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What will happen in Portugal’s real estate market? Will prices go up or down? Is Lisbon still a hotspot for foreign investors? How is Portugal’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Portugal, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
How this content was created 🔎📝
Fact-checked and reviewed by our local expert
João Morais 🇵🇹
Founder | Real Estate Advisor, at Wilderness Investments
1) More Asian investors will be interested in Portugal’s residential real estate market
Asian investors are increasingly eyeing Portugal's real estate market for several compelling reasons.
Since 2012, they've poured €4.8 billion into Portuguese properties, a clear sign of their growing interest. This substantial investment highlights Portugal's appeal as a prime destination for Asian buyers.
Direct flights are making a big difference too. With new routes like Korean Air's direct flights from Seoul to Lisbon, it's now easier than ever for Asian investors to visit and invest in Portugal.
Companies like Juwai IQI are expanding into Portugal, aiming to connect overseas property buyers with local real estate. This move is part of a strategy to boost their global presence and make it simpler for Asian investors to enter the Portuguese market.
These developments are not just about convenience; they reflect a strategic push to enhance connectivity and accessibility between Asia and Portugal. This growing link is crucial for fostering investment opportunities.
As these trends continue, it's clear that Portugal is becoming a hotspot for Asian real estate investment, driven by strategic expansions and improved travel links.
Sources: Online Marketplaces, The Portugal News, Benoit Properties
2) More foreign investors will focus on Portugal's interior regions for investment opportunities
Foreign buyers are eyeing Portugal's interior regions for some smart investment opportunities.
Why? Well, property prices in coastal hotspots like Lisbon have skyrocketed, making them less affordable. In 2023, Lisbon saw a price jump of over 10%, with some areas hitting a whopping 10,000 euros per square meter. So, investors are naturally looking inland where prices are more reasonable.
The Portuguese government is sweetening the deal with incentives like tax breaks and subsidies for those investing in the interior. These perks are aimed at urban rehabilitation and energy efficiency, which not only revitalize areas but also preserve their historical charm. It's a win-win for investors and the community.
Plus, the infrastructure in these regions has gotten a major boost. Optical fibre now covers 90% of Portuguese households, including 70% in rural areas. This means reliable internet for remote workers and digital nomads, making these regions even more attractive.
With these developments, interior regions are becoming more accessible and appealing to foreign buyers. The combination of lower property prices, government incentives, and improved connectivity is hard to resist.
Sources: Future Procedure, Portugal Global, Idealista
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Portugal versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Price growth in Lisbon's historic areas will slow as new developments in the outskirts draw more buyers
In 2023 and 2024, Lisbon's historic neighborhoods like Alfama and Bairro Alto saw a slowdown in price growth.
While these charming areas experienced only modest increases, ranging from 0.1% to 12.4%, the outskirts tell a different story. New developments in places like Campolide are booming, with prices jumping by 17.7%. This shift shows that buyers are drawn to the modern amenities and larger spaces these areas offer.
Suburban spots like Cascais and Sintra are also gaining traction, especially with families. Their appeal lies in their proximity to beaches, parks, and schools, making them ideal for those seeking a balanced lifestyle. This growing popularity is pushing up property values there, which in turn affects the demand in Lisbon's historic center.
People are increasingly favoring modern conveniences and more spacious homes, which are more prevalent in these new developments. This change in buyer preferences is a major reason why the outskirts are thriving compared to the historic heart of Lisbon.
For those considering a move, it's worth noting that the allure of Lisbon's historic charm is being rivaled by the practical benefits of suburban living. The trend is clear: modern living spaces are becoming more desirable, and this is reshaping the real estate landscape.
As the outskirts continue to develop, they offer a compelling alternative to the traditional city center, providing a mix of modernity and convenience that many find hard to resist.
Sources: GuestReady, Home in Portugal, WithPortugal
4) Rental yields in the Algarve will remain stable because of steady tourist demand
The Algarve is a top tourist destination in Portugal.
In August 2024, the Algarve saw 3.2 million overnight stays, highlighting its strong appeal. This popularity ensures a steady flow of visitors, making it a prime spot for property investment.
Rental yields in the Algarve are stable, with an average of 5.6 percent in 2024. This is largely due to the consistent demand for short-term rentals, driven by both local and international tourists who flock to the region year-round.
Real estate agencies in the Algarve report a robust market for short-term rentals. This is further supported by platforms like Airbnb, where bookings continue to rise, showcasing the Algarve's lasting allure.
Investors can feel confident in the Algarve's rental market, as the region's tourist demand remains unwavering. This consistent interest from visitors ensures that rental properties are in high demand, providing a reliable income stream.
