In recent years, Portugal’s property market has attracted more and more investors’ attention. The epidemic and the war make more capital flow into it for investment. Portugal is favored by Chinese investors for its high rental yields of 8%-12% in small towns and villages, simple tax system, and residency by investment policy. However, how to choose a suitable property at a reasonable price is important for investors to obtain stable returns.
Portugal property prices keep rising due to strong demand
According to reports, in Q1 2021, the average selling price of residential properties in Portugal rose by 17.4% year-on-year, showing an upward trend. The number of properties available for sale also increased by 87.8%. At present, Portugal’s economy is still recovering. Driven by financial stimuli and other factors, house prices in many countries including Portugal are at historic highs instead of collapsing. As more capital flows in, housing demand rises, further pushing up property prices.
Small town properties have higher rental yields
Compared with big cities, Portugal’s small towns and villages have much higher rental yields of 8%-12%. For example, two-bedroom apartments in Fundao can easily get 750 euros per month, with annual yields exceeding 10%. Besides, small towns have cheaper property prices. In Fundao, Marvao and other places, houses with 3-4 bedrooms only cost around 120,000 euros, much more cost-effective than big cities.
Residency and tax incentives attract foreign investors
Portugal has long implemented the ‘Golden Visa’ policy, allowing foreigners to obtain permanent residency through property investment. Recently, its new residency by investment rules only require 15 days of residence each year. The simple tax system is also attractive. Portugal only taxes local income and has no inheritance tax. Capital gains tax on property sales can be exempted for buying primary residences.
High-quality properties scarce, research is the key
As prices keep rising while quality properties become scarce, doing research is vital for obtaining cost-effective projects. Besides lower prices and higher yields, factors like developer reputation, property management, and community facilities should also be considered thoroughly. By finding the right local partners, global investors can better tap into Portugal’s opportunities.
In conclusion, Portugal’s property market has huge potential, especially for high-yield real estate projects in small towns, driven by strong housing demand and preferential policies. However, prudent research is the key to discovering cost-effective investment targets.