Foreign Real Estate Investment in Portugal

Portugal is considered the most dynamic real estate market in Western Europe, and for that contributed the tax benefits and the golden visa, which offer a resident permit if invested 500.000€ in Portugal. And the truth is that foreign investors already invested 4,3 thousand million EUR in Portuguese real estate since this program started, in 2012.
 
This investment helped to transform Lisbon in one of the main tourist destinations in the Western Europe, renewing proprieties and converting some of these in short term rentals. According to the 14^th Edition of the Atlas Hotel Trade of Deloitte, Portugal still beats records in tourism and surpass the 66 million overnight stays in 2018. Comparatively to other European capitals, regarding the occupancy rate, Lisbon (79,8%) exceeded Berlin (79%), Barcelona (77,3%) and Madrid (76,5%) but continues to lag behind Amsterdam (84,1%), London (83%) and Paris (81%).
 
In the last decade, the buildings in the historic area of Lisbon were crumbling, the tiles and the masonry were faded and cracked. According to the Lisbon’s Municipal Chamber, in this locality, in 2012, around 20% of total number of the buildings were in poor conditions or in ruins. But this changed when, in that same year, were introduced the strategies referred above to capture foreign real estate investors. Today, the streets, buildings, apartments and stores are being renovated.
 
This real estate change brought transformations in the social fabric. The suburbs, in the times past, neglected, today are the center of foreign residents and the elected place to install companies. However, due to this price increase, some resident with less resources couldn’t follow the prices requested for the houses and were forced to move out.
 
And this increase of values is promoted not only because foreign investors are buying more houses, but also because they are paying more for it. In 2018, these investors were responsible for the buying of 8,2% of the total of immovable property sold in Portugal but paying an average of more than 171.000€ for each property, which represents 58% more than the average value of the real estate transactions in the country (around 108.000€).
 
Although the French are the ones who buy more real estate in Portugal (19,7% of the total of transactions to foreign) and the Chinese are responsible for only 5,1%, but the average value of the immovable property bought by them was 297.200€, much higher than the average of the foreign investment (171.000€/per immovable property), and the average of all the real estate transactions (108.000€/per immovable property).
 
The number of immovable properties sold for a higher price than 500 thousand EUR to non-residents also increased (representing 7,2% of the total number of real estates acquired by foreign), because of the golden visa program.

By Beatriz Veiga Santos