With its beautiful beaches and vibrant culture, the Algarve is not just a vacation spot but a lucrative opportunity for property buyers looking for stable returns.
Sources: ETIAS, Portugal Buyers Agent
5) Short-term rental investments will surge in Silver Coast coastal towns as tourism increases
Coastal towns on the Silver Coast are gearing up for a boom in short-term rental investments thanks to a surge in tourism.
In early 2024, Portugal saw a 7.7% rise in tourists and a 7.1% increase in overnight stays compared to the previous year. This uptick means more people are visiting, and they all need places to stay, which is great news for property investors.
The Silver Coast is catching the eye of international buyers, leading to a rise in property demand and prices. Investors are seeing the potential for profit, making it a hot spot for short-term rental opportunities. As more tourists arrive, expect higher occupancy rates for these rentals.
The Portuguese government is also playing a part by promoting tourism through initiatives like the Cross-Border Tourism Strategy with Spain. This plan aims to boost tourism in areas like the Silver Coast by improving infrastructure and amenities, making it even more attractive to visitors.
These efforts are likely to make the Silver Coast a prime destination, further increasing the demand for short-term rentals. With more tourists and better facilities, the area is set to thrive.
Sources: CaixaBank Research, Novvanest, MinTur
From this video, we realize that the Silver Coast's boom in tourism, particularly in summer months, is driving significant opportunities for short-term rental investments.
6) Demand for senior-friendly housing in Portugal will grow as the population ages
Portugal's aging population is creating a growing demand for senior-friendly housing.
In 2023, 23.3% of Portugal's population was aged 65 and above, and this number is expected to rise to 26% by 2030. This shift means more people will need homes that cater to their specific needs. Imagine living in a place where everything is designed with your comfort in mind, from wider doorways to easy-access bathrooms.
According to a study by Savills, as people live longer, they want a better quality of life, which is why there's a rising demand for senior living residences. These places aren't just about having a roof over your head; they offer services and amenities that make life easier and more enjoyable for older adults.
In Portugal, there's a noticeable trend in the real estate market towards properties with accessibility features. This isn't just a fad; it's a response to the growing number of older adults needing mobility-friendly homes. Think about homes with ramps instead of stairs or elevators that make getting around a breeze.
As the number of people aged over 80 is projected to increase, the need for healthcare and assisted living facilities will also rise. This means more opportunities for investors and developers to create spaces that are not only functional but also welcoming and supportive for seniors.
For those considering buying property in Portugal, this trend offers a unique opportunity. Investing in senior-friendly housing could be a smart move, given the increasing demand for such properties. It's not just about buying a house; it's about investing in a future where comfort and accessibility are key.
Sources: The Global Economy, UNECE Report, Savills Study
7) Multi-generational living will become more popular, shaping new residential designs
In Portugal, multi-generational living is becoming increasingly popular.
This shift is largely due to the country's aging population, which is among the highest in Europe. By 2023, there were 188.1 elderly people for every 100 young people, showing a significant rise in the elderly demographic. This change is affecting housing demands, with more families looking for homes that can accommodate multiple generations under one roof.
Another reason for this trend is the rising cost of elderly care facilities. Many families are opting to live together to better manage these expenses. In 2022, there were already 1.2 million households with a parent aged 80 and over living with them, and this number is expected to grow. This economic pressure is pushing families to unite, making multi-generational living a practical choice.
Cultural preferences in Portugal also support this shift. The country has a strong tradition of family-centric living, which increases the demand for larger homes that can house extended families. This cultural aspect, combined with economic factors, is driving the preference for multi-generational living arrangements.
In the property market, developers are taking note of these trends. New residential developments are increasingly designed to cater to multi-generational families, offering features like separate living areas and adaptable spaces. This approach not only meets the current demand but also anticipates future needs as the trend continues to grow.
For potential property buyers, understanding this trend is crucial. Investing in homes that accommodate multi-generational living could be a wise decision, as these properties are likely to remain in high demand. This trend is reshaping the housing landscape in Portugal, making it an exciting time for those looking to invest in the property market.
Sources: Hines, Statistics Portugal, eSales International
8) More first-time buyers will enter the market due to changes in property tax laws
Changes in property tax laws are making it easier for first-time buyers to enter the market.
In 2023 and 2024, the Portuguese government rolled out some helpful measures for young buyers. If you're under 35, you can enjoy exemptions from the IMT and Stamp Tax, which really cuts down the costs of buying a home. This is a big deal because these taxes can add up quickly, making homeownership feel out of reach for many.
