Construction in Portugal 2026: Guide to Costs, Permits & Trends

Introduction to Construction in Portugal

Construction in Portugal means building, renovating, and maintaining residential, commercial, industrial, and infrastructure projects.

Construction costs are the total price of building a property from the ground up. It covers everything from permits and raw materials to professional fees.

For foreign investors and expats, these costs shape the size, the style, and the return on investment. Understanding the construction expenses can help you control your budget and customize the entire layout based on your long-term goal.

For example, Portugal’s national average cost is around €1,700 and €2,500 per square meter. The location, raw materials, type of property, and contractor choice will change this amount.

Portugal construction industry

Based on a market review from Global Market Insights (GMI), the Portugal construction market was valued at $11.6 billion (€9.87 billion) in 2022. It is projected to grow 1.7 percent between 2026 and 2029, and by 2.5 percent from 2023 to 2032. The growth is driven by increasing urbanization, population growth, and foreign investment. Portugal has a demand for residential, commercial, and infrastructure projects. Revenue figures reached over €34 billion in 2023.

Constructing property in Portugal

According to the FIEC Statistical Report,  Portugal’s residential sector reached a new peak since 2008. Building permits for new dwellings went up by 4.9 percent in 2024, with a total of 34,117 units. Portugal’s North region dominates the 2025 landscape, claiming a 45 percent market share with over 15,500 licensed dwellings.

Key Drivers Behind Construction Growth in Portugal

In 2025, Portugal’s construction sector is expected to grow by around 2.5 percent. The main drivers behind the growth are a combination of new laws, massive European funding, and a shift in how people live and travel.

Here are the key reasons:

• Urbanistic Simplex reforms (Decree-Law 10/2024): The goal of this new reform was to reduce the waiting period for starting construction projects in Portugal. If the council doesn’t respond within approximately 120 to 200 days, the project is automatically approved. You no longer need a physical “license” document. You simply receive a certificate stating that the deadline has passed, pay your fees, and start building.
• EU funding: The European Union in focusing on expanding the Lisbon and Porto metro systems with high-speed rail links.
• Tourism and hospitality: Tourism in Portugal is a €62.7 ($73.57) billion market in 2025. This creates a high demand for luxury villas, traditional houses, modern apartments, and new boutique hotels.
• Green building: Property owners are investing more in insulation, solar panels, and new windows to save more on energy costs.

Market outlook: permits and production

Based on recent reports from Statistics Portugal (INE), as of October 2025, residential construction costs in Portugal increased by 4.5 percent year-on-year (YoY). While material prices rose by a modest 1.3 percent YoY, labor costs surged by 8.3 percent.

For example, in 2023, cement consumption increased by 1.5 percent. The gross domestic product (GDP) went up by 2.3 percent, with an estimated drop to 1.2 percent in 2024, reported Cembureau, the European Cement Association.

While this may appear to be a standard case of post-pandemic inflation, a closer analysis reveals a strategic pivot that is reshaping Portugal’s real estate investments. Property investors are now focusing on value-added and income-generating properties.

How much does it cost to build a house in Portugal?

So, what is the cost of building a house in Portugal? One of the advantages of building your own home in Portugal is that older properties cost 25 to 50 percent less per square meter than new builds. Buying property in Portugal comes with no restrictions on foreign investors.

As of 2025, the current national average for a standard mid-range build is between €1,700 ($1,989) and €2,500 ($2,925) per square meter. The cost of building a house in Portugal varies based on the location, material, and property type.

Here is the average construction cost per m2 in Portugal:

• Mid-range properties in high-demand areas: The construction cost per square meter in Portugal can reach €2,700 ($3,159) to €3,500 ($4,095) in Lisbon, Porto, and the Algarve, due to intense competition for skilled labor.
• Luxury new builds: Luxury real estate in Lisbon or the Golden Triangle of the Algarve can cost €8,000 ($9,360) to €12,000 ($14,040) per square meter. These properties are high-end villas and designer homes with smart-home features, eco-friendly systems, and contemporary design.
• Renovation and refurbishment: Older properties outside prime areas that require innovation can cost €2,000 ($2,340) per square meter. A basic renovation costs about €500 ($585) to €1,000 ($1,170) per square meter, while extensive structural overhauls can add over €1,500 ($1,755) per square meter.

The most affordable option for building a home from scratch is to buy land in Portugal. The price of land in the interior parts of the Algarve can go for as little as €100 ($117) and €300 ($351) per square meter. Land for sale in Portugal, especially in the center, north, or Alentejo regions, can cost between €150 ($176) and €500 ($585) per square meter for plots with building feasibility.

Tip: When buying land in Portugal, make sure it is urban land (ready for building), not rustic land (protected or agricultural land). Although rustic land can go for as little as €5 ($5.85) to €50 ($58.50) per square meter, you need permission to build a residential home, which in most cases is difficult or impossible.

What affects construction costs in Portugal?

