Briefly about the main thing

Having a rich centuries-old history, Portugal is the youngest country in Western Europe, and in fact, for most of the XX century it was completely isolated from the Old World. At the same time, the capital of the country, Lisbon, is one of the oldest cities in Europe.

Of course, the interest in this country on the part of foreigners has awakened with the help of tourism, and a special wave of demand for real estate in Portugal was prompted by the program of the so-called "golden visas". According to the rules currently in force, in order to obtain a residence permit when buying real estate, it is necessary to purchase an object more expensive than 500,000, or for 350,000 to become the owner of an old home (over 30 years old) or buy it in an area of the country that requires development. In the latter case, the specified amount includes not only the cost of the object itself, but also the costs of repair and restoration work. It is worth clarifying the following point: to obtain a residence permit when buying for €500,000, a purchase and sale agreement is enough, and when requesting a residence permit based on the renovation of an object, an extensive package of documents will be required, and there is no guarantee that all of them will be approved and the investor will receive the desired permission. The formal fulfillment of the minimum requirements only means that the case can be reviewed by the SEF Border Service (Serviço de Estrangeiros e Fronteiras de Sines), but without the guarantee of approval. Perhaps that is why during the entire existence of the program, only one investor took advantage of the purchase of real estate for renovation.

 

Another important factor:the price minimum in €350 000 applies only to the purchase of real estate older than 30 years, which does not have a residence license (not any house older than 30 years, as the vast majority of potential buyers think), and is also located in a sparsely populated area: for example, in the province of the Alentejo region.

Statistics show that during the entire existence of the Golden Visa program (from October 8, 2012 to the present day), more than 3 billion euros have been invested in real estate in Portugal, and more than 4880 investors and 7896 members of their families have become new residents. Based on these data, the Portuguese program was recognized as the most successful among similar European schemes. The five most active purchasers of a residence permit for the purchase of real estate consistently include citizens of China, Brazil, South Africa, Russia and Lebanon.

How to get there

To date, direct flights from Moscow to Lisbon are operated by the Portuguese national carrier TAP Portugal and the Russian airline "Ural Airlines". A round-trip ticket will cost about 20,000 rubles. However, Aeroflot has announced the launch of a new Moscow-Lisbon-Moscow flight; so far it will run three times a week, and by the end of the summer season, the number of weekly flights is planned to increase to six. Here, as promised, prices will start from 7000 rubles.

Travelers with limited means can get to Portugal by budget airlines, for example, Ryanair, Vueling or Wizz, but for this you will first have to get to one of the European cities, for example, Stockholm, Vilnius or Warsaw, and from there go to Lisbon, Porto or Faro. Yes, it's not very convenient and it's not so easy to get budget tickets, but the opportunity to quickly and comfortably fly to warm Portugal for just 9.99 is worth it.

A large number of European low-cost airlines allows you to get to Portugal on a budget, and in general, the development of air routes has made it so that now more than 350 million Europeans live from Portugal in just three hours of flight.

The situation on the real estate market

In all regions of Portugal, there has been a significant drop in housing prices since the end of 2007. And, despite some recovery in 2009, by the end of 2010 prices began to decline again. Weak signs of market recovery emerged only by the fourth quarter of 2014. By the end of 2016, the average cost per square meter in Portugal was set at the level of €1081. The most expensive objects are concentrated in the metropolitan region (€1308) and in the resort Algarve (€1358). The island of Madeira closes the top three price leaders, where one "square" costs "euro;1205.

The cost of premium real estate in the Algarve is one of the highest in the country: from €3,400 to 4,000 per sq. m, which means that prices have almost doubled since 1999. Prices for prestigious housing in the center of Lisbon vary between €2500-3100 per «square ».

In addition to the area of housing and its quality, the key element influencing the price is the location of the object: the closer it is located to a major city or to the beach, the higher the prices will be. The premium price category includes housing on the first line or near golf courses.

