10 Best Places To Invest In Real Estate In Portugal

10 Best Places To Invest In Real Estate In Portugal

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).

Introduction

Finding the best places to invest in real estate in Portugal may be one of the best things you can do right now as the real estate market gradually returns to normalcy after the pandemic.

More than ever, the tourist community and those wishing to retire in a low-cost nation are paying close attention to Portugal. There are many benefits to living in Portugal, but quality and affordability of life are at the top of the list.

Purchasing a home is a goal for many who want to move to Portugal. However, during the past several years, the real estate market has undergone a substantial transformation, and property prices have also increased dramatically as a result of the pandemic.

Although it would be impossible for us to include them all in this post, Portugal offers many best places where you may buy a home.

10 Best Places to Invest in Real Estate in Portugal

1. Central Portugal and Silver Coast

The Silver Coast and Central Portugal are two of many destinations that most visitors and expats overlook despite them being the best places to invest in real estate in Portugal. 

The “Costa de Prata” is a lengthy stretch of historic coastal settlements that is mostly untouched.

The craggy coastline with its beautiful sandy beaches is ideal for a variety of water activities.

This area is home to three districts that remain among the cheapest places to buy property in Portugal. Aveira, Coimbra, and Leiria are the three cities.

To put that into perspective, the average cost of inmobiliario in the Coimbra area is 1,217 €/m2, whereas the price per square meter in other large cities like Lisbon is 3,773 €.

2. The Algarve

Many areas of the Algarve, including the towns of Aljezur, Castro Marim, Alcoutim, Monchique, and Vila do Bispo, are still regarded as low-density and inland. Additionally, certain parishes in the municipalities of Loulé, Silves, and Tavira are regarded as being inland.

All of them provide breathtaking scenery and real local culture in the least visited regions of the Algarve, giving them both a terrific alternative for investments and a fantastic opportunity to experience a more genuine Algarve.

Since Lagos is only a 30-minute drive from several of these areas, such Aljezur and Vila do Bispo, they are not all that remote in the first place.

Alcoutim, which is regarded as the warmest region of Portugal, is only one hour’s drive from Faro and two hours from Seville if you’re prepared for a journey to Spain.

3. Douro Valley

The Douro Valley, which is located inland from Porto and features endless vineyards along the Douro River, is one of the most sought-after regions in interior Portugal. It is not only near Braga and Porto, but it is also dotted with quaint villages, rural homes, and towns.

All things considered, it is now far less expensive than the Algarve or the Silver Coast, although it is rapidly growing in popularity as a tourist destination.

4. Porto

Porto is one of the best places to invest in real estate in Portugal. Dreamy houses may be found at unbelievable costs. Furthermore, for every 100 euros invested in property, anticipate to receive 12 to 14 euros in annual earnings.

Porto’s tourist population has nearly quadrupled since the entrance of low-cost carriers. The rising popularity of this area provides an excellent chance to rent out your house and generate a consistent income flow.

Porto has an enormous and diversified transportation infrastructure. Even though the city is tiny and walkable, you may simply take a bus or a local cab.

There are several things to do in Porto. The Clerigos Tower, the Crystal Palace Gardens, and the Serra do Pilar are just a few examples of sites you should see.

Everything is dependent on the price you set. Because the inmobiliario market in Porto is not as busy as it is in Lisbon, you will have to work harder to sell your house.

5. Peneda-Gerês

The oldest national park in Portugal is located in this area, which shares a northern border with Spain.

It is a well-known hiking location in the highlands, adjacent to Vila Real, which is a completely low-density region, and Viana do Castelo. Not to mention that it provides a rapid crossing across to Spain’s Galicia.

6. Cascais

The Portuguese municipality of Cascais has grown to be a popular tourist destination. It is located in the Lisbon District. In 2011, there were little over 200,000 people living there.

A stunning seaside view is a great perk of being close to the marina. However, keep in mind that as you approach nearer to the marina or the town’s core, property values increase.

