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Investing in Real Estate

Investing in Real Estate in Portugal: Information on the Residential Sector in 2022

The Portuguese housing is healthy and ripe for investment. According to data released, 190 000 properties were sold in Portugal in 2021, with a total transaction value of over 30 billion euros. With an increase in transaction volume of 18 percent compared to 2020 and 12 percent compared to 2019, the previous peak year for the Portuguese residential market, this was considered as the best year yet.

Frederik
Frederik Pohl, CEO
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As for 2022, two major trends are emerging in Portugal’s real estate investment scene right now. Overseas investors are discovering Portugal as a good investment opportunity and many houses are entering the market after being used as Airbnbs. In other words, while this might lead to a growth in price, it also means that it is an excellent time for international buyers to look at investing in real estate in Portugal.

After the country being closed due to the pandemic in the last couple of years, more foreigners are gaining interest again and coming to Portugal to invest. A recent report published in Dinheiro Vivo indicates that foreign investors in growing numbers are setting their sights on real estate investments in Portugal. During the first three months of 2022, property sales to non-Portuguese nationals were up by more than 70% compared to last year.

Specifically, figures published by the INE (the national statistics institute for Portugal) indicated an increase of 72.3% in Portuguese property investments from buyers within the EU. Even more impressively, buyers choosing to invest in Portugal real estate from non-EU countries were up by a huge 79.1% year-on-year. 

In total, 1,435 Portuguese properties were purchased by investors within the EU, while 1,212 were bought from people outside the bloc – total property sales of 2,556 properties for the quarter. These investment properties had a total combined value of €842.2 million.

“This dynamic was in part due to the fact the market stopped at the beginning of 2021 because of the pandemic”, reads a quote from the publication, which went on to suggest that Portugal’s Golden Visa Real estate investment program was also a key driver for the sector. 

“In the first five months, property acquisition through this regime (Golden Visas) captured €190.2 million”, Dinheiro Vivo continued.

“As INE reveals, between January and March, there were 43,544 property transactions – an increase on the same period in the year before of 25.8%,”

“The purchase of new-builds rose 28.7% (a total of 7,603 homes), while the acquisition of ‘used homes’ saw the greatest level of investment: 35,941 transactions, which represented a comparable increase on the same period last year of 25.2%,”

“Families were the prime movers within the market”, the online continues – representing 86.9% of all transactions, which translates into a 28.6% increase on the same period last year.”

A steadily growing real estate market

Increasing demand for quality investment properties in key locations is driving an upward trend in average asking prices. Official figures suggest that average property prices increased by 13% during the year’s first quarter.

This is the highest quarterly increase noted since the beginning of 2010, emphasizing the extent to which Portugal has become a relevant property investment market in the EU. 

Speaking on behalf of APEMIP (the Portuguese association of real estate professionals and businesses), Paulo Caiado indicated that the growing disparity between supply and demand results in a major increase in average asking prices. 

“Supply is inferior to the fluxes of demand,” he said. 

“This is what has put an enormous pressure on prices”.

With further increases on the horizon, the advice for investors looking to buy into the Portuguese property market is straightforward: average prices for high-quality investment properties are not likely to decrease, making now the time to consider a property purchase.

Reasons to Invest in Portuguese Real Estate

With a broad range of affordable investment opportunities across the EU, it is natural to question what makes Portuguese real estate so attractive. 

All investors have their unique motivations for buying into Portugal, but the country’s biggest draws for most foreign investors are as follows:

  1. A steadily growing, developing and diversifying real estate market, with residential and commercial properties available to budgets.
  2. Extremely attractive real estate prices compared to other European markets, averaging around €2200 per square meter, compared to the EU average of €4000 per square meter.
  3. A comparatively favorable tax system that does not excessively or unfairly squeeze foreign investors looking to buy Portuguese properties.
  4. One of the EU’s most desirable seasonal rental markets, with as many as 23 million tourists descending on Portugal’s main towns, cities and resorts each year.
  5. The country’s Golden Visa scheme makes it quick and easy for those who buy into the country to qualify for EU residency or citizenship. 
  6. A fantastic place to call home or to own a second property, with exceptionally high living standards and comparatively low living costs.

Coupled with the potential to generate excellent capital gains on all types of property investments, the appeal of the Portuguese real estate market is easy to understand.

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