Real Estate: The demand for houses to buy and rent by foreigners living in Portugal grows

In the last years, Portugal has entered the route of foreigners who, for the most diverse reasons, choose our country to live. In terms of housing, what are these people looking for? Buying a house or leasing? The numbers indicate that the trend of investment in real estate is growing and that it represents millions of euros. On the other hand, demand for buying or renting has increased in geographical areas such as Funchal (in Madeira), Ponta Delgada (in the Azores), Leiria, Coimbra or Porto

 

 

What are the reasons that lead foreigners to Portugal?

  • Soft weather
  • Quality of life
  • Safe Country
  • Leisure programs that provide
  • Relatively easy access to health care
  • Cost of living lower than in their home countries (in some cases)
  • Tax Regime (for investors and digital nomads)
  • Possibility of obtaining Portuguese nationality (under certain circumstances)
  • Value of real estate, although high for Portugal, in many cases is lower than that practiced in the countries of origin of foreigners

 

Why buy a house in Portugal?

  • To effectively live and/or work in the country, either individually, with their families or in situations of retirement.
  • Some buy it as a second home and, in many cases, spend the months they are not in Portugal at Short Term Rental (which exists throughout the country, although it is currently conditioned in some parishes in Lisbon, and it is still possible to register a property along these lines in some capital zones).
  • From an investment perspective which under certain circumstances may allow them to access a golden visa despite the Portuguese Government announcing in November that it is studying the possibility of ending this type of authorization for investment residences. That is, for now, the legislation remains.
  • To take advantage of the tax regime for non-habitual residents which, with the entry into force of the 2023 State Budget, makes them equivalent to regular residents (Real Estate: The new measures of 2023)
  • Digital Nomads – These remote workers usually choose to rent, however, when they acquire their own permanent home, they also enjoy tax benefits.

In Portugal, the data reveal that the acquisition of properties by citizens of foreign nationality is a growing trend and that it represents an investment of hundreds of thousands of euros in the country. In November 2022, the Bank of Portugal presented the Financial Stability Report for November, in which it states that “in the accumulated of the four quarters ended in June 2022, non-resident buyers represent 11.7% of real estate transactions in Portugal, “against” the 8.9% in the same period in 2021.

According to data pointed out by the Bank of Portugal in November 2022, the turnover in the real estate market involving non-resident citizens reached almost 30 billion euros during the second quarter, that is, until June 2022, when in the same period 2021 did not reach 25 billion euros.

According to a study carried out by Idealista News, the interest of foreign investors in buying a house in Portugal has not changed with the pandemic, the war in Ukraine, or inflation. These variants that have changed the country’s economy in recent years have not manifested themselves. “The average weight of international demand for the 20 Portuguese district capitals stood at around 27% both at the end of 2019 and at the end of 2022. And in the rental market there was even greater international demand in December 2022 (32%) than before the pandemic (24%)”, underlines Idealista News. This data points to a growing trend of Brazilians, French and North Americans buying a house in our country, while Brazilians lead the list in the rental market.

Between 2019 and 2022, Idealista News points to an increase in demand in some areas of the country. Here are the data from the study:

  • Funchal (in Madeira) – demand for houses grew by 9.5%. In December 2022, the search for houses by citizens of foreign nationality represented 50% of the search.
  • Leiria – interest grew by 3.8%
  • Coimbra – 3.5% increase in demand for homes for foreigners

Other data from Idealista News:

  • Faro, Viana do Castelo and Bragança – one in three people looking for a house to buy is a foreign national.
  • Ponta Delgada (Azores) – demand for houses by foreigners is around 40%.

 

The numbers revealed by Idealista News point to a differentiation of nationalities depending on the geographical area of Portugal. Thus, in Lisbon there is a greater international demand by Spaniards, French and North Americans, “against” Porto, where one in every 5 people who go through the real estate market with the intention of finding a house, is of foreign origin, being that Spain, Brazil and the United States of America lead the list. In Faro, in the Algarve, there is a marked search by the British, North Americans and Germans.

 

Market for renting houses to foreigners grew

The rental market in Portugal is going through a complex period for those who want to rent, particularly in urban centers. However, if on the one hand it is difficult to rent a house at competitive prices, on the other we are seeing more and more foreign nationals looking for houses to rent in the country and not necessarily in Lisbon or Porto. In fact, according to the study released by Idealista News, this demand increased and went from 24% in December 2019 (pre-pandemic period) to 32% in December 2022, that is, there was an increase of 8. 2% of foreign citizens are looking for a house to rent.

Following the study carried out and published by Idealista News, the places that registered the greatest increase in the search for a house for rent by foreigners, between December 2019 and December 2022 were the following:

  • Ponta Delgada in the Azores – grew by 19.1%
  • Funchal, in Madeira – increased by 19% although here these data can, in part, be justified by the conditions provided by the Regional Government of Madeira to digital nomads and by the fact that this Autonomous Region increasingly enjoys international projection (Digital Nomads: Madeira among the 8 best places in the world to work)
  • Porto – there was a growth of 11.6%

In 2022, the figures indicate that the city’s most sought after by foreigners to rent a house were Funchal (Madeira), Viana do Castelo and Bragança. In the same year, Portalegre, Évora and Beja recorded a sharp drop in rentals or international demand for housing rentals.

The number of foreigners residing in Portugal has increased in recent years; According to data revealed by the Foreigners and Borders Service – SEF – in 2022, for the seventh consecutive year, there was a growth of the foreign population in the country, with at the end of that year, 757,252 thousand citizens of foreign nationality with legal residence in Portugal, which represents an increase of 8.3% compared to the end of 2021. In practical terms, it symbolizes 58,365 more people.

According to these data, the nationalities that registered the greatest growth in recent years were Indian and Brazilian, followed by Nepalese.

 

Ranking of the countries of origin of foreigners residing legally in Portugal at the end of 2022 according to data indicated by the SEF:

 

  1. Brazil
  2. United Kingdom
  3. Cape Verde
  4. India
  5. Italy
  6. Angola
  7. France
  8. Ukraine
  9. Romania
  10. Nepal

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