Portugal Real Estate Investment: The Complete Guide for 2025

Why is investing in Portugal real estate a good idea?

Investing in Portuguese real estate offers compelling advantages, due to the country’s desirable quality of life, solid fiscal foundation, and booming tourism sector. Foreigners can buy property without any restrictions. However, the process can take longer due to the complicated bureaucratic system. There are also significant upfront costs, such as stamp duty, transfer tax, and registration fees, as well as ongoing annual taxes (IMI).

You can’t get Portugal’s Golden Visa anymore by directly buying property. However, investors are still purchasing real estate there because owning property can help them apply for residency in other ways and strengthen their applications for non-investment-based residency visas, such as the D7. Here are the main reasons why the Portuguese property market remains a wise investment.

Growing property market

Housing prices in Portugal are on the rise, and that’s enough to make any investor cautious. The latest research by Statistics Portugal (INE) showed that in April 2025, the average bank appraisal for homes was €1,866 per square meter, €19 more than in March, a one percent rise. Prices were up 16.9 percent compared to last year, the same as in March. This places Portugal’s annual house price growth among the highest in the European Union, significantly outpacing the EU average.

Even so, Portugal’s market still has room to grow. Compared to other major Western European cities, it remains in a catch-up phase. In Lisbon, Porto, and the Algarve, homes remain more affordable than in the prime neighborhoods of Paris, London, or Berlin.

High rental yields

In 2025, the average rental yields stood at 6.9 percent for investors who buy a house to rent in Portugal. The less expensive, secondary-city markets in Portugal provide higher gross rental yields compared with the most expensive markets. For example, yields of over 5 percent are recorded in cities like Braga (5.6 percent), Coimbra (6.7 percent), and Setúbal (5.3 percent).

In markets where acquisition costs are high, rental yields are lower. While this leads to modest gross yields—such as about 4.5 percent in the city centre of Lisbon and 4.8 percent in Funchal (the capital of Madeira)—investors often tolerate this because prime locations like Lisbon offer significantly lower long-term investment risk and greater capital value stability.

Strong capital appreciation

When it comes to return on investment (ROI), Portugal’s real estate market has a lot to offer. Investors can earn a steady income from rental yields and sell a property later for a higher price due to strong capital appreciation.

International buyers and high-net-worth individuals often invest in buy-to-let properties in major cities like Lisbon, Porto, and tourist hotspots like the Algarve. Others take on Portugal’s urban rehabilitation projects. They renovate older properties in historic districts, which can provide strong returns.

Meanwhile, luxury and holiday homes along Portugal’s coast remain in high demand among those looking for second residences or vacation rentals. The commercial real estate sector is equally thriving, mainly with retail units and office spaces.

Safety and a stable economy

Portugal ranks as the seventh safest country in the world, according to the 2025 Global Peace Index. It boasts political and economic stability, a low crime rate, and a welcoming environment for investors.

The real estate market in Portugal remains a strong draw for foreign investment, particularly from North America and Europe. In the first quarter of 2025, Americans accounted for 58 percent of all foreigners buying property in Portugal. They especially gravitated toward luxury homes in Lisbon and Porto.

Real Estate Investment Portugal: Rental Yields

Portugal real estate investment for expats presents a prime opportunity, thanks to its combination of low property prices and substantial rental income driven by tourism. With demand for short-term rentals on the rise, now is an ideal time to invest in the property market.

The booming tourism sector has significantly increased demand for short-term rentals, particularly in Lisbon and the Algarve, a trend that is expected to continue growing. The table below highlights rental yields in key regions across the country.

Portugal Property Investment: Which Areas to Invest In

The property market in Portugal is dynamic and diverse, with many potential locations depending on what you are looking for. Lisbon offers the best of a European capital city, with very appealing property investment opportunities across the city.

Lisbon: Lisbon has a higher price bracket compared to the rest of the country. However, the capital remains relatively affordable when compared to other Western European cities. A Lisbon real estate investment in luxury property could yield significant returns, with capital appreciation in luxury properties expected to grow by 4.5 percent this year, surpassing cities in Europe such as Geneva, Monaca, and Paris.

