Is buying a property in Baixa (Lisbon) a good investment?

Last updated on December 29, 2023

Yes, the analysis of Lisbon's property market is included in our pack

If you've admired the historic streets and cultural attractions in Baixa, you may have thought about investing in property in this Lisbon district.

Is it a good idea though? What's the current state of the real estate market in that area? Are property values appreciating or depreciating? Are investors seeing returns on their real estate investments? How's the demand for rentals?

We'll answer all these questions for you! When building and updating our property pack for Portugal, our team has been researching and surveying this area. In fact, there is significant customer interest in investing there. Therefore, we believe it would be beneficial to include some information about it in our property pack.

Why do property buyers like investing in Baixa (Lisbon)?

Baixa in Lisbon holds a special allure for property buyers distinguishing itself from other real estate markets in several key ways.

Nestled at the heart of Lisbon, Baixa is renowned for its unique blend of historical charm and modern convenience.

This area, often referred to as the downtown of Lisbon, is a vibrant hub of activity, offering a rich tapestry of cultural, retail, and culinary experiences. Its grid-like street layout, a rarity in Lisbon's generally winding alleyways, adds a unique urban character, making navigation easier and more intuitive.

What sets Baixa apart from other areas in Lisbon is its seamless fusion of old-world architecture and contemporary lifestyle. While neighborhoods like Alfama or Bairro Alto offer a more traditional, albeit less modernized, Lisbon experience, Baixa strikes a balance, preserving its historical facades while housing modern amenities within.

This blend is particularly appealing to those who appreciate the historical significance but don't want to compromise on modern comforts.

Baixa's popularity as a prime real estate location surged notably after Portugal's economic recovery post-2010 and with the introduction of the Golden Visa program, which attracted international investors.

This popularity isn't just a passing trend. The sustained interest in Baixa is backed by ongoing urban revitalization projects and the area's enduring appeal as a tourist destination. These factors not only make it a desirable place to live but also a wise investment choice, as properties here are likely to appreciate in value.

The area attracts a diverse demographic, from young professionals drawn to the urban lifestyle to retirees who appreciate the area's accessibility and cultural richness.

Additionally, it's a hotspot for expatriates and investors looking for a blend of cultural immersion and investment potential. This diverse mix contributes to the vibrant, cosmopolitan atmosphere that defines Baixa.

However, it's important to recognize some of Baixa's potential drawbacks. The very factors that make it attractive, its central location and popularity can also lead to drawbacks like higher property prices and a bustling, sometimes crowded environment, especially during peak tourist seasons.

The area can also be noisier and busier than more residential neighborhoods, which might not appeal to those seeking a quieter, more laid-back lifestyle.

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Why is Baixa (Lisbon) a nice place to live?

Living in Baixa offers a unique experience that blends the charm of historical architecture with the pulse of modern urban life.

The streets of Baixa are lined with a variety of cafes, restaurants, and shops, offering a vibrant day-to-day life. The area is renowned for its historical buildings like the majestic Praça do Comércio and Rossio Square, which are not just tourist attractions but also form the backdrop of everyday life for residents.

The expat community in Baixa is quite thriving, thanks to Lisbon's popularity among international residents.

This multicultural environment makes it easier for newcomers to integrate, with many English-speaking services and international social groups available. The presence of expats adds to the cosmopolitan feel of the area, making it a melting pot of cultures and languages.

However, the cost of living in Baixa can be relatively high compared to other parts of Lisbon. Property prices and rents in this central area reflect its popularity and central location. But, despite the higher living costs, many find the quality of life and the unique atmosphere worth the investment.

In terms of safety, Baixa is generally considered safe, especially in comparison with other major cities. Like any bustling urban area, it's always wise to be aware of your surroundings, but the district doesn't have significant safety concerns.

Baixa is well-equipped with amenities and facilities. For shopping, you have the Armazéns do Chiado, a popular shopping center. In terms of healthcare, the Hospital São José and the Hospital Santo António dos Capuchos are nearby.

Although Baixa itself may not have a large number of schools, there are several reputable institutions in the surrounding areas, such as the St. George's School for international education.

The quality of infrastructure in Baixa is generally good. The streets and buildings, while historic, are well-maintained. Utilities and services like electricity, water, and internet connectivity are reliable and of high quality.

The internet connectivity, in particular, is excellent, catering well to the needs of both residents and the many businesses operating in the area.

Access to and from Baixa is one of its strong suits. It's centrally located and well-connected to the rest of Lisbon. Major transport hubs, like the Lisbon Airport, are easily accessible via public transport or a short drive.