One of the richest municipalities in all of Portugal is thought to be Cascais. The property value quotas in this area are among the highest you will ever pay in the nation.

One of the best places to invest in real estate in Portugal if you’re seeking the upscale property is Cascais.

It’s crucial that you determine whether investing in real estate in Cascais is worthwhile. Many individuals purchase real estate in order to live there, while others do it in order to safeguard their investments. The value of your house in Cascais will thus continue to climb if you can afford it.

The only modes of transportation are local buses and taxis.

On your list of places you must see, be sure to put the Museu Condes de Castro, Praia da Rainha, and, of course, the Old Center of Cascais.

Given that Cascais is close to Lisbon, selling your house here won’t be a problem for you.

7. Alentejo

Alentejo is a well-known region south of the Tejo River famed for its excellent gastronomy, vineyards, castles, and other archaeological monuments.

It’s largely agricultural, with a concentration on cork and olive trees, but it also has two magnificent cities, Beja and Évora, both in low-density inland communities.

The good news about Alentejo is that it is still one of the more cheap areas of Portugal, and practically all of its shore (which is stunning) is classified as inland and low-density, making it an excellent option for Golden Visas in 2022 and beyond.

Alentejo may be the ideal location for you if you’re seeking peace and quiet far from the bustle of Portugal’s largest cities.

Portugal’s broad plains and ancient castles are where history and nature converge. The world has just lately begun to recognize this region’s beauty, and foreigners are starting to show an interest.

Alentejo’s distinction as Portugal’s area with the lowest population density is one of its distinctive features.

Alentejo’s real estate prospects are excellent as a result of recent revisions to the Golden Visa program.

8. Lisbon

Most people wanting to buy real estate in Portugal focus on Lisbon because it is the country’s most well-known and popular city. However, with a little investigation, you’ll discover that it’s not the finest financial alternative.

It all comes down to cost and return on investment.

The top market prices in Lisbon are around 10,000 euros per square meter… comparable to places like Madrid and Barcelona.

The quality of living in Lisbon is excellent. It contains all of the amenities that you would expect from a well-developed city, which explains its appeal among expats.

However, there are more affordable solutions to consider.

Lisbon features a well-developed metro system, trams, funiculars, and urban buses and ferries that travel throughout the city. You won’t have any trouble getting about here.

As a European capital, the city provides a varied range of cultural activities including as concerts, theatre, art museums, music festivals, and just about every other cultural activity you can think of.

There are also many fine eateries in Lisbon. There are several taverns, restaurants, and pubs in this city. Everything may be reached by bus, vehicle, or even on foot.

There is a vast range of neighbourhoods to pick from. Each has its own distinct personality and charm.

In Lisbon, there is a wide range of housing types and prices to suit all likes and budgets.

Lisbon has a large population, and theft and robbery are frequently reported. Take security precautions to secure your property.

9. Madeira Islands

One of the most beautiful locations in the nation is without a doubt this autonomous region of Portugal. Not only that, it is also one of the best places to invest in real estate in Portugal. Without a question, having a home in Madeira is a privilege.

Some of the most breathtaking scenery can be seen there, and it is now receiving the credit it deserves.

There is so much for expatriates to enjoy on this tropical island in the midst of the Atlantic Ocean. It has a semi-tropical climate and is really closer to Africa than Portugal.

Madeira Islands is one of the most expensive real estate markets on this list, yet it is genuinely distinctive both physically and culturally. In fact, during the last two years, real estate prices have increased by 17.4%.

Its capital, Funchal, is the sixth-largest city in Portugal, implying that it is not completely isolated, and its islands are all designated as high-density inland areas of Portugal, implying a minimum investment of €500,000.

10. The Azores

If you’re feeling daring, the Azores could be the spot for you to invest in real estate. It’s been dubbed the “Hawaii of Portugal,” and it’s full with fumaroles, hot springs, caves, and cliffed coastlines.