Why Portugal

• Being the westernmost country on the continent, it may seem that the only way out of Portugal is neighboring Spain, but the modern development of transport networks allows you to move freely between continents, and it is especially easy for holders of a golden visa to do this.
• Portugal will grant a five-year residence permit to non-EU citizens, provided that they buy a property worth at least 500,000 (for areas with low population density, the price threshold can be lowered to 400,000). A residence permit will allow you to live, work and study, as well as freely move around the EU countries. You can change the temporary registration to a permanent one after five years, and after another year you can apply for citizenship.
Portuguese legislation does not impose any restrictions on the purchase of real estate by foreigners. In addition, the transaction costs accompanying the transaction are also relatively low here.
• The mild climate is one of the aspects for which foreign buyers, especially residents of Northern Europe, love and appreciate Portugal so much. Winters off the coast are very comfortable, and much warmer compared to the temperature on the mainland. Even torrential rains do not overshadow the sunlight, which on average warms Portugal for six hours a day. And summer temperatures, thanks to the influence of the ocean, almost never reach uncomfortable levels, as often happens with the Mediterranean coast.
Another factor that pleases foreigners is the cost of living: although it has increased recently, it still remains low compared to most EU countries. In particular, the prices of real estate, rent, food, transport, restaurants and other entertainment in Portugal are lower than the European average.
• The Portuguese are known for their hospitality and love for foreigners, which means that even if there is a language barrier, the locals will try to overcome it and help the guest.

• The unique and colorful cuisine of Portugal is the hallmark of the region. 850 km of the Atlantic coast naturally led to a gastronomic orientation towards seafood. Nevertheless, the Portuguese also love meat, which is prepared according to various recipes, with the addition of fragrant local spices and herbs. More than 200 types of pastries testify to the love of sweets, and this addiction originates from the time of the Moors. Wine is a separate topic: in addition to the world-famous port wine produced on the island of Madeira, various grape varieties are grown throughout the mainland of Portugal, and the fertile local soil contributes to good yields.
• Portugal is famous for one of the lowest crime rates in the world.
• The constant increase in real estate prices and the increase in the number of objects on the market indicate the development of the sector, which, in turn, opens up investment opportunities and attracts foreign buyers. The growth in the value of real estate is constantly ahead of inflation, which means that it is quite easy to get additional profit from renting in the tourist market.

The most interesting regions for investment

Portugal firmly holds a leading, but stable position in the eyes of investors in foreign real estate. Regardless of whether buyers are looking for an investment property, a holiday home or a place to move to for permanent residence, this market can satisfy all the requirements of discerning foreigners. The main "hot spot" remains the Algarve and the area surrounding Lisbon, "it is here that the maximum number of foreign tourists is concentratedinvestors.

Algarve region

The Algarve coast itself is divided into three regions: central, eastern and western. The center is considered to be the most active in terms of tourism, with its sandy beaches and beautiful rocky coves stretching along the coast, a mild climate throughout the year, fabulous golf courses and exclusive resorts. From the point of view of real estate, this is the most expensive region of Portugal, and some of its locations are considered the most expensive in Europe. The maximum interest of investors here is aimed atAlbufeira, Vilamoura, as well as resorts Quinta do Lago and Vale de Lobo.

For decades, the most attractive place for mass tourism has been Albufeira, an old, once calm, beautiful fishing village that has become the tourist capital of the region. Today, Albufeira is known for its harbor, nightlife, dramatic cliffs, as well as beaches, each of which has its own unique character. The boom in the real estate market is supported by the construction of new residential complexes, golf courses, hotels, marinas and modern resort apartments. Albufeira is famous for a large selection of villas, townhouses and residential apartments, as well as a strong rental market; this is one of the places that should be considered for an investment deal.

A one-bedroom apartment costs from €90 000 here, a townhouse can be purchased from €150 000, and houses in the suburbs and in Albufeira itself cost from €250,000 and from €350 000, respectively.

Further west of the city of Faro lies the "golden triangle" formed by the exclusive resorts of Vilamoura, Quinta do Lago and Vale de Lobo. Vilamoura is considered one of the largest tourist complexes in Europe with luxury hotels, apartments, casinos, bars, restaurants, golf courses and, of course, beaches. Two other resorts with golden sandy beaches and green golf courses, numerous lakes and a coastline surrounded by pine trees are considered the most expensive villages in Portugal. The cost of detached houses with five bedrooms, private pool, garden, located close to the beach and not far from Faro International Airport, easily reaches €2 million.

