An Expert Guide to Buying Lisbon Real Estate

Are you interested in buying real estate in Lisbon? In this guide, we’ll tell you all you need to know and some insider tips on how to get a good deal buying real estate in Lisbon, as well as information on all the best areas and how to get the highest returns on your investment.

In this article, we’ll cover the following: 

• Lisbon real estate: An overview
• Main demand factors driving real estate prices in Portugal
• Who is buying property in Portugal?
• Why buy a house in Lisbon?
• What to consider when buying real estate in Lisbon
• Am I paying a fair price?
• Which is the best neighborhood in Lisbon to buy real estate?
• How can I find Lisbon real estate?
• Lisbon Property types
• Tips on buying real estate in Lisbon
• Get in touch
• FAQs
• Plus much more!

What’s going on with real estate in Lisbon?

Everyone’s talking about Europe’s hottest real estate market, Lisbon. But what happened to make property in Portugal’s capital so interesting to investors? There are many different factors that contributed to the rise in Lisbon real estate, from economic growth to the rise in the tourism sector, as well as an increase in short-term rentals.

Portugal is undergoing an economic and social boom, attracting a new wave of affluent international investors, entrepreneurs, and professionals. The dynamic Portuguese market has a wide variety of investment opportunities and is forecast to continue on a trajectory of healthy growth in the coming years. The city of Lisbon and Portugal as a whole offer a number of tax benefits to incentivize redevelopment in historic centers.

Lisbon statistics

• Lisbon population: 2.9 million
• Number of foreigners: 260 503 (as of 2020)
• International schools: 14 (British, French, American, German, and more)
• 20 Hospitals
• 7 marinas
• 16+ beaches along the Lisbon coast and close by

Main Demand Factors Driving Real Estate Prices in Portugal

The following factors have all contributed to the rise of popularity in Lisbon real estate:

Economic growth

The Portuguese economy has bounced back after a few difficult years following the financial crisis. GDP has gradually and steadily increased over recent years and is likely to continue (after the COVID-19-related blip in 2020), particularly with the rising number of startups and tech companies in the capital. Websummit, the largest tech festival in the world, relocated to Lisbon in 2016, cementing the city as one of the key innovation hubs in Europe.

Inflation

1.17 percent – 2018

0.3 percent – 2019

-0.12 percent – 2020

0.94 percent – 2021

4.03 percent – 2022

1.48 percent – 2023 (predicted)

Data from Statista.

GDP growth rate

2.8 percent – 2018

2.7 percent – 2019

-8.4 percent – 2020

4.9 percent – 2021

Data from the World Bank.

Unemployment rate

6.99 percent – 2018

6.46 percent – 2019

7.2 percent – 2020

Tourism boom

The tourism sector has always played a big part in the Portuguese economy, though this has largely been focused in the south of the country, particularly the Algarve.

However, recent trends mean that Porto and Lisbon have become increasingly popular tourist destinations, with Lisbon frequently featuring in travel features and topping rankings for the best getaways in Europe.

The rise in short-term rental platforms, such as Airbnb has contributed to the ease of home rental and an increase in returns on real estate investments.

Lifestyle

The Portuguese capital has become increasingly popular in the past few years, not only as a tourist destination but also as a base for startups and entrepreneurs who are drawn in by the low cost of living and high quality of life. Lisbon is famous for its incredible food and good year-round climate, as well as its proximity to fantastic beaches which are popular with surfers along the Lisbon coast.

Portugal also has one of the highest English proficiency levels in Europe and is conveniently located in Western Europe with frequent flights to the rest of the continent, as well as to the Americas and the rest of the world.

It is therefore unsurprising that record levels of international citizens are choosing to make Portugal their home.

Government incentives

Portugal’s citizenship by investment scheme, known as the “Golden Visa” has been highly successful in bringing real estate investment to the country and adding value to the housing market. While before investments could be made in Lisbon, the program now allows investors to obtain Portuguese citizenship for the residential real estate route only when they invest at least €5000,000 in residential real estate in a designated interior area or invest €350,000 in a rehabilitation project, also in an interior area. If the property is also in a “low-density area”, then a 20 percent discount will apply. The full options for 2022, including an overview of what is meant by an “interior” area or “low-density area”, in our article on interior and low-density areas in Portgual. Note that there are no location restrictions if you choose to invest in commercial real estate. 