Another great perk is the government's guarantee of up to 15% of the property's value. This means you don't need a huge deposit to get started, which is often a major hurdle for young people. Thanks to this, more young folks are jumping into the housing market, and it's showing. In the first half of 2024, there was a 3.1% rise in housing transactions, a clear sign that these changes are working.
For those under 35, there's also the option of getting financing for up to 100% of their first home. This makes the mortgage process a lot smoother and less stressful. With these changes, the buzz in the media and real estate circles is all about how more young people are taking the plunge into homeownership.
These tax law changes are not just numbers on paper; they're making a real difference. Young buyers are finding it easier to step into the market, and the increased activity is proof that these measures are effective. It's a good time to be a first-time buyer in Portugal.
Sources: Global Property Guide, Portugalist, Togofor Homes
Our team found this video discussing new laws in Portugal aimed at young homebuyers, highlighting exemptions from key taxes like IMT and Stamp Duty to encourage first-time buyers.
9) Demand for eco-friendly homes in the Algarve will rise as buyers become more environmentally conscious
The Algarve is seeing a big shift towards eco-friendly homes as more buyers care about the environment.
In 2023, Portugal saw a boom in eco-friendly home construction, with developers focusing on sustainable and energy-efficient designs. Take Natura Village in Vilamoura, for example, where luxury meets nature-inspired living.
Surveys show that Portuguese buyers prefer sustainable homes. The European Investment Bank found that many are ready to change their lifestyles for the environment, and this is clear in the Algarve's real estate market, where eco-friendly features are a big selling point.
The Portuguese government is also helping out with subsidies and tax incentives for sustainable home construction. These perks make eco-friendly homes more appealing to buyers who want to invest in properties that are built to last.
Sources: What Algarve's Property Market Data Reveals for 2024, Construction and Housing - Statistics Portugal, High demand for Portugal's sustainable homes, The changing climate: consequences for the Algarve and the real estate market
10) Demand for rentals near universities will rise as more international students arrive
Portugal is becoming a hotspot for international students, with over 74,000 enrolling in the 2022/2023 academic year.
This surge means more students are looking for places to live, especially near universities. Off-campus housing is popular because it's often cheaper and closer to lively city centers with better amenities.
There's a buzz about a shortage of student accommodation in university towns. This lack of housing, paired with the influx of international students, is pushing up demand for rentals.
For those considering buying property, this trend is a golden opportunity. Investing in rental properties near universities could be a smart move, given the steady stream of students needing housing.
Many students are drawn to Portugal not just for education but for its vibrant culture and lifestyle. This makes properties in city centers even more appealing as they offer a taste of local life.
With the rental market heating up, landlords can expect a competitive edge by offering well-located, affordable housing options to these students.
Sources: European Commission, Erudera, University World News
11) Demand for larger homes with outdoor spaces will grow in Lisbon's suburbs as families look for more room
In recent years, there's been a noticeable shift in housing preferences around Lisbon, with suburban areas becoming more attractive due to rising property prices in the city center.
Central Lisbon's average asking price is a hefty €6,009 per square meter, while in the Lisbon Metropolitan Area, it's a more affordable €4,061. This price difference is pushing families to consider the suburbs, where they can get more space for their money.
The trend of remote work is another game-changer, allowing families to live further from city centers. With this flexibility, people are opting for larger homes with outdoor spaces in suburban areas, without the stress of long daily commutes.
Post-pandemic, there's a clear preference for spacious living environments. Many now value having outdoor spaces and larger homes, making suburban areas even more appealing.
In 2023, the Greater Lisbon region saw a significant portion of home sales, with a notable number involving international buyers. This shows a growing interest in suburban areas, as foreign buyers are drawn to the space and affordability.
Improved infrastructure and public transportation links between Lisbon and its suburbs have made these areas more accessible, further boosting their appeal. This means suburban living is more convenient than ever, attracting families seeking a better quality of life.
Sources: Portugal Buyers Agent, arXiv, CaixaBank Research
Don't buy the wrong property, in the wrong area of Portugal
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12) Fewer buyers will invest in historic properties due to high maintenance costs
Interest in historic properties is dropping because of rising maintenance costs.
In Portugal, keeping up with utilities like gas, water, and electricity can cost between €60 to €150 monthly. This adds up, especially for those eyeing older homes. Buyers are cautious about the financial load of maintaining these charming yet demanding properties.
Take Lisbon, for example. Many buildings there, especially those built before 1755, have structural issues and are earthquake-prone. Fixing these problems isn't cheap. Renovating such homes requires not just money but also specialized skills and strict adherence to conservation rules, making it a tough and costly endeavor.
