Everything you need to know about real estate investment in Lisbon

Lisbon, Portugal’s hilly coastal city, isn’t simply a tourist hotspot and nothing more. The European capital has drawn investors from all over the globe over the last years. Portugal’s capital boasts a vibrant economy that lures foreign investors with tax incentives and EU and banking backing. Demand for quality hospitality and accommodation services is on the rise with a growing tourism market. Property investors have established collaborations with Airbnb management companies to meet the demand and handle their short-term rental sector investments.

Real estate market in Lisbon

The Lisbon real estate market is booming, and prices are higher than ever. Properties are being repaired, new buildings are being built, start-ups are springing up in Portugal and the Portuguese economy is looking turned a corner from the economic crisis.
All of this has resulted in increased demand for property and lodging in Lisbon in general. Basically, the property market is booming again and so is Lisbon. From the trend of things, it looks like it will be the new reality for some time to come.
A vast number of houses, more precisely 132,000 of them, were sold in Lisbon in 2018, an increase of 22 percent compared to the previous year. For a residential property in Lisbon, the average price per square meter is €10.5K, compared to other capital cities in Europe where homeowners and investors pay up to €29.5K per square meter in London and up to €17.5K per square meter in Paris for prime property(Learn more about Paris property here). Lisbon also has a high capital appreciation to offer investors.

In Lisbon, the city saw the number of tourists rise by 50 percent between 2012 and 2018, increasing demand for holiday rentals, and short- and long-term rentals.

Foreign property investments

There are no special conditions or documentation for foreigners who wish to buy property in Portugal or Lisbon, so you should have no problems. Indeed, if you buy a home as a third-country national in Portugal, you might be entitled to a ‘golden visa’ that provides up to five years of residency if the house is purchased for more than €500,000.

Mortgages for foreigners

If you already own a property with ample equity in another country, you may opt to take out an additional or even a new mortgage on that property to fund your purchase in Portugal.
Conditions in Portugal, however, have changed in recent years, and lenders are becoming more interested in assisting foreigners with lending solutions.
The key benefit of taking out a Portuguese mortgage is that the lender will perform legal property inspections and arrange for a valuation to be carried out.

Another advantage is that if you want to let your property in short- or long-term contracts, your rental income in euros can offset or cover your Portuguese bank’s mortgage payments in euros, which of course hedges any currency risk. If you want to use non-euro mortgage facilities overseas, you’d be exposed to risks of foreign currencies.

Investment in real estate in Lisbon: Yes or No?

I’d say yes – it is a fine time to invest in Lisbon, but you have to be cautiously positive. The Lisbon property market is hot and makes for a very strong investment option in Portugal. Whether buying an old apartment in the city center to renovate and rent out, or buying a new house in the capital’s choice locations, they’re all good value for money. While making an investment in a Lisbon property, the most important thing to do is to choose carefully, because the market is costly.

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