Real Estate: Why Portugal?


Portugal emerges as a haven

Portugal’s Real Estate Resilience: A Beacon Amid Global Uncertainty

Portugal, with its low cost of living, excellent lifestyle, and robust infrastructure, becomes an attractive hub. Portugal’s forecasted growth surpasses the European average, promising a resilient and prosperous future.

In a world of uncertainty and despite some turbulence in internal politics, (Portugal is going to have elections this year, and a rightward shift is expected, while Spain is grappling with a more challenging issues related to independence aspirations), Iberian countries are seen as a “corner heaven” in global geopolitical and economics challenges.

Investing in Portugal’s Real Estate: Opportunities Amidst Economic Challenges

In fact, with the Russia-Ukraine war far from ending (and the scars of which will likely persist for decades), a new recent war in the Middle East, deglobalization going forward, the Iberian countries are benefiting from its geographical location. Situated within West Europe yet far away from ongoing conflicts, they stand as the closest European nations to both North and South America, providing a strategic advantage. 

Particularly when we talk about Portugal, it also includes the cheapest cost of living compared with Central Europe and low labor cost, apart of the traditional good lifestyle. 

Weather, food, hospitality, good transport and internet connections, and security ensures the right cocktail for both individuals and companies to come to Portugal, now more than ever – and we are not only talking about the usual slogan over the past decades: “The Florida of Europe”.

The outcome of this environment is that the European Commission forecasts that GDP growth for Portugal will be 2,2% in 2023, far above Europe average (0,6%) and only below the “tiger” Ireland. 

This means that, for example, Portugal yields are below Spain, Italy and UK and very near the ones from Austria, Belgium, and France.


Unlocking Profits: Navigating Portugal’s Real Estate Boom and Challenges

The trade-offs here are twofold:

  • Housing prices went up to the sky as there is a great imbalance between supply and demand.
  • Portuguese workers, facing higher tax rates compared to the incentives offered to foreigners, are choosing to emigrate.
  • Real Estate investment is, thus, quite profitable. In residential areas the higher prices do compensate for some delays on the permits to construct.
  • On Commercial Real there is a combination of two positive factors. 
  • Net operating income (NOI) is increasing due to increasing rents in different sectors, fueled by companies’ demand.
  • Yields are still above the ones that occur in Central Europe combined with a quite conservative price per square meter.

Last year has brought to all of us new challenges and new scenarios really unexpected before.

Inflation had not been this high in 30 years, interest rates much higher. But the way to normality, despite the uncertainty of the war, is approaching with the expectation that inflation and interest rates will go to what the ECB recommends, close to 2%, but not above.

And Portugal’s scenario is bright, as usual the weather predictions that we see on TV .

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