Since Portugal’s ‘clean’ exit from its euro-zone bailout, investors have viewed it more favourably. But what about property? In residential, first-quarter prices were up 4% on the year. Rental demand is at a high. “This is the best time in almost 30 years to invest,” says Manuel Alvarez of RE/MAX, citing prices at 1980s levels. “Your investment is secure, and the yield is 6 to 7%.”
The sector has since 2012 been galvanised by the Residence Authorisation for Investment Activity, or ‘golden visa’. Thanks to a well-drafted law, this fast track for non-European Union investors has proved a hit despite the minimum threshold – €500,000 – being twice that of Greece. The scheme is a victim of its own success: visas once took a month to process but now can take several. Still, by end-August 1,441 were issued (1,159 to Chinese), bringing in €870m.
To avoid the hefty fees of Chinese immigration agents, developers suggest coming directly to them; realtors counter this means not getting a feel for what is available. “Agents’ commissions can be very high; the market covers this by raising property prices,” notes Henrique Moser of Lisbon law firm Telles. “But agencies are often essential in investors’ coming here.”
Big investors seeking ultra-safe property hunt ‘trophy’ buildings in London or Paris. Those wanting bargains look elsewhere. Portugal may recover more slowly than Spain but whereas a year ago Lisbon’s investment prospects were poor, they have since risen more sharply than Madrid or Barcelona – while Athens remains a no-go area for many.
Factors such as Portugal’s great infrastructure, security and welcoming locals count for a lot. But investors should focus on the prime segment that is being buoyed by golden visas; other prices could even slip further.“The worst thing would be if the rules of the game changed” notes Moser. “We don’t see that for a while, but there are no guarantees.” Meanwhile, the market is also benefiting from the Non-Habitual Resident scheme, whose offer of tax-free living draws EU citizens to the Algarve, with its mild climate and lovely beaches.