Speaking of public transportation, Baixa has excellent options, including metro, buses, and trams. The Baixa-Chiado metro station is a central node connecting various lines, making it easy to navigate the city.

How much does it cost to buy real estate in Baixa (Lisbon)?

If you need a detailed and updated analysis of the prices, rents and yields, you can get our full guide about real estate investment in Portugal.

Buying property in Baixa can be an exciting prospect but it's important to understand the market dynamics and what's available.

In Baixa, the most common types of residential properties are apartments, including renovated units in historic buildings and occasionally, newer developments. Houses and luxury villas are more rare in this densely built-up, urban area.

The high demand in Baixa is primarily for apartments, particularly those that blend historic charm with modern amenities. This demand is driven by the area's central location, rich cultural heritage, and vibrant lifestyle.

It's a hotspot for both locals and international buyers who are drawn to the unique character of the neighborhood and the conveniences it offers.

Regarding the property market, Baixa mainly consists of resale properties, given its historical nature. However, there have been new developments as well, typically involving the refurbishment of older buildings into luxury apartments.

These developments are in line with the city's efforts to preserve the architectural integrity of the area while meeting modern living standards.

Now, let's talk about pricing. The price range for properties in Baixa can vary widely depending on the property's size, condition, and exact location. Prices per square meter in Baixa could range anywhere from approximately €4,000 to over €7,000. These figures, however, are subject to change based on market dynamics and should be researched for the most current information.

Over recent years, property values in Baixa have seen a steady increase. This trend is attributable to Lisbon's growing popularity as a global city, increased foreign investment, and the overall appeal of living in a culturally rich, historically significant neighborhood.

Looking ahead, there might be upcoming developments or city planning changes that could affect property values. Projects like the renovation of old buildings or infrastructure improvements typically boost the area's appeal, potentially leading to an increase in property values.

Predicting the real estate market's future can be tricky, but Baixa, with its enduring appeal, is likely to remain a sought-after location.

Factors that indicate a potential increase in value include ongoing urban renewal projects, Lisbon's growing status as a European tech hub attracting international professionals, and the general trend towards urban living.

Where is the best area to buy a property in Baixa (Lisbon)?

When considering the best area to buy a property in Baixa it's important to recognize the diversity within this neighborhood.

Baixa, often referred to as the heart of Lisbon, has various parts that offer different atmospheres, property types, and price ranges.

Firstly, the area around Praça do Comércio and Rua Augusta is highly sought after due to its proximity to the Tagus River and the main commercial streets. This part of Baixa is bustling with activity, filled with shops, cafes, and street performers.

Properties here are often in historic buildings, with many apartments having been beautifully renovated. However, due to its prime location and popularity, prices in this area tend to be on the higher end.

Moving towards Rossio Square and the surrounding streets, you'll find a slightly quieter but equally charming area. Here, the properties are a mix of traditional Lisbon apartments and newer renovations. The atmosphere is a blend of tourist activity and local daily life.

Prices here might be slightly more affordable compared to the riverfront areas, but they are still reflective of Baixa's overall desirability.

An up-and-coming area within Baixa to keep an eye on is around the São Nicolau and Madalena parishes. These areas are seeing a gradual transformation, with more renovations and improvements.

They offer a more authentic Lisbon experience and might present good value for property buyers, especially those looking for a blend of traditional charm and potential for appreciation in value.

On the other hand, areas immediately adjacent to major tourist attractions, while attractive, can sometimes be less desirable for long-term living due to the constant flow of tourists and the associated noise and bustle.

Streets that are heavily commercialized may also lack a sense of residential community, which might be a consideration if you're looking for a homelier environment.

When choosing the best area for buying a property in Baixa, it's crucial to consider your personal preferences and lifestyle needs. If you enjoy being at the center of activity, closer to the riverfront or main squares might be ideal. For a quieter but still centrally located option, look towards the areas slightly removed from the main tourist hubs.

Keep in mind that while some areas may offer lower prices, they might also require more investment in property renovation or may not appreciate in value as quickly as the more established parts of Baixa.

Here is a summary table to help you visualize better. If you need more detailed data and information, please check our property pack for Portugal.

Area	Atmosphere	Property Types	Price Range	Comments
Praça do Comércio / Rua Augusta	Bustling, Touristy	Historic Renovated Apartments	High	Prime location, popular with tourists.
Rossio Square Area	Charming, Quieter	Traditional and Renovated Apartments	Moderate to High	Blend of tourist and local life, more affordable than riverfront.
São Nicolau / Madalena	Authentic, Up-and-coming	Traditional, Potential Renovations	Moderate	Good value, more authentic experience, potential for future appreciation.
Near Major Tourist Attractions	Very Busy, Commercial	Varied	Varies	Less desirable for long-term living due to tourist traffic.