The Atlantic Ocean is home to the island of Azores, which is similar to Madeira. This area is well-known for its verdant hills and recognizable black volcanic sand beaches. Inversión inmobiliaria on the Azorean islands might be quite profitable.

Nature enthusiasts will like the Azores archipelago. There is a lot to discover in the rocky terrain and stunning surroundings.

It’s a sanctuary for ecotourism, diving, water sports, whale watching, and hiking, so you won’t be bored if those activities interest you. Real estate prices in Madeira are little lower, but they are gradually catching up.

There aren’t many people living on the nine islands that make up the Azores; only 1.7% of the population is made up of foreigners. Which might be advantageous or disadvantageous for anyone seeking to settle in the Azores.

There are several options available for purchasing homes and property!

Things You Should Know Before Investing in Real Estate in Portugal

Cost of Living in Portugal in terms of Real Estate

Due to housing costs, Lisbon has a higher cost of living than Porto and the Algarve. Rent for a three-bedroom apartment in the city center averages 1,700 euros in Lisbon and 1,200 euros in Faro or Porto, the two largest cities in the Algarve.

In comparison to the Algarve, Lisbon will cost 40% more and Porto 16% more for a family with two children.

Outside of Lisbon and Porto’s urban centers, housing costs are lower. In the Almada neighborhood of Greater Lisbon, a three-bedroom apartment rents for roughly 750 euros per month. It will cost approximately 880 euros in Vila Nova de Gaia (Greater Porto).

Although it is not the same as living in the city center, it is a cost-effective choice for people who wish to be near the busy life of major Portuguese cities.

Taxes and Fees

In addition to your real estate investment, taxes will be due. Some of these taxes and fees will be charged at the time of purchase, while others won’t be until after. IMI Transfer Tax and VAT may already be included in part of the fees if you decide to work with a real estate developer.

Upon purchase, you may be required to pay:

• IMT (Property Purchase Tax)
• Stamp Duty
• Notary costs
• Mortgage tax (if you have a mortgage)

IMT (Imposto Municipal sobre Transmisses), generally known as the property purchase tax (also often referred to as IMI Transfer Tax), is one tax you will be required to pay when purchasing the property.

Whether the property is in an urban or rural area, or if it is your primary or secondary dwelling, will all affect the rate.

The tax contains a number of reductions and exclusions, including an exemption if the property was bought by a real estate investment fund, a flat rate of 5% on agricultural properties, and a rate of 6.5% on other commercial sites.

You will also be required to pay a notary charge of about €1,000 and stamp duty on any contracts, bank loans, and other legal papers.

The stamp duty varies according to the value of the property, however for the minimum investment requirements for a Golden Visa, it is 0.8% of the property value.

Additionally, the bank will charge you a mortgage tax if you have a mortgage. This is not the full property; it is 0.6% of the financing value.

Following a purchase, you may be required to pay:

• IMI
• AIMI
• Capital gains tax
• Rental taxes

IMI, or immoveable property tax, is a requirement for all Portuguese property owners. Where you own the property as of the last day of the tax year, you are obligated to pay this tax each year.

Depending on the municipality, the rate typically ranges between 0.3% and 0.45% for urban regions and 0.8% for rural houses.

There are actually a number of ways you might avoid paying IMI. For instance, you can get a three-year exemption if you decide to live in the house or rent it out. Additionally, if the property is going to be renovated, you can obtain a temporary exemption for three to five years.

There are numerous more exceptions, including those that apply if there are children residing there, if the building uses renewable energy, if it is of public interest, or if it is located in a certain location with urban renewal efforts.

You may also be liable to AIMI (Additional Imposto Municipal Sobre Imóveis), generally known as riqueza tax, if your property is valued more than €600,000. The wealth tax is fixed at 0.7%, although it increases to 1% and 1.5% for homes worth over €1,000,000 and €2,000,000, respectively.

If the property is owned jointly, there is a €600,000 deduction for each individual. So, for instance, if a couple owns the house, the wealth tax won’t apply until the property is valued at €1,200,000.

