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Guest Article: Portugal Real Estate Market Beyond 2022 - €280,000 opportunities

Updated: Aug 17, 2022

Following on from our earlier blog post “Golden Visa Changes - Should you rush to meet the deadline?”, guest writer Sr. Rui Inácio talks about the evolution of the Portuguese Real Estate market and where the opportunities lie after 2022, especially in the €280,000 Golden Visa Investment segment.


Sr. Rui Inácio is a Real Estate Consultant with Re/Max Ideal and brings over 12 years’ experience in the Portugal Real Estate market.

 

The last half decade has taken the Portuguese real-estate market for an authentic ascending ride. In all fairness, there was no place to go but up since the hardest and most challenging part of the financial crisis which occurred between 2009-2014. Portugal’s renowned status as a prime tourism destination played a key role in fueling this recovery by generating wealth and employment, as well as attracting foreign investors.


Of course, the COVID-19 pandemic and the travel restrictions caused by it, took a huge toll on the tourism industry, having cost the economy a decrease of nearly 60% in revenue in 2020 in comparison to the previous year, but surprisingly the real-estate industry thrived during this period and continues to grow at a steady pace.


Mr. Ricardo Guimarães, director of “Confidencial Imobiliário”, recently stated that, “the data from August points towards yet another trimester with a noticeably high number of transactions, after a record breaking 50.000 transactions in the previous three months. We are witnessing a level of activity greater than the pre-Covid period at the end of 2019, when the market was at its historic best”. Prices have consequently been on the rise as shown in the following chart (“Evolution of the Post-Covid Housing Prices”):




This is definite reassurance that Portugal is currently a sound investment, but where exactly are the opportunities for new Golden Visa seekers?


With the new Portugal Golden Visa changes which will be in force as of January 1st, 2022, you will no longer be able to invest in a residential property in major cities such as Lisbon or Porto or in coastal towns of the mainland. This may seem like a disadvantage but, in my opinion it’s quite the opposite. By opting to acquire and renovate property that is more than 30 years old, OR is in an urban rehabilitation area, and is located in a low-density populated area in Portugal, the minimum investment drops to €280,000. In cities where there is high demand for rental properties you can easily secure returns on your investment from 3-5% or more.


In places like Évora, for example (UNESCO World Heritage), where you have over 8000 university students, large international companies such as Embraer and Capgemini that are constantly recruiting, and significant tourist activity (more than 430K guests in 2019, and nearly 40K guests who stayed in AL (Home Stays) as opposed to hotels), great potential for GV investors is evident.

Estremoz, Arraiolos and Montemor-o-Novo are other examples of interesting places to consider in the Alentejo region. These areas are well known for their historic, cultural and natural values and, given that they are just over an hour’s drive from Lisbon, they are also attractive to both local and foreign tourists.


Fewer coastal areas in southern Portugal are still available but Grândola, Odemira and Aljezur are some of the ones that haven’t yet been removed from the list. The unquestionable natural beauty in these regions and the potential for higher returns on seasonal rentals make them quite enticing, especially if you’re considering using the property yourself for vacationing or retirement.


The potential for investment is greatly present in a series of regions in northern Portugal as well. Whether your goal is traditional rental, eco-tourism, or AL, there are many places to choose from, but I would leave that analysis to a local real-estate agent, as I am a firm believer that one should specialise in a specific geographic area in order to be able to provide knowledgeable and professional advice. As a rule of thumb, you can’t go wrong with investing in University cities where supply of rental properties is invariably inadequate for the student population.


In sum, there are plenty of options in the low-density areas in Portugal. Keep in mind that most regions are easily accessible by highway and are never too far from an international airport. The Portuguese government’s decision to shift investment to the interior of the country was an inevitable strategy, but this is a good thing for foreigners. Although Portugal is small, it’s quite diverse when it comes to what each region has to offer and there are real gems to discover. It is expected that with the changes in the legislation, the prices in these areas, which have been growing anywhere between 5-7% in the last years, will continue to increase. It’s never too early to get a head start.

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