The average cost of a one-bedroom apartment in Vilamoura is €166 500. In Vale de Lobo and Quinta do Lago, similar apartments on average cost €225 000 and €315 000, respectively. The average cost of houses in all three locations starts from €400 000, and townhouses can be purchased by investing from €250 000-300 000.

In the western Algarve, one of the most attractive cities, which has gained popularity with tourist facilities and restaurants, is Lagos. The new marina only added popularity and attracted even more wealthy tourists here. Beautiful beaches, rocky cliffs that block the area from the winds, and 8 high-class golf courses located within a radius of 25 km from the city are the main magnets for travelers and investors. The status of a popular resort naturally raises the prices of local real estate, but it is still considered one of the most affordable on the entire Algarve coast. In addition, there is a large selection of real estate in Lagos, including villas, beach apartments and a complex of townhouses; both Portuguese and non-residents buy second homes and investment properties here.

A two-bedroom house costs about 280 000 here, and prices for two-bedroom apartments start from 130 000.

In small port towns Praia da Luz and Sagres, lost between the rocks, but preserving the traditional national character, you can buy a one-bedroom apartment at a price from €135 000-140 000.

The eastern Algarve, stretching from Faro to the Spanish border, is considered the least urbanized part of the region. The construction of a motorway to the Algarve and a new bridge over the Guadiana River has opened up the area to millions of people arriving at Faro Airport or coming from neighboring Spain. It was this that gave a new impetus to the development of tourism and rapidly increased the value of local real estate. Those who did not have time to get housing five years ago may still have time to jump on the investment train, experts say that the trend of price growth will continue. is considered popular and attractive for investment hereOllyan – the largest fishing port of the Algarve, which, despite modern development, has not lost its characteristic North African appearance. There are daily markets with fresh fish, vegetables and fruits, and there is a huge selection of restaurants with local seafood dishes. On average, apartments here can be bought for 110 000, and 1 sq. m costs about 1100 (apartments) and 1660 (houses).

Silver Coast and Coimbra

The Silver Coast (Costa de Prata) is located in the heart of Portugal, which, thanks to new motorways, can be reached in just a couple of hours from Lisbon Airport. Although this region is slightly less developed than the Algarve, it attracts some of the best beaches, always good weather and rich historical heritage. In recent years, exclusive resorts, golf courses and wellness centers have been built here, but thanks to strict regulation, the coastline has remained virtually untouched, which has allowed preserving the natural beauty and attractiveness of the region. The Silver Coast has another big advantage: local real estate is about a third cheaper than similar properties in the Algarve and Lisbon.

A new townhouse in the area of Obidush is sold on average for 1500/1 sq. m., which makes a new residence with three bedrooms, a private garden and a small pool available for 250,000.

In Coimbra there is no direct access to the ocean, so you should not look for resort real estate here, but there is one of the oldest educational institutions in Europe, Universidade de Coimbra, which means that local real estate attracts the attention of parents whose children are going to get an education at a prestigious European university, and investors who purchase compact studios for rent for rent to the same students.

Housing in Coimbra costs €1000-1500 per «square», an apartment can be purchased for €170 000, and a house for €255 000.

Lisbon and Estremadura

Lisbon The capital of Portugal, surrounded by seven hills and firmly established at the mouth of the Tagus River, which divided the country in half. The best areas of the city are rightly considered to be Bairro Alto, Santos, Lapa, Chiado, as well as the historical center of Lisbon.

In the suburbs of Lisbon, one-bedroom apartments cost from €130 000, while housing in renovated buildings in the capital itself is sold for €400 000 (with one bedroom), reaching a price of €2 million for exclusive apartments with six bedrooms.

is also popularCascais is a former fishing port located 25 km from Lisbon. This picturesque town, protected from the northern winds by the hills of the Serra de Sintra, is surrounded by exclusive residential resorts, where rich Portuguese and no less wealthy foreigners now live. The area also offers a wide range of sports and recreational activities with plenty of golf courses.

