Lisbon Real Estate Investment: Your Complete Guide

As one of the most captivating Western European capitals, the Portuguese capital city of Lisbon has cemented itself as a major tourist destination and one of the most sought-after cities for real estate investments in the world.

Property investment in Lisbon, Portugal, offers a range of property types to choose from with promising purchase price value, diverse neighborhoods to suit the needs of different buyer profiles and attractive returns on investments. These perks make buying property in Lisbon attractive to expats, and why many choose Lisbon over other Western European capitals.

In this article, Lisbon Real Estate Investment: Your Complete Guide, we’ll provide property investors with essential information concerning buying Lisbon real estate. We will explore rental yields, real estate prices, rent prices, and top neighborhoods to consider buying property in Lisbon.

Lisbon Real Estate Market: An Overview

Investing in Portugal real estate is a smart move, particularly if you are looking to invest in the vibrant Portuguese capital. The simple fact is that the Lisbon housing market has something for everyone, whether you are looking for a modern apartment in the city center, waterfront property, or spacious family home. With an affordable, high quality of life and great potential for high returns on investment, Lisbon is a favorite with both investors and expats. There are also no restrictions on foreign investors buying real estate in Portugal, making it easy for foreign buyers to snap up property.

Whether Portuguese buyers and expats from the UK, USA, and other non-European countries are looking for Lisbon apartments for rent, a summer holiday apartment, or a secure villa for retirement near the coast, you will discover a variety of property options with all the charm available when buying property in Lisbon, Portugal.

In a recent housing market survey, the Director of the Confidencial Imobiliario, Ricardo Guimarães, shared insights about Portugal’s 2023 real estate market that displays the resilience of the country’s real estate market, economy, and investment value. Housing prices steadied and recovered with a 2.5 percent increase in quarterly sales since the second quarter of 2023.

Predictions for the Portuguese Real Estate Market

Despite facing challenging housing market conditions and amidst purchase price and interest fluctuations, Portugal’s tourism sector point towards high rental yield in 2024 on investment properties.

The Portugal National Institute of Statistics recently reported that despite a slight decrease in purchases by foreign buyers and a 7.6 percent annual increase in the House Price Index (HPI) reported in the third quarter of 2023, investment value is still high if you strategically buy property in Lisbon. Your investment will hold great potential for Return on Investment (ROI) in the year ahead. The property market in Lisbon is strong, with continued high demand over the past few years.

The average asking price for property in the Lisbon Metropolitan Area is €4,061 per square meter, while, for Lisbon city, this rises to €6,009 per square meter. Property prices for Lisbon neighborhoods are shown in the table below.

Is now the time to buy property in Lisbon?

Over the past few years, Lisbon’s property market has moved from strength to strength. Purchasing property in Lisbon’s city center and metropolitan area is an outstanding decision due to several compelling factors, including the exceptional quality of life, the potential for a favorable return on investment, and promising prospects for future growth.

It is important to keep in mind that during the buying process, the asking price can differ from the sales price. Property sales prices can often be significantly lower. Sellers frequently aim to sell their properties by a specific deadline and may be influenced by various factors that can help buyers get a better price for the property. Additionally, it’s important to note that there is a possibility that the sales price could be higher than the asking price, although, as you can see below, this is not so common.

Rental yield: Lisbon Metropolitan Area

While the Lisbon Metropolitan Area average for rental yields is currently a high 6.7 percent, some areas will prove to be better investment options than others. In the table below, we share the latest data on current rental yields in the Lisbon metropolitan area.

Rental yield: Lisbon neighborhoods

Below, you can find the rental yields for each neighborhood in Lisbon. Marvila, in particular, stands out as a top investment opportunity.

Tips for buying property as an investment rental property

If you are considering buying property to rent it out and secure passive income, you should ensure that you fully understand the real estate market in the Portuguese capital city.

• Research: Thoroughly research the real estate market, rental demand, and potential rental income in different neighborhoods.
• Choose the location wisely: Select a location that offers amenities, transportation, and attractions that appeal to potential tenants.
• Get professional help: Seek guidance from a real estate agent or buyer’s agent familiar with the local market.
• Think long term: Consider the property’s long-term rental potential and its ability to attract tenants in the future.
• Be prepared for challenges: Anticipate and plan for potential challenges such as maintenance, tenant turnover, and legal requirements.
• Understand local regulations: Familiarize yourself with local rental laws and regulations to ensure compliance and avoid legal issues.
• Calculate the expected return on investment: Evaluate the potential return on investment based on property costs and projected rental income.
• Consider property management services: Assess whether hiring a property management company would be beneficial to handle tenant relations and maintenance.
• Assess profitability: Calculate potential expenses, including taxes, maintenance, and mortgage, against expected rental income.