The Portugal Golden Visa program was first introduced in 2012 and has been responsible for almost €5 bn worth of investment in Portugal, the vast majority of which has come from Chinese investors. However, many different nationalities are now applying for the program, notably Americans in the last few months. 

The non-habitual resident tax regime is another highly successful scheme introduced by the Portuguese government. It gives individuals of high economic and cultural worth tax reductions and exemptions over a ten-year period.

Restricted supply of real estate stock – unique and concentrated

Another factor impacting real estate prices is a restricted supply of housing in the city center. Lisbon is a small and concentrated city, situated next to a river. In addition, the Câmara municipal (the city regulator) limits construction in order to maintain the character of the city, and as a result, new constructions in the historic center are virtually impossible. Rehabilitation of older buildings is preferred and is usually the only solution for those looking to make a real estate investment in a central location.

For those looking to invest in new-build real estate in Lisbon, there are specific areas to consider, where new construction is permitted. One such area is Parque das Nações, which is particularly popular with foreign investors.

In the historic center of Lisbon, the restricted supply of housing explains the rise in real estate prices.

The Real Estate Market in Lisbon

Is there a property market bubble in Lisbon?

The rapid rise of property prices in Lisbon has left many wondering whether there is a real estate bubble in Lisbon. However, much of the recent increase has come from the resumption of economic growth after a long period of stagnation.

Housing prices in Portugal did not rise in the mid-90s at the same rate as in other Western European countries and then dropped significantly during the financial crisis.

In the past few years, the Portuguese economy has made a miraculous recovery, largely due to special measures brought in by the Portuguese government, with the Golden Visa program and the non-habitual tax regime being some of the most successful. These incentives have helped to encourage investment in Portugal on a massive scale, and as a result, the country’s economy has been enjoying a period of stable growth.

 

Why buy a house in Lisbon?

As mentioned, over the past few years, buying property in Lisbon has become hugely popular with investors from all over the world, as well as those who move to the city to make it their home. As the capital city of Portugal, the municipal area is a major tourist hub for the country and also the rest of Europe. Additionally, the picturesque city has a buzzing pulse and rich cultural history.

Here, we’ll delve into some reasons why the bustling Portuguese capital could be the perfect place for you to buy property. 

An Investor’s Paradise

Portugal’s economy has experienced many trials and tribulations over the years. However, the Portuguese real estate market seems to be moving from strength to strength and has experienced tremendous growth in the last few years. 

The Lisbon real estate sector has benefitted greatly from new investment policies that have transformed the city into an urban paradise, for businesses and residents alike. Foreign investments, urban renewal projects, and the rise of tech, startups, and key businesses in the city have coincided to create an investor’s paradise. 

Continuous growth

Lisbon has increased its competitiveness with other cities in Europe, including London, with its transformative policies. For example, in investing heavily in startups and attracting entrepreneurs to its shores. 

Other examples include Volkswagen and Mercedes-Benz opening tech hubs in the city, Websummit, the biggest tech festival in the world relocating to Lisbon in 2016, and countless international companies setting up shop in the capital and other parts of Portugal. 

Tax Benefits

Incentives to attract expats include the Non-Habitural Residence (NHR) scheme, which, if structured correctly, allows you to live with significant tax benefits for up to ten years. 

The Portugal Golden Visa

The Portugal Golden Visa program, introduced in 2012, has fast become one of the most popular residency-by-investment schemes of its kind. With the possibility to acquire citizenship after five years, there are several options to consider, including purchasing commercial real estate in Lisbon, purchasing residential real estate in interior areas of the country, or making a fund investment. 

 

What to Consider when Buying Real Estate in Lisbon

There are many factors to take into account when buying real estate in Lisbon. Location and amenities are particularly important, and you may want to consider whether you want to buy close to:

• Schools
• Transport links
• Tourist sites
• Hospitals
• International transport

Portugal and Lisbon’s main airport has frequent flights to the rest of Europe, and the rest of the world. All low-cost carriers fly to the airport, which is just a short 20-minute car ride from the city center. The airport is also connected to the city via the metro.

