5 Reasons to Invest in Portugal’s Real Estate Market
Portugal offers nowadays a stable real estate market, with bigger diversity and dimension, where more demand sources exist and coexist, more diverse investors origins, more promotor’s profiles, in an economically favorable scenery and in a context of bigger geographical reach where new promising destinations have been emerging.
The real estate sector, therefore, holds an unmatched relevancy in the national economic panorama. According to the National Statistics Institute, 178.891 properties where sold in 2018, which correspond to 490 houses sold each day. These transactions total 24,1 billion euros, an amount equivalent to 12% of the country’s GDP.
Portugal is living an optimistic phase in the real estate sector, considering that the investment in Lisbon and Oporto’s historic centers continues to rise. Besides, the Portuguese economy is healthily growing and Lisbon is perceived as an international destination for tourists, workers, students, real estate developers and investors.
But what are the reasons why this country is so adored by, not only the Portuguese itself, but also by foreigners?
According to the Global Peace Index (GPI), Portugal is currently the 3rd safest country in the world, having improved significantly in this matter in the last five years.
The Social Progress Imperative keeps a ranking of the quality of life in 132 countries, where they highlight safety has one of the main reasons to choose Portugal, where they consider Portugal the 17th safest country in the world.
It is safe to walk on the street at night, women have the same rights has men, kids play on the streets and the risk of the terrorist attacks is relatively low. It is common for people to visit the city center or go to a concert on the town square and bring their children. The ATM machines are located on the exterior of the buildings as well as the interior and the taxi drivers don’t have armored cabins on their vehicles.
There is a general feeling of safety and the sense of fear is not common in the Portuguese culture.
Safety is one of the most fundamental reasons when choosing Portugal as the area of residency, especially amongst Brazilian citizens. Portugal continues to be a safe harbor for real estate investment and provides excellent returns.
An authentic characteristic that distinguishes us as a nation is knowing how to welcome people into our country. We know how to serve, create relations, generate empathy and interact with tourists who wish to enjoy unique and singular experiences.
According to the InterNations study from 2018, Portugal is the most welcoming country in the world. InterNations is the biggest information network for people that live and work abroad, and they analyzed data from about 13.000 expats from 188 countries. We are an extremely welcoming nation that appreciates showing all corners of its home.
It is true that we are located in Europe’s periphery, but Portugal is still a strategic point of interest, being a privileged platform for connections and trade between the different continents, with airports and low-cost routes for all the main European capitals. It is also to note that Lisbon is the closest capital to Africa and America.
For its geographical condition between continents, for its history and its political international relations, remains a singular country in the European panorama and a point of access to relevant markets.
The system of tax incentives and residency permits
Portugal maintains one of the most advantageous tax regimes for “non habitual residents” since 2009, which can be beneficial for retirees, pensioners, specialized workers and foreigner investors. There are almost 30.000 non habitual residents benefiting from this system, with the French leading the ranking.
Broadly speaking, the non-habitual residents’ regime allows investors to benefit from a special 20% tax regarding income derived from dependent work and corporate and professional income.
On the other hand, as long as certain circumstances predicted in the law are verified, the system allows an exemption on tax returns in Portugal regarding income generated overseas, like enjoying pensions free from taxes for 10 years in both Portugal and the country source of that income.
Besides the NHR Program, since 2012 is available the Golden Visa program. This one is destined to citizens from extra-EU countries and it is constituted of a residency permit for corporate or real estate investment activities within Portugal. Chinese citizens are the ones who invest the most trough this program, that have already issued more than 19.000 golden visas and more than 17.000 renovations, according to the numbers from SEF (the Immigration and Borders Service) and the Fund for International Relations from the Ministry of Foreign Affairs.
The Tech Visa program, enrolled into the “National Strategy for Entrepreneurship” from StartUP Portugal, aims to attract international talent and offer an alternative for companies from extra-EU countries that develop activities in the tech and innovation fields. The Tech Visa aims, then, to make visa and residency permits issuing for highly qualified workers more efficient, which is also going to allow companies to attract and retain specialized talent.
Huge real estate potential
Portugal is benefiting from an opening in banking, with interest rates more and more attractive and satisfying returns on properties, what makes investing in real estate more appealing. For the Portuguese, real estate assets are perceived as secure investments compared to other financial products. According to Deloitte’s Portuguese Real Estate Investment Survey 2018, the investment strategy continues to be the first choice for players in this area.
Consequently, Portugal is on the radar for foreigner investors, specially the more central and touristic zones. According to ListGlobally, Portugal was the most wanted destination for foreigners worldwide in 2018, with 20% of international house purchases focusing on Portugal. To note that, despite the general price increase, Portugal continues to be one of the countries where buying a house is cheaper.
The Portuguese capital was considered, according to PwC’s Emerging Trends in Real Estate 2019, the most attractive city to invest in 2019, overtaking cities like Berlin, Dublin and Madrid. In fact, the promotion of the country abroad and the rise in tourism make Lisbon an internationally renowned city. According to the National Statistics Institute, in 2018 in Lisbon’s Metropolitan Area alone were transacted 62.000 properties, the equivalent of 35% of the national transactions.
In addition, there are also other important factors to take in consideration, like:
- Social and political stability
- The geo-strategic and privileged relations with the European Union, Africa, Brazil and Macau. Portugal is an open door for a market of 700 million Europeans and more than 260 million of Portuguese speakers worldwide
- The huge value of the Portuguese specialized labor and the quality of Portuguese universities.
The biggest challenge that Portugal faces is precisely the fact that it continues to be the favorite destination for foreigners looking for a diversified supply in housing, culture and quality of life.