account all the costs of buying, selling and owning an asset.
Taxes and fees are one of the significant items that have the greatest impact on profitability.
Thus, when purchasing real estate in Portugal, the investor’s main additional expenses are approximately 9-11% of the cost of the property:
If you purchase personal residence property, the cost of maintaining the property will include:
When renting out real estate, the following expenses will be added to the above expenses:
In case of sale of real estate, the seller will have to pay:
With any taxation system, as a rule, there are opportunities to optimize costs, and our experts will always help you understand these details.
It is important to remember that investing in international real estate, particularly Portugal, requires careful analysis, expertise and discretion. We recommend seeking advice from VelesClub Int. professionals who can provide valuable information and strategies throughout the investment process.