Lisbon’s neighboring areas: Locations such as Cascais and Sintra provide excellent residential property investment opportunities. A Cascais real estate investment can provide exceptional returns for lifestyle buyers and investors seeking out luxury property by the coast. Sintra is steeped in authentic Portuguese tradition, filled with colorful palaces and extravagant properties offering unique charm for residential real estate.

Other prime locations in Portugal: The Algarve is the ultimate tourist and luxury property destination with a growing demand, while Porto attracts visitors and investors with its rich cultural history and beautiful properties for sale at an affordable rate. For a taste of luxury, Comporta, the Tróia Peninsula, and Melides offer exclusive tranquility. The southwest of Portugal is also expected to gain momentum in the next few years.

Best Portuguese Cities for Real Estate ROI

The best property investment opportunities in Portugal are in Lisbon, Porto, Faro, Braga, and Coimbra. Lisbon and Porto offer strong rental yields due to tourism and expat demand. Faro benefits from the Algarve’s holiday market, while Braga and Coimbra combine affordable prices with growing student and tech populations.

Source: Numbeo

Portugal Property Investment for Expats: Key Considerations

Before you can purchase property, you will need to obtain a Número de Identificação Fiscal (NIF) from a local tax office. A NIF is a Portuguese tax identification number required to open a Portuguese bank account and complete financial transactions in the country. This is a key first step to making your real estate investment in Portugal.

If you are a non-EU/non-EEA/non-Swiss national, you will need to have a fiscal representative to get a NIF in Portugal.

After you get a NIF, you don’t automatically become a tax resident. You begin paying taxes in Portugal if you spend more than 183 days in the country within a single year, or you have a permanent home in Portugal, whether you own or rent real estate.

A real estate lawyer in Lisbon can draft the investment contracts for you, whether you are buying or selling property, and advise you on any legal complexities. They can also connect you with a local tax advisor.

How to Invest in Portugal Real Estate for Foreigners – Step by Step

1. Define your investment goals. Choose the type of property (residential, commercial, or rental) based on your budget. Select a location that aligns with your long-term objectives, such as a city, coast, or countryside.
2. Research the market. Study property trends, legal requirements, taxes, and market conditions. It helps to work with a local real estate agent or property advisor.
3. Secure the funds. Arrange funds through personal capital or a Portuguese mortgage. Non-residents can also apply for loans from Portuguese banks.
4. Do due diligence. Work with a buyer’s agent to compile all the paperwork that ties you or the seller to the property.
5. Make the purchase. Sign the promissory contract, pay the deposit, and finalize the sale with the public deed before a notary. Register the property in your name.

Portugal Residence Permit or Citizenship by Real Estate Investment

Non-EU citizens should be aware that the length of stay for tourists in Portugal is limited. If you want to move to Portugal long-term, ensure you have a valid residency permit. Currently, there is no direct route to obtaining a residence permit or Portuguese citizenship through real estate investment.

The Golden Visa removed its criteria for property investment, so you can no longer secure residency in Portugal through purchasing real estate. Regardless, real estate remains one of the best investment opportunities in Portugal.

You can become a resident in different ways, such as the D7 Visa for retirees and passive income earners, the D8 (Digital Nomad Visa), and by meeting the new criteria for the Golden Visa Program. The D7 Visa requires applicants to have a stable passive income of at least €870 per month, while the Digital Nomad Visa requires a monthly income of at least €3,480.

To qualify for the Portugal Golden Visa, a non-EU citizen must make a minimum investment (typically €500,000) in a qualified route, such as investment funds or scientific research, or by creating at least ten jobs, and maintain the investment while meeting a minimal stay requirement.

For guidance, reach out to the experts at Global Citizen Solutions, who will be able to advise you based on your individual needs.

What is the minimum real estate investment amount in Portugal?