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Is there a strong rental demand in Baixa (Lisbon)?

In Baixa there's indeed a strong rental demand which can be attributed to several factors including its central location, historic charm, and vibrant atmosphere.

The demand is significant in both short-term and long-term rentals, but each has its own characteristics and target demographics.

For short-term rentals, the demand is primarily driven by tourists and business travelers. Baixa, with its proximity to major tourist attractions like Praça do Comércio and Rossio Square, is a prime location for visitors looking to stay in the heart of the city.

Properties that are most sought after for short-term rentals are furnished apartments that offer modern amenities. They're often in historic buildings, providing an authentic Lisbon experience. In terms of specific areas, properties closer to the riverfront or main squares, like around Rua Augusta, are particularly popular due to their convenient location.

The profile of potential tenants for short-term rentals in Baixa typically includes international tourists, couples, small families, and business travelers. These tenants are often looking for properties that are well-furnished, have modern facilities like Wi-Fi, and are centrally located to easily explore the city.

For long-term rentals, the demand comes from expatriates, professionals working in Lisbon, and sometimes students. This demographic tends to look for comfortable living spaces that can support a more settled lifestyle.

They prefer apartments that are functional for daily living, with a preference for modern or recently renovated spaces. In this segment, areas like the quieter parts of Baixa, slightly away from the main tourist thoroughfares, are more desirable.

Amenities that can help reduce vacancy and attract tenants include reliable high-speed internet, modern appliances, proximity to public transport, and being in walkable areas with access to shops, cafes, and other daily necessities. Properties that offer these conveniences are more likely to maintain consistent occupancy.

Regarding potential returns on investment, properties in Baixa can offer attractive yields, particularly due to the high demand. For short-term rentals, properties can yield higher returns, especially during peak tourist seasons.

However, this comes with the need for more active management and potential seasonality in income. Long-term rentals might offer slightly lower returns but provide more stable and predictable income.

In terms of property types, renovated apartments in historic buildings are getting more demand. They offer the charm of traditional Lisbon architecture combined with modern living standards, appealing to both short-term and long-term tenants.

As the area continues to attract both tourists and long-term residents, these types of properties could potentially provide better yields due to their unique appeal and consistent demand.

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Is it easy to buy a property as foreigner in Baixa (Lisbon)?

Before we answer the question, please know that we have an article dedicated to the experience of buying real estate as a foreigner in Portugal.

Buying a property in Baixa, Lisbon, as a foreigner is generally straightforward, but there are important aspects to consider to ensure a smooth process.

Firstly, there are no specific regulations or restrictions for foreign buyers in Portugal. People from all nationalities can purchase property, making it an attractive market for international investors. This openness has been a significant factor in the popularity of Lisbon's real estate market among foreign buyers.

It typically involves selecting a property, agreeing on a price, conducting legal checks, signing a preliminary contract, paying a deposit, and finally completing the transaction with a notary and registering the property. It's a process that requires due diligence at every step to ensure everything is legally sound.

One of the primary risks associated with property investment in Baixa is the potential for overpaying due to the area's popularity and high demand. The market can be competitive, and prices may be inflated, especially for properties in prime locations.

Additionally, renovation costs can be higher than expected, particularly for historic properties, which are common in Baixa. These buildings often require adherence to strict renovation guidelines to preserve their historical and cultural value.

A classic pitfall for foreign buyers in Portugal, including Baixa, is underestimating the importance of legal due diligence. It’s crucial to ensure the property has a clean title, no outstanding debts, and complies with local building regulations.

Another common mistake is not adequately accounting for transaction costs, such as property transfer taxes, notary fees, and legal fees, which can add a significant amount to the total cost of the purchase.

Working with a local real estate agent or lawyer is highly advisable. They can provide invaluable guidance through the complex process, help navigate local laws and regulations, and ensure that all legal aspects of the purchase are handled correctly. They can also assist in negotiating the best possible deal and avoiding common pitfalls.

As for exit strategies, property investors in Baixa commonly consider either selling the property after a period of appreciation or renting it out. The area's popularity as a tourist and expat destination makes it an attractive market for both short-term and long-term rentals.

Selling the property can be a lucrative option, especially if the market conditions are favorable, and the property has appreciated in value.