Villas and apartments near the beach or at golf resorts are considered the most prestigious, demand for them is consistently high, and prices are comparable to Algarve properties: for a two-bedroom apartment you will have to pay from 250,000, and for a four-bedroom villa more than 1 million. 

Not far from Cascais there is a once modest fishing village Estoril, which has now grown and merged with the nearby town. Thanks to luxurious villas, a beautiful promenade framed by long-legged palm trees, and the largest casino in Europe, the city remains one of the flagships of Portuguese tourism. Accommodation here is cheaper than in Lisbon and Cascais. An apartment, for example, can be purchased from €117 000.

Porto and the north

Porto is the second largest city in Portugal, known for its wine and historical center, listed as a UNESCO World Heritage Site. Housing prices here are about a quarter lower than in Lisbon: about 1,500 per sq.m. m in the center and about €3000 per «square » in prestigious areas near the sea or river.

Having a budget of €100 000 you can buy «one-bedroom », and buying an apartment with three bedrooms you can meet €150 000-200 000.

The autonomous territories of Portugal deserve special attention: Azores and Madeira. And if the AzoresRather, they are exotic for Russian investors, then Madeira real estate has been studied for a long time and is popular among foreign buyers. An apartment in the capital Funchal with a view of the Atlantic can be bought for €75 000-100 000. In Kanisu and Mashiku, one of the two districts of Maidera with a sandy beach, apartments cost from 73 000, and houses from 150 000.

The maximum demand for real estate in the Azores falls on the largest island of the archipelago of San Miguel and, in particular, on its main city of Ponta Delgada. Apartments here cost about 78,000, and detached houses cost 140,000.

Subtleties of the purchase and sale process and additional costs

Portuguese legislation does not impose any restrictions on the right of foreigners to purchase local real estate, and the process of purchase and sale is simple and transparent.

Indirect costs can increase the amount when buying real estate by 2-14%. They include a tax on the transfer of ownership (up to 10%), legal expenses (1-2%), registration fee (0.2-1.2%) and state duty (0.8%).

Taxation of Portuguese real estate

The amount of tax on the transfer of ownership depends on the classification of the object. So, for land plots where it is planned to build residential or commercial real estate, defined as "tourist", the rate of 6.5% is applied, and 5% for agricultural objects. In the event that the property is used for personal residence, the rate will vary from 0 to 6%, however, if the buyer of the property is located in a jurisdiction with a low level of taxation, the rate of 10% will be applied to him. If the property is owned by a company included in the "black list of offshore companies", then the tax will be 7.5%.

Every year, the owners of Portuguese real estate pay a tax, the rate of which is determined by a specific municipality. The tax on suburban properties is 0.8%, while urban real estate is taxed from 0.3% to 0.5%.

If a non-resident sells Portuguese real estate, the income received will be taxed at a rate of 28%.

Relatively recently, Prime Minister Antonio Costa proposed in 2017 to increase indirect taxes and fees on real estate in order to be able to increase pensions and salaries of civil servants. The proposed measure, according to his proposal, should apply only to objects whose market value exceeds 600,000. Many oppose this measure - officials and businessmen rightly believe that an increase in the tax burden can scare away many investors.

A new surcharge on the Municipal Property Tax (IMI) is levied on the taxable value of real estate (VPT) located on the territory of Portugal. Buildings used for conducting economic activities (commercial, industrial or rendering services) are excluded. For individual taxpayers who own real estate in the amount of 600,000 to 1 million euros, a rate of 0.7% is applied, and if the value of the real estate is more than one million euros, then in the amount of 1%.

For companies that own residential real estate, a rate of 0.4% is set to the entire taxable value of real estate, or 7.5% if the company's residence is located in an offshore zone.

This additional tax replaces the stamp duty of 1%, which was applied to each property worth more than a million euros.

The HomesOverseas portal thanks Marina Leifer for her help in preparing the article (Best Homes of Portugal), Olga Leberskaya (Aurora D'estrelas LDA, Portugal) and Evgeny Berezin (MENU Portugal).

_{photocredits: dmitry kruglyak / flickr}

Olga Shoshina