Since the Golden Visa no longer includes the real estate investment option, property owners can’t become residents after purchasing a property. The minimum real estate investment no longer qualifies for Residency by Investment (RBI). To enter the Portuguese market via RBI, you must meet additional criteria, such as making an investment or donation, investing in an investment fund, conducting scientific research, creating ten jobs, or increasing a company’s share capital.

What taxes and costs apply to investors?

Every investor who purchases real estate pays property taxes in Portugal. Non-residents and residents are subject to one-time and annual taxes. The rates vary based on residency status, property type, and location.

The following taxes apply when making a property investment in Portugal:

Property purchase tax (IMT): The IMT tax is a property transfer tax paid when purchasing Portuguese property (levied on the higher of the purchase price or tax value). The tax rate ranges from 0 to 8 percent, depending on the purchase price, the type of property, the location, and whether it is your primary or secondary home. A 10 percent rate applies to properties in blacklisted jurisdictions (territories that benefit from favorable tax schemes).

Stamp duty: Imposto do Selo (Stamp tax) is paid at the time of purchase. Real estate transactions are usually subject to a rate of 0.8 percent.

Municipal property tax (IMI): The IMI or Immovable Property Tax is an annual tax determined by the municipality where your property is located. The rate ranges between 0.3 and 0.45 percent for urban properties and 0.8 percent for rural properties. The municipal property tax is levied on the tax value of the property.

Additional to IMI (AIMI) Tax: There is an extra annual tax on properties that are valued at more than €600,000. Rates range from 0.7 to 1.5 percent, depending on the property’s value.

Taxes on rental income: The 25 percent rate is the standard flat tax for residents with long-term residential rental income (Category F). The 28 percent flat tax is the standard rate for non-residents on all rental income, and for residents on non-residential leases. Short-term rentals (Alojamento Local) for residents fall under Category B (business income) and are taxed differently, based on a percentage of the gross income. The Mais Habitação package can help reduce the tax burden and offer advantages with an AL license and local rules.

Capital gains tax: When you sell property, you earn a profit. Every investor is often subject to capital gain tax on the profit from the property sale. However, there are exemptions if you are selling to reinvest in your new home. There are also potential discounts if you have had work done on the property. You can learn more from our guide on capital gains tax Portugal.

Other associated property purchase costs to consider for a real estate investment in Portugal:

• Notary fees (Escritura Pública): €500 – €1,000
• Legal fees: €2,000 – €5,000
• Land Registry fee (Conservatória do Registo Predial): €250
• Utility costs: About €115 for an 85 square meter apartment
• Agency fees: Around 3-6 percent of the sale price, depending on the agency
• Condominium fees: €50 to €250 or over per month

Goldcrest: How We Can Help You 

Goldcrest is a buyer’s agent that is based in Lisbon. We provide expert, impartial advice on real estate investments and how to buy property in Portugal. From scouting out the perfect property through to property acquisition, we have you covered throughout the process.

If you are looking to purchase property in Portugal, don’t hesitate to get in touch. Our team of skilled experts is available to solve all your real estate doubts, helping you with the property search and offering insightful expertise and strategic advice.

Why choose Goldcrest?

• Local knowledge: With offices located across Portugal, our presence nationwide allows us to assist you personally across the country.
• Independent service: As an independent buying agent, we do not represent any development or project. Our service is entirely tailored toward each individual client, providing you with everything you need to secure the perfect property at the best possible price. As an impartial advisor on the market, we work solely on behalf of our client and provide a service tailored to your needs and requirements.
• Streamlined process: Our real estate agents speak English and Portuguese, and our service is completely focused on providing you with a hassle-free buying experience, saving you time.
• Experienced team: Our expert real estate team has a vast local knowledge of the Portuguese property market. We have cutting-edge technology and metasearch tools at your disposal to provide full market coverage, ensuring the best investment choices and negotiated prices.
• Network of partners: We have a close network of partners, including lawyers, property management services, builders, architects, designers, and landscape gardeners, again saving you time and hassle by providing you with trusted experts in their field of work.