Real estate options in Lisbon

Like in any city, there are a few options to consider depending on whether you are looking to buy a family home or make a property investment. This will mean choosing between:

• Used residential property
• New residential property

Investors may also want to consider the following options:

• Building for investment
• Commercial property for rental yield
• Land for construction

Is now a good time to invest in real estate in Lisbon?

The Portuguese real estate market, and Lisbon, in particular, is predicted to continue growing at a steady pace over the coming years. This makes buying Lisbon real estate a lucrative opportunity, as investors can be sure of the security of their investment, which can in many cases high returns.

Over the past few years, buying real estate in Lisbon has become hugely popular with investors from all over the world, as well as those who move to the city to make it their home. As the capital city of Portugal, the municipal area is a major tourist hub for the country and also the rest of Europe. Additionally, the picturesque city has a buzzing pulse and rich cultural history.

Challenges of buying real estate in Lisbon

Buying foreign property is a daunting process and each country comes with its unique set of challenges. Fortunately, foreign investment is common in Lisbon and the entire process of purchasing a property in Portugal is regulated and handled by government officials, lawyers, and notaries.

The biggest challenge facing those interested in Lisbon real estate is finding properties for sale. There is a high demand for housing in Lisbon which outweighs the number of houses currently available. This puts property owners in a great position to receive favorable prices for housing sales and rental yields, but puts makes it difficult for interested parties to find the perfect property at a desirable price. Furthermore, property prices continue to rise, which means you’re more likely to get a better price by acting sooner rather than later.

A point of consideration that is specific to Portugal is the law of subrogation, which attaches debts to the property, not the owner. It is important to know if the property you are interested in is free of debt, otherwise you may find yourself liable for any unpaid taxes, bills, or mortgages attached to the property. Most lawyers will catch this when putting together the contract, but it is an important Portuguese law for property buyers to be aware of.

The last point of concern is the title deed. Portugal’s dispersion of ownership clause means that family properties are passed down through generations. This can result in the property belonging to several people, some of whom may no longer reside in Portugal. In order to facilitate the sale, you will need to find each owner of the property, a process that can delay the sale of the property being finalized.

Dispersion of ownership is less common in Lisbon, but it is still something to note as it can impact the time it takes for the purchase of your property to be finalized. Again, this is something that any good lawyer will catch during the process, and why it is essential that you’re well-represented by a lawyer familiar with the local real estate law when purchasing foreign real estate.

Portugal real estate buying process

1. Once you have agreed on the price of the home you are buying, it is important to find a lawyer. A lawyer can deal with the bureaucratic processes of buying a home and draw up all the necessary contracts.
2. Your lawyer will then request all of the necessary checks and documents for the house, before drawing up a preliminary contract to guarantee the sale of the house and agree on the final date of sale.
3. The seller and their lawyer will then review the preliminary contract.
4. The buyer and seller sign the preliminary contract in the presence of a notary and a deposit is paid.
5. Once the transactions have been arranged and any remaining paperwork or action on the house has taken place, the buyer and seller meet again to sign the final act of sale. The new owner then signs the property deeds and receives the keys to the house.

To find out more about the buying process, take a look at our step-by-step guide to buying real estate in Portugal.

We have also recently launched our E-Book, Your Expert Guide to Buying Property in Portugal, which provides an easy six-step overview of the buying process, information on taxes, financing your home, and the top locations in Portugal to consider.

Portugal real estate taxes

The following taxes are required for the purchase of real estate in Portugal.

• Imposto Municipal sobre Transmissões (IMT) property transfer tax, between two and eight percent
• Imposto de Selo (IS) stamp duty, 0.8 percent
• Imposto Municipal sobre Imóveis (IMI) taxable property value, between 0.3-0.8 percent
• Notary fees, admin and registration fees, around 1.5-2.5 percent
• Legal fees, one to two percent

There are also a number of required documents, such as a NIF (Portuguese tax identification number), and you will also probably find it easier to open a Portuguese bank account.

Which is the best neighborhood in Lisbon to buy real estate?