Building a house in Portugal in 2025 takes more than calculating the price per square meter. Other factors that affect the total cost of construction include the competitive labor market, legal process, and location.

Here’s a simple example of how costs can look like for a 200 m² mid-range home in a non-central area, with an estimated total cost of €400,000 ($420,000):

• Construction labor and materials are the biggest expense. They take about 70 to 80 percent of the project budget, or €280,000 ($294,000) to €320,000 ($336,000).
• Architecture and engineering fees usually account for 5 to 10 percent of the total cost, or about €20,000 ($21,000) to €40,000 ($42,000).
• Project management and contingency costs often fall between 10 and 15 percent, equal to €40,000 ($42,000) to €60,000 ($63,000).
• Municipal and government fees, including taxes and inspections, typically make up 2 to 4 percent, which is around €8,000 ($8,400) to €16,000 ($16,800).

Tip: Watch out for VAT (Value Added Tax). Although the standard rate for construction is 23 percent, a major policy shift in 2025 with the Construir Portugal (Building Portugal) plan allows many new builds and renovations to qualify for a reduced rate of 6 percent. On a €400,000 ($468,000) project, this alone can save you almost €68,000 ($79,560). So, verify your eligibility with a tax fiscal expert before you sign a construction contract.

Choosing a building plot in Portugal

Here is how to choose land in Portugal:

• Check that the land is approved for building.
• Make sure utilities (water, electricity, sewage) are available. In rural areas, you will need a borehole (furo) or septic tank, which requires separate permits.
• Review the local zoning laws and building permits.
• Consult with a real estate lawyer in Portugal to make sure the plot has clear ownership and legal documents.
• Consider the location, access to roads, and future development plans.

How to get a building permit in Portugal?

To obtain a building permit in Portugal under the 2024 Urban Simplex (Decree-Law 10/2024), you must first hire a registered architect and engineer to verify the land’s feasibility, often through an optional but recommended Prior Information Request (PIP), also known as Pedido de Informação Prévia.

The process is now divided into two main pathways:

• Prior Communication (Comunicação Prévia), which applies to most urban plots and allows construction to begin almost immediately after submitting technical projects and paying municipal fees
• Licensing (Licenciamento), which is mandatory for complex projects or those in historic zones.

A recent change in the new law eliminated the traditional “building permit” document. Instead, a receipt of payment for municipal fees serves as your legal authorization to proceed with the building project.

If the municipality fails to respond within the legal deadlines (ranging from 120 to 200 days depending on the project size), you receive a tacit approval to move forward with the project.

You submit a Notice of Completion, and your team provides the “as-built drawings” (Telas Finais) and a Term of Responsibility, signed by your technician, certifying that the work was done according to the approved plans. The building is considered authorized for use the moment these documents are submitted.

Tip: As of January 2026, you can obtain a building permit through the new electronic platform for Urban Planning Procedures (PEPU). Until then, you can use the digital portal of the specific city hall where you are building your property.

How to Get Started with Construction in Portugal

Starting construction projects in Portugal requires land zoning approval, hiring licensed experts, and submitting a project to the local city hall.

You then receive a construction permit, register the build with the tax office (Finanças), and work with certified contractors.

The required documents include:

• Land registry certificate (Certidão Permanente)
• Tax office document (Caderneta Predial)
• Topographical survey (Levantamento Topográfico)
• Architect project plans (Projecto de Arquitectura), such as design plans, elevations, layouts, and terms of responsibility
• Engineering reports, such as stability, water and sewage networks, health and safety plan
• Geotechnical study and soil survey
• Execution project approval (Projecto de Execução)
• Construction start communication (Comunicação Prévia)
• Construction license request (Pedido de Licenciamento)

Hiring a construction company/construction experts in Portugal

Unless you have extensive construction experience, you’ll likely need to hire a builder to build your home.

A certified construction company in Portugal must be registered with the IMPIC (Institute of Public Markets, Real Estate and Construction, or Instituto dos Mercados Públicos, do Imobiliário e da Construção).

Choosing the right contractor is vital, but your success also hinges on your architect and project manager.

Top construction companies operating in Portugal

There are many different construction companies in Portugal. Below are some of the most popular options:

• Grupo Casais: Best suited for residential complexes, sustainable, and turnkey projects
• Teixeira Duarte: Perfect for those seeking a trusted, long-established company with flexibility for medium to large private construction works
• Mota-Engil: Focused on major construction projects, though possible for high-end or luxury real estate projects
• Martifer: Works with contemporary, steel, and glass, and eco-friendly architectural styles

Building a House in Portugal: A Step-by-Step Guide

To build a house in Portugal, you will need to manage a legal process, a team of licensed professionals, and a budget of roughly €2,700 ($3,159) to €3,500 ($4,095) per square meter for mid-range properties in urban areas.

Here’s a step-by-step guide for the construction process.

Step 1: Assemble your team of specialists

In Portugal, you cannot “self-certify” a build. You must have a licensed team of architects and engineers.