Any profit from the sale of your assets is subject to capital gains tax. Depending on your tax residency status in Portugal at the time of the sale of your home, this rate can change.

A fixed rate of 25% applies to non-residents of Portugal; a rate of 28% applies to residents of Portugal, although you are only subject to taxation on 50% of your gains.

A flat 15% tax will be levied on the net rental revenue if you decide to rent the property out.

Cost of Golden Visa Real Estate Route

You must pay many expenses, including a visa issuance charge of €5,325 per person and a processing fee of €533 per person, in order to obtain the Golden visa.

In addition, you will be responsible for paying any applicable taxes and fees due at the time of purchase, including IMT (Property Purchase Tax), Stamp Duty, any associated notary fees, legal charges, and mortgage taxes if you have a mortgage.

See the taxes and fees section for a detailed overview of initial and recurring property taxes in Portugal. You will also pay some taxes on a recurrent basis (such as property tax, wealth tax, etc.).

Additionally, each renewal will need you to pay extra fees. The renewal application fee will be €2,663 per individual, plus the same €533 processing fee for all applicants, including family members.

Buying Golden Visa Property with Mortgage

As long as the mortgage does not cover the minimum investment requirement, you can purchase a Golden Visa home with a mortgage.

However, if you want to buy a more expensive home and use the minimal investment amount as the loan deposit, it is acceptable. You must utilize your own existing capital for the investment.

For instance, if you were to purchase a home in a high-density area (requiring a minimum investment of €500,000), you could do so for, say, €750,000 with a mortgage of €250,000, but the remaining €500,000 would need to come from your own resources rather than the banks in order to be eligible for the Golden Visa.

As a non-resident or temporary resident, it is also considerably simpler to obtain a mortgage in Portugal than in many other European nations, even though the deposit requirement and interest rates are often a little higher.

However, you are still permitted to borrow money against any property or other assets you own outside of Portugal (e.g. re-finance your existing house in your home country).

However, you cannot obtain this loan from a Portuguese bank without using the Portuguese property as security.

Are Portugal’s Cheapest Neighborhoods Any Good?

Portugal offers much more than just Lisbon, Porto, and the Algarve, despite popular misconceptions to the contrary.

How such a little nation like Portugal is crammed with so much beauty is nearly incomprehensible.

Having said that, it is unquestionably worthwhile to invest in real estate in Portugal’s less expensive areas. Given that the majority of these locations are regarded as rural areas, you actually stand to gain from Golden Visa Programs.

Additionally, areas like the Azores and Madeira Islands offer a high-quality, leisurely pace of life away from the bustle and commotion of the city.

The cost of real estate is relatively lower, and more investors are becoming interested in these areas. The inland rural areas of Portugal are where you’ll get the best deals because everything there is more reasonable than in the cities and coastal towns.

Pros of Investing in Portugal’s Cheapest Options

• A lot of investors are going to rural communities instead of major cities because of the recent modifications to the Golden Visa Program, which have good future real estate prospects. Additionally, Portugal’s real estate market as a whole is flourishing, thus it is possible that property will see a substantial increase soon.
• Major cities like Lisbon or Porto struggle with overtourism. The amount of tourists that swarm to these places each summer is too much for them to handle. The busiest tourist months frequently put a strain on the government’s resources (via Portugalist). You won’t be troubled by many tourists if you choose to live in Portugal’s more rural and inland regions.
• Affordable cost of living: In comparison to other places, the big cities can have rather expensive living costs. The less expensive places will therefore make more financial sense for you if you tend to be frugal.

Cons of Investing in Portugal’s Cheapest Options

• It can take some time for your investment to pay off. Yes, it is true that the new Golden Visa program regulations have increased interest in these areas. But before you see a solid return on your investment, it will take some time.

Pained by financial indecision? Want to invest with Adam?

Adam es un autor reconocido internacionalmente en temas financieros, con más de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.