Current Real Estate Market Landscape in Portugal

Six months after the government implemented changes to the Golden Visa program, Portugal’s real estate market continues to show an upward trend in housing prices.

This demonstrates that the Portuguese market continues to offer investment opportunities, even amidst an unprecedented fall in prices in some of the European Union’s most solid countries.

As reported by El País, there was a decrease of 1.1% in 2023, the first such decline since the financial crisis a decade ago. This was more pronounced in Germany and France; due to their relevance in the European market, the results in these countries were decisive in the downward trend shown by Eurostat’s House Price Index for the Eurozone.

But as mentioned earlier, other countries saw an increase. In Spain, for example, prices rose by 4.3%; in Portugal, on the other hand, the increase was 8.2%.

Where do investors’ preferences lie? Mainly in cities like Lisbon, Oporto, and Faro, whether for commercial or residential investments. According to the real estate portal Novvanest, rental profitability figures of between 4% and 6% are observed there.

Rental profitability means the annual rental income of a property divided by its price. Thus, in the well-known tourist sector of Algarve, this figure ranges from 5% to 7%, especially for properties near beaches or places like golf courses.

Data from the Portuguese National Institute of Statistics support these estimates. According to their figures, housing prices have increased by 61.8% in the last 5 years. This means that – for example – if someone bought a villa in Algarve for US$ 425,000 five years ago, it would now be worth around US$ 688,000.

But prices are not the only attraction of Portugal. Its stability must also be taken into account. According to the 2023 Annual Report of the Fragility Index of States, compiled by The Fund For Peace, Portugal has a score of 27.5, well placed on the international spectrum (for comparison, Finland has a score of 16.0, while the United States has 45.3).

In the last 10 years, Portugal has not only managed to maintain economic and social stability but has also reduced its public debt, currently being one of the least indebted countries in the European Union, in what some experts consider a true economic miracle.

On the other hand, projections from the International Monetary Fund estimate a growth rate of 1.7% for 2024, slightly higher than in 2023. Moreover, the average per capita GDP has positively varied by 5.0% in the last five years. This points to a population with more resources available to invest or rent properties, among other aspects.

Could we then say that the current outlook for the Portuguese real estate market is positive? For the portal Investropa, the answer is yes. Economic growth and GDP figures, combined with the fact that the number of new real estate projects has not increased, allow for an estimate that “there will be growth in the number of tenants with high incomes”, which in turn will lead to an increase in rental profitability.

If you are interested in investing in this market, AIM Global is the right firm to advise you. We offer real estate brokerage services in Portugal; we have offices in Lisbon and a team of highly qualified professionals to meet your needs. Schedule a meeting with us now!

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