Why you should invest in Portugal

With a heady mix of sun, sea, and steak sandwiches (or prego in Portuguese), this southwestern European country is not only an idyllic holiday destination but also a great place to invest in your future. Here’s why:

1. Portugal is regarded as one of the cheapest western European countries, with the cost of living estimated to be 27% lower than the UK¹.
2. If you’re dreaming of building a Portuguese portfolio, the good news is that there are no restrictions to foreigners buying property here. In fact, the system is probably more favourable than most of its European neighbours when it comes to overseas investment.
3. The short-term rental market is strong and steady, with tourists attracted to the warm climate and beautiful surroundings looking for somewhere to stay. Although tourism is mostly seasonal, investing in popular holiday destinations such as the Algarve, Porto or Lisbon is sure to offer you decent returns on your investment².
4. As part of Europe and the Eurozone, Portugal is well connected for a country of its size, with international airports and a comprehensive road system which makes travelling around as a foreigner much easier.
5. Although relatively small in size, at just 92,345km², Portugal offers buyers a diverse landscape in which to invest. From gorgeous coastal towns along the Silver Coast, stunning volcanic backdrops in Madeira and the quaint cobbled streets of the Capital, every corner of this country offers something different.
6. Portugal’s economy is described as stable, which means it’s a safe place to invest. Although economic growth was below 2% last year, this is still higher than other European countries during the same period³.

If you’re thinking about investing in Portugal, it’s worth looking at recent property trends. Whilst the country has been affected by slow growth and sales due to the global pandemic and other economic factors, housing prices have been increasing steadily over the last decade⁴.

The uplift in property prices has largely been attributed to foreign investment. Many investors were attracted by Portugal’s relaxed Golden Visa program and tax relief schemes. They could afford to pay more for properties than Portuguese nationals, causing an increase in prices which has had both positive and negative effects.

Although the Government has now changed Golden Visa requirements, many foreign investors had already taken up the opportunity to gain residency by investing €500,000 into real estate.

To find out more about the new Golden Visa Rules, click here.

Whilst 2023 brought a new lot of rules and regulations for foreigners planning to invest or reside in Portugal, the future of the property market still looks buoyant and foreign investment is described as a “key driver of growth⁵”.

So, what does this mean if you’re looking to invest now? Well, while property prices are still rising, Portugal is still considered to be less expensive than other European countries. However, it’s worth noting that there are major price discrepancies from region to region as demonstrated in the table below.

Data from The Portugal News

At the end of 2023 the average rental yield in Portugal was valued at 5.65%⁶, which is in line with other countries in the Eurozone for the same year. In cities such as Lisbon or Porto this figure could easily increase due to demand from tourists and remote workers.

Popular regions such as the Algarve hold a strong pull for foreign buyers, perhaps tempted by the sun and sandy beaches. A hotbed of tourism, the Algarve offers a vast range of property types from seaview apartments to sprawling luxury villas.

Split into 16 municipalities, each one offers investors an excellent rental return. Millions of visitors descend on this region every year, attracted by the lights and liveliness of busy Albufeira and Portimao, or the luxurious beach clubs and golf courses of Vilamoura and Quinta do Lago. Rental yields in the region range from anywhere between 4 to 8% and occupancy levels are high⁷.

For investors seeking rental opportunities in the Algarve, quieter areas such as Almancil are worth a look as purchase prices are slightly lower whilst demand remains constant.

To find out more about a region’s rental potential, get in touch with one of our helpful iad Overseas advisors*.

Portugal is popular with many foreign buyers including Americans, Brazilians, Germans, Brits and French. Whether investing for their own personal use or for rental purposes, non-residents purchasing Portuguese property is on the up. And in 2022, a huge 13% of homes were purchased by non-residents, up from 8.9% in the previous year⁸.

Figures from Portugal’s Foreigners and Borders Service (SEF) estimated that in 2022, there were approximately 714,123 foreign citizens living in Portugal. British expats were the second largest group of foreign residents (after Brazialians) with approximately 42,071⁹ choosing to swap the grey skies of the UK for a life in the Portuguese sunshine.

An advantage of investing in Portugal as a foreign buyer is that the system has welcomed many previous overseas investors. This makes the procedures and processes of investing easier to navigate. Our iad Overseas property consultants* have helped many people investing in Portugal and you could benefit from their expertise too.

Other reasons foreign investors have chosen Portugal include:

• Despite the country’s small size, it still offers all the comforts of a modern European state.
• Flexible visa options have attracted a younger demographic to the cities and sites of Portugal. For example, Portugal recently launched the Digital Nomad Visa, which allows people to work remotely for up to a year¹⁰.
• Portugal has one of the best healthcare systems in the world and is ranked 19th in the Health Care Index of 2024¹¹.
• It’s widely regarded as one of the safest countries in the world and is ranked 7th on the Global Peace Index¹².

One thing is certain, whether you are buying a holiday home, a second property, a retirement property or just looking to grow your portfolio, Portugal should be high on the list when it comes to investing your cash.

With Portugal being such a popular place for investment, our team is well informed when it comes to factors such as budget requirements, buying processes and where to invest.

We have helped hundreds of people achieve their dream of investing in Portugal and look forward to assisting you in your investment journey. Our property consultants  are fluent in English and Portuguese and will be able to support you from your initial enquiries to your final purchase.

We work closely with a whole host of professionals that can make your investment in Portugal as stress free as possible.

Let us help you find your dream property in the right region and for the right price. We offer value for money, useful advice, and a network of professional contacts.