People are now leaning towards modern, energy-efficient homes. This shift is fueled by a desire for low-maintenance living and better energy efficiency. Buyers want homes that are easier to manage and cheaper to run, which is why historic properties are losing their appeal.
Modern homes promise lower upkeep costs and better energy performance. This is a big draw for buyers who are increasingly looking for properties that won't break the bank in terms of maintenance.
As a result, the charm of historic homes is overshadowed by the practical benefits of newer constructions. The trend is clear: people want homes that are easy to maintain and energy-efficient, leaving historic properties in the dust.
Sources: Imin Portugal, Blast Advisors, IITK, Idealista
13) Luxury property prices in Portugal will keep rising due to high demand and limited supply
Portugal's luxury real estate market is booming, and it's not slowing down anytime soon.
In the past few years, property prices in Portugal's luxury segment have surged at twice the rate of those in the UK, EU, and North America. This is mainly because there's a huge demand from international buyers, but not enough properties to go around.
Last year, only 20,000 high-end properties were built, a stark contrast to the 200,000 a decade ago. This scarcity has pushed up prices significantly. The Portuguese Golden Visa program has also played a role, attracting over 75,000 international expats, many of whom are wealthy individuals drawn to Portugal's rich culture and top-notch construction.
Tax incentives like the Non-Habitual Residency program are another big draw for foreign investors. Even with changes expected in 2025, these incentives are still enticing. Portugal's allure as a luxury destination, especially in the Algarve, offers investors not just a solid investment but also a fantastic lifestyle.
With limited supply and high demand, the luxury segment in Portugal will continue to see price increases. The combination of cultural appeal, quality construction, and favorable tax conditions makes it a hot spot for high-net-worth individuals.
Sources: Live Algarve, High Net Worth Immigration, Chris Cruises
14) Coastal property demand will decrease due to environmental worries and rising sea levels
Coastal properties in Portugal are under the spotlight due to environmental concerns and rising sea levels.
Along the Portuguese coast, erosion is a big issue, with the land disappearing at about 1.13 meters each year. Some spots are hit even harder, leading to the loss of 1320 hectares of land from 1958 to 2021, impacting nearly half of the sandy beaches. This erosion is a major factor in why these properties are being scrutinized.
While the south coast hasn't seen much change in storminess, the west coast is dealing with increased wave energy. This, along with rising sea levels, is speeding up erosion. Experts predict sea levels could rise by 10 to 20 centimeters by 2050, with a faster increase later on. This will especially affect areas like the Ria Formosa, known for its lagoons and estuaries.
The Portuguese government is changing how it manages the coast. Instead of building more groins and seawalls, they're focusing on sustainable solutions like beach and dune nourishments and sand fencing. This shift shows they're serious about tackling the challenges of rising sea levels with integrated coastal management.
Insurance companies are likely to hike premiums for coastal properties, a common practice in disaster-prone areas. This financial angle, along with media reports on environmental risks, is shaping real estate trends. Buyers are becoming more cautious about the risks of living near the coast, which might lead to a shift in demand away from these vulnerable areas.
Sources: ESRI Community, Climate Change Post, Tomorrow Algarve
From this disucssion between experts, we realize the environmental challenges coastal properties face due to storm surges, sea-level rise, and temperature changes, which lead to increased scrutiny.
15) Sustainability will drive property buying choices
Sustainability is now a major factor when buying property in Portugal.
People are increasingly looking for eco-friendly homes due to environmental concerns and new regulations. This shift is largely because sustainable building materials are now more available and affordable, making it easier to develop green properties. In fact, 83% of investors in Portugal expect tenants to demand more sustainable living options.
The Portuguese government is also pushing for sustainability in real estate. They've rolled out tax breaks for green buildings and grants for energy-efficient upgrades. These incentives are nudging developers to go green, aligning with both market trends and stricter building codes.
In Portugal, the trend towards sustainability is not just about being eco-friendly; it's also about cost savings. Energy-efficient homes can significantly reduce utility bills, making them attractive to both buyers and renters. This financial benefit is a key driver for the growing interest in sustainable properties.
Moreover, the focus on sustainability is reshaping the real estate market. Developers are increasingly incorporating green spaces and renewable energy sources into their projects. This not only meets regulatory requirements but also enhances the appeal of properties to environmentally conscious buyers.
As the demand for sustainable homes rises, the real estate market in Portugal is expected to see a shift towards more eco-friendly developments. This trend is likely to continue as both buyers and investors recognize the long-term benefits of sustainable living.
Sources: eSales International, PR Newswire, Constructive Voices
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.