What types of property are available to buyers?

One of the key advantages to buying Lisbon property is the range of property types available to buyers, alongside the diversity of neighborhoods – there is something to suit the needs of any buyer.

In Lisbon, there are both residential and commercial properties to invest in. In this section, we’ll provide you with more information on some of the most common types of each.

Residential properties

When it comes to residential properties, you’ll find everything from modern apartments to luxurious waterfront properties. Some of the most common are listed below.

Apartments

If you’re looking for a modern apartment with a pool and riverside views, or a smaller property in an up-and-coming area, you’ll find several options to consider.

Villas

Particularly on the Lisbon Coast stretching to Cascais, you’ll find many modern villas on the market. You’ll be able to enjoy the best of both worlds, the stunning beaches that hug the coast and the bright lights of the capital city.

Country homes

You’ll find spacious homes a little out of the city, whilst still being within striking distance of Lisbon. Locations such as Santarém, just over an hour’s drive away, could be an excellent option to consider.

Luxury properties

From beautiful waterfront properties to modern apartments with stunning city views, Lisbon delivers for luxury buyers. In Lisbon the area of Avenida da Liberdade offers the most luxurious properties the city features. Suburbs like Príncipe Real, Baixa, and Chiado also feature luxury homes with the perk of stunning views of the River Tejo and Ponte de Abril 25 Bridge. In Greater Lisbon, you can look in the areas of Cascais and Estoril for luxury properties on the coast. Many of these properties come with private pools, gyms, and other features. Our Luxury Real Estate Lisbon Guide offers more insight into upmarket properties available in Portugal’s capital city.

Commercial properties

Some of the most popular investment opportunities for commercial property are listed below.

Offices

Officers provide stable rental income and potential long-term capital appreciation.

Retail spaces

Investing in retail spaces offers steady income from established businesses and potential growth in prime locations.

Warehouses

Warehouses provide lucrative opportunities and construction costs are generally much lower. In certain areas in Lisbon, such as Marvila, many warehouses are being renovated into boutique craft beer bars and hip restaurants, for example.

Tourism real estate

Given the booming tourism sector in Lisbon, which just seems to be going from strength to strength, these areas offer options to invest in tourism real estate. From hotel projects to serviced apartments, there are several investment options on the table.

How to Buy a Property in Portugal: Key Considerations

If you are looking to purchase property in Portugal, there are certain aspects that you should be aware of.

Legal considerations

Understanding the legal implications of buying property is crucial when buying property. We recommend working with an experienced lawyer who will be able to guide you through the process. They will help you check, double check, and triple check both the property and the seller to ensure that you do not face legal issues down the line.

It can also be beneficial to enlist a property surveyor’s help, who will ensure there are no problems with the property’s interior or exterior.

Financial considerations

As with buying property in any country, it is best to consider your budget as soon as possible. This will help you shortlist potential properties. Plus, there are many banks in Portugal that provide, mortgages for foreigners and you will want to spend some time determining which one suits your needs. The mortgage process itself can also take longer than expected, so it is best to get the ball rolling as soon as possible.

Key steps in the buying process

The buying process in Portugal can be broken down into the following five steps.

• Step 1: Decide whether you’d like to take out a mortgage to finance your property.
• Step 2: Find the perfect property
• Step 3: Negotiation
• Step 4: Promissory Contract (CPCV)
• Step 5: Sign the Escritura (Final Deed)

Real Estate Investment Lisbon: Risks and Challenges to Consider

Understanding the market

One of the initial challenges when investing in the Portuguese real estate market is gaining a comprehensive understanding of the market dynamics. It is crucial to conduct thorough research and analysis to grasp factors such as property prices, demand-supply dynamics, local regulations, and market trends. To mitigate this risk, working with experts in the field can provide valuable insights and guidance.

Market volatility and economic influences

Investing in any real estate market involves considering market volatility and economic influences. When it comes to Portuguese real estate, make sure you understand the return-on-investment potential alongside macroeconomic factors, such as inflation rates.

Due dilligence

Due diligence can never be understated. This includes carefully evaluating the property’s legal aspects, including title deeds, permits, licenses, and potential encumbrances. Engaging a lawyer that specializes in real estate transactions can help navigate through the legal complexities and identify any potential risks or issues. Additionally, verifying the credibility and financial stability of the seller is crucial to avoid potential fraudulent transactions or disputes.

Goldcrest: Who We Are and How We Can Help You

Goldcrest is a buyer’s agent that is based in Lisbon and the Algarve. 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, offering insightful expertise and strategic advice.