If you’re considering buying Lisbon real estate, then you are likely wondering what the best neighborhoods in Lisbon are. Lisbon real estate has become more popular over the last ten years both with investors and with expats trading in their lives for a sunnier, and better quality of life. As far as places to live in Lisbon go, prices do have quite a range depending on the area of Lisbon you are interested in. We will take you through the main Lisbon areas and what you can expect to pay for real estate in each of them.

Real estate prices in Bairro Alto

A privileged located in Lisbon, Bairro Alto is one of the most popular places you can choose when buying property as an investor. Bairro Alto is in a central location and as far as Lisbon areas go, it’s in the mid to high range of prices for buying Lisbon real estate. Bairro Alto is a key tourist zone and neighbors Baixa Chiado, a high-end shopping district. This area is known to attract investments in short-term holiday rentals, where you can expect to receive high rental yields.

Property in the Lisbon neighborhood of Bairro Alto (in the Misericórdia neighborhood) costs on average €6,825 per m².

You can see more about this part of the city in our guide to real estate in Baixa, Lisbon.

Real estate prices in Lapa and Santos

Lapa and Santos also offer highly attractive investment opportunities, both in the tourist short-term rental market and in long-term rental possibilities, as the neighborhood has high demand from an affluent local renters’ market too. If you’re thinking of relocating to Lisbon, Lapa and Santos are amongst the best Lisbon areas to live with a family thanks to the parks, cafes, and schools that surround the area.

Property prices in Lapa and Santos (both in the Estrela neighborhood) cost on average €5,670 per m².

Real estate prices in Avenidas Novas

Avenidas Novas is not the main touristic area of town but is still a very popular choice for real estate investment in Lisbon as it is a bustling area where locals, expats, and families live and work in the city. You can expect to rent long-term to students or professionals.

Property costs on average €6,046 per m².

Real estate prices in Intendente and Mouraria

Intendente and Mouraria are some of the most up-and-coming neighborhoods in Lisbon and therefore present an attractive opportunity to investors looking to cash in a return on a sale in a few years’ time. The prices in this area are quite reasonable considering how well located the area is in Lisbon. There is both a short-term rental market for tourists as well as a long-term market for locals and young professionals in this hip part of town.

Average prices in Intendente (in the Arroios neighborhood) are €4,766 per m² and property prices in Mouraria (in the Santa Maria Maior neighborhood) are €6,145 per m².

You can see more about this part of the city in our Intendente real estate guide.

Real estate prices in Campo de Ourique

Campo de Ourique is a sought-after and quiet part of town that presents more opportunities in the long-term rental market. It’s an ideal neighborhood to relocate to with family too, considering the green spaces, indoor food hall, and plethora of cafes and restaurants.

The average price of property in Campo de Ourique is €5,561 per m².

You can read more about this area in our Campo de Ourique real estate guide.

Real estate prices in Alfama and Graça

Graça and Alfama are the oldest parts of town, situated up high with panoramic views of the city and the Tagus river from the famous miradouro look-out points. It’s no wonder that these neighborhoods are the top choice for tourists visiting Lisbon. There are however certain rules in place that have prevented the initiation of new Airbnb contracts in this part of town so, from a purely short-term holiday rental investment standpoint, this might not be the best option.

Average prices for the Alfama (in the Santa Maria Maior neighborhood) are €6,145 per m² whereas property in Graça (in the São Vicente neighborhood) is slightly cheaper at €4,514 per m².

You can read more about this area in our Alfama real estate guide and Graça real estate guide.

Real estate prices in Belém, Ajuda, and Restelo

These parts of town will be better value per square meter, as they aren’t so centrally located in the main touristic hot-spot locations. However, for families from a relocation perspective, these areas have plenty of space and are still very pretty and happening neighborhoods to live in.

In Ajuda, the average price of property is €3,989 per m², while in Belém and Restelo it is a little bit more expensive at €5,395 per m².

Real estate prices in Parque das Nações

Parque das Nações is a newly re-developed quieter part of town that presents interesting opportunities to investors looking to get good value for their money with great growth potential on the investment. There are striking contemporary buildings here and the area lines the waterfront of the Tagus river. It’s also a spacious place to move to with a family, while still being centrally located.