An architect designs your home and prepares plans that meet local regulations. This step is required in Portugal and is key to getting municipal approval and licensing.

We recommend you also consult with a real estate lawyer to handle the land deeds and keep in close contact with the builders to avoid delays, lack of materials, or weather problems.

Stage 2: Lay the foundations

Laying the foundations is crucial for the stability and longevity of the structure.

In Portugal, there are different foundations that you can use, and your construction company can offer detailed insight. Large properties use deep foundation, while smaller properties with a smaller environmental impact often opt for shallow foundation.

This stage typically includes site preparation, excavation, pouring concrete footings, and laying the foundation walls. Ensuring proper drainage and waterproofing is crucial, especially in regions prone to heavy rainfall or high moisture levels.

Tip: Make sure the land is classified for construction with approved building rights. Always check zoning regulations, building restrictions, and access to utilities before purchasing.

Stage 3: Infrastructure construction: Structural framing and roofing

Once the foundations are in place, the next step is to put up the framework of the house, including the walls, floors, and roof.

While timber framing is growing (especially for eco-builds), the overwhelming standard in Portugal is reinforced concrete columns and beams filled with ceramic bricks (tijolo térmico). Many standard builds use traditional clay tiles, while modern projects opt for under-tile insulation.

In 2025, construction projects in Portugal often use “sandwich panels” (metal with built-in insulation) underneath the aesthetic clay tiles for superior thermal performance. However, your construction company can offer the best advice about which type of materials to use.

Stage 4: Plumbing, electricity, and insulation

Once the structure and roof are in place, you can then begin to consider the plumbing, electricity, and insulation.

While Portugal boasts a mild climate, it can get cold in the winter months, and you’ll want to ensure you have proper insulation in place. A licensed plumber and a licensed electrician can set up the essential services correctly.

Stage 5. Interior design and landscaping

Yes, you’re pretty much there. Your house is truly beginning to take shape, and it’s just interior finishes, such as wall treatments, painting, flooring, and so on, to suit your individual preferences. Now is the time to create the perfect interior that suits your exact preferences.

In Portugal, natural materials are widely embraced, including stone, ceramic tiles, and wood, which create a timeless and rustic charm within the house. Outside, you can collaborate with landscape gardeners to create the perfect garden and outdoor space tailored to your needs.

Construction methods and build quality in Portugal

Homes in Portugal often use brick and reinforced concrete. They have thick walls and clay roof tiles, unlike the wood framing and asphalt shingles often found in the United States. This style is well-suited to the local climate and is renowned for its durability.

Many builders offer turnkey homes that combine traditional materials with modern features, such as sound insulation, double-glazed windows, and energy-efficient systems. This helps meet newer building rules and keeps energy costs lower.

Understanding Taxes and Additional Expenses

As with any type of property, there are taxes that you will need to pay to purchase land in Portugal. Here, we have outlined some of the costs to be aware of.

Property taxes

Understanding property taxes is crucial, both during the purchase process and on an ongoing basis. Initial taxes include Property Purchase Tax (IMT) and Stamp Duty, while recurring taxes encompass Municipal Property Tax (IMI). For a more comprehensive exploration, you can refer to our article: Property Taxes in Portugal.

Notary and legal fees

The Notary is the private entity that facilitates official certification of ownership documents like the Promissory Contract (CPCV) and final deed (Escritura). Notary fees typically amount to around €500 ($585) to €1,200 ($1,404). Legal fees vary depending on your chosen legal representation but generally range from €2,000 ($2,340) to €5,000 ($5,850).

Upon completion of the Final Deed, the contract is forwarded to the Land Registry, incurring a public fee of €250 ($292.50). It’s advisable to obtain multiple copies of the stamped Escritura from the Notary beforehand.

Additional fees

Additional considerations include various expenses like real estate agent fees, potentially hiring a surveyor, and unforeseen costs such as extra materials required by builders. Clear communication with builders beforehand helps establish a transparent agreement.

Current Challenges in Portugal’s Construction Industry

The biggest challenge to the Portuguese construction sector is finding workers. Skilled builders are in short supply, as veterans are leaving the industry, and there is a lack of new recruits.

Vocational training programs are way behind the curve, so builders offer services at much higher prices. This worker shortage is here to stay, and it’s making new builds way more expensive and less profitable for investors. You can also read our article on having a builder’s warranty in Portugal, which can be a good way to protect yourself and minimize risks.

Goldcrest: How We Can Help You

Goldcrest is a buyer’s agent with extensive knowledge in the Portuguese property market. We provide the latest market insights, access to off-market properties, and rental services for long-term rentals, as well as negotiating prices on your behalf.

Whether you are looking for land for sale, a modern apartment with sweeping ocean views, or a mansion in the countryside, contact us today, and we can help you discover your dream property in Portugal.

If you are thinking about moving to Portugal and want to know what it’s really like, check out our article: Portugal Reality vs Expectations.