In Parque das Nações the average price of property is €5,965 per m².

With so many great opportunities for investment, the real challenge as a purchaser is narrowing your search.

Note that there are many other prospective areas in the city, that we have not run over in this article. This is simply because there are too many to mention. Each neighborhood will have its unique characteristics and property types.

Real estate alternatives to the center of Lisbon

There are many interesting alternatives to investing in the center of Lisbon, which can make a far better investment depending on your requirements. For example, if you are looking for a beach house, to live in the countryside, or close to the Lisbon coast. 

 

Cascais

Cascais is a seaside town a short distance from the center of Lisbon, with excellent transport links to the center. It is more family-friendly than the center of the city, with more open space, and also has a number of good international schools.

Setubal

Setubal is a neighboring city located to the south of Lisbon on the coast. It takes around an hour to drive there from the center, and as a result, is popular with those looking for more inexpensive real estate options.

 

How can I find real estate to buy in Lisbon?

Property specialists

1. Buyers agents

Using a buyer’s agent to find real estate in Lisbon will help you as an expat to discover a range of new listings and real estate listings specific to your search. A buyer’s agent will also help you know in detail how sound the investment you’re making is as they add localized and unbiased knowledge from the profession.

A buyer’s agent primarily works for you as their client and therefore has the sole purpose of representing your goals in the transaction. They will also have access to real estate listings and new listings that cannot be found elsewhere.

Buying property is always difficult, so it is best to have an expert at hand who can help you throughout the process.

2. Realtors

Realtors will also have a range of properties on offer to show you. They can help you find your ideal Lisbon property, but their offers will not cover the whole real estate market like a buyer’s agent will.

A realtor also works primarily for the seller of a property as their client, so they will have the purpose of selling a particular property ahead of your own specific goals and needs. While most will have your best interests at heart, bear this in mind to make sure they are deemed reliable and find recommendations before committing to a realtor. The maximum and minimum prices for services can also vary, so it is invariably difficult to know where to begin the buying process.

You can also see our article on how to find the best properties for sale in Lisbon.

Visit our guide: How to Find a Real Estate Agent in Lisbon.

 

Types of Lisbon property

Lisbon has several different property types, from hip studios, and spacious modern apartments with a private terrace, to four-bedroom homes with a swimming pool. Whether you are looking for new development or an older property, you should be able to find it in the city. Note that a new development may be the safer option and for older properties, make sure that you conduct thorough due diligence checks. You can invest in the following property types.

• Terreno (land)
• Quintas (rustic homes and farms)
• Condos or Condomínios
• City apartments
• Casa Geminada (a semi-detached house)
• Moradia (a classic detached house)
• Luxury homes and apartments, many with a swimming pool, private gym, and security
• You will also find development located along the Lisbon coast, perfect for beach homes

Tips for buying Lisbon real estate

• Buyers agents versus realtors: we recommend using a buyer’s agent for a more targeted search and a more impartial interest representation, alongside having access to new listings
• When buying Lisbon real estate as an investment opportunity make sure you know the market in Lisbon well and  where you can yield the highest returns
• If you are looking to purchase property to move with family, make sure you have researched all the areas thoroughly
• Search for the best real estate deals with a trusted real estate professional who will show you a wide range of properties to match your criteria
• Be careful to do your due diligence when buying a property in Lisbon
• Make sure you are making the right offer in the negotiation process and get the right documents in order
• Factor in the level of natural light in the apartment. Some ground-floor apartments can lack on this front. New developments are likely to have better natural light than some older properties.

 

Get in touch

Goldcrest is a team of industry experts that can assist you in making the best investment property decision for Lisbon real estate. We have deep expertise in the Portuguese real estate market, and access to real estate listings, including new listings, and will always act diligently on your behalf to negotiate the best and guaranteed accurate deal for you, ensuring you have the right property for your needs. 

 

Other articles that may be of interest to you:

• You can learn about Portugal property tax in our article Property taxes in Portugal
• 3 Key Essentials to Buying Property in Portugal
• Crash Course on Buying a Property in Portugal
• Villas in Portugal
• Lisbon South Bay Real Estate

(Source for prices per sqm of local areas, Confidencial Imobiliário)