Updated: April 2, 2024
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.
Why consider investing in Lisbon real estate?
Whether you are looking to relocate to Portugal by buying your second or third home or make a foreign investment on a nice holiday home in a stunning European capital, Lisbon is an excellent financial investment destination. The city boasts a high quality of life, excellent healthcare and education opportunities, and captivating historic neighborhoods Plus Portugal is the seventh safest country in the world, according to the Global Peace Index in 2023.
If you are looking to invest in Lisbon, you’ll find options to get a high return on your investment. As a favorite with tourists and digital nomads, foreign investors will find it easy to buy property to enter the rental market with the help of local real estate agencies.
However, it is important to note the changes and limitations that the Housing Plus Law that came into effect in October 2023 have made to property investments with the purpose of earning rental income. Real estate investors in Portugal who apply for the Alojamento Local also known as the Local Lodging license have been restricted to drawing up one temporary lease agreement for tourist purposes annually in major urban centers of Portugal like Lisbon and Porto.
While Lisbon housing prices have been increasing in recent years, you should still be able to find property in Lisbon to be relatively affordable compared to other Western European countries. Plus, if you work with a local real estate agent or buyer’s agent like Goldcrest, you will have insight into the Portuguese real estate market and be able to capitalize on their local knowledge, for example in understanding which neighborhoods have high investment potential.
An Overview of Lisbon's Real Estate Market
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 rental apartments, 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 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. Property prices for Lisbon neighborhoods are shown in the table below.
Lisbon Neighborhood | Average Price Per Square Meter |
Ajuda | €4,222 |
Alcântara | €4,368 |
Beato | €3,616 |
Benfica | €3,723 |
Campolide | €5,287 |
Carnide | €4,138 |
Lumiar | €4,360 |
Marvila | €3,687 |
Olivais | €3,330 |
S Domingos de Benfica | €4,180 |
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 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 yields in the Lisbon Metropolitan Area
While the Lisbon Metropolitan Area average for rental yields is currently a high 6.70 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.
Area | Rental Yields (%) |
Metropolitan Area Lisbon | 6.7 |
Lisbon City | 5.2 |
Cascais | 5.6 |
Loures | 5.9 |
Mafra | 5.8 |
Oeiras | 5.6 |
Sintra | 6.3 |
Vila Franca de Xira | 6.7 |
Amadora | 6.3 |
Odivelas | 6.0 |
Almada | 6.2 |
Barreiro | 7.8 |
Montijo | 6.5 |
Seixal | 6.6 |
Setúbal | 7.7 |
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 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.
Discover our ultimate guide to Lisbon real estate
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.
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.
Key Locations for Real Estate Investment in Lisbon
If you’re looking to purchase real estate in Lisbon, you will be pleased to know that there is something for any buyer, whether you are looking for a second home, are looking to move with family, or are looking for a good investment opportunity.
Here are some of the best Lisbon real estate investment options.
Baixa
Baixa is Lisbon’s historic downtown area, located in the civil parish of Santa Maria Maior. Baixa is well known for its vibrant streets, historic buildings, and bustling atmosphere. Investing in Baixa offers the advantage of a prime location with high tourist footfall. The neighborhood attracts both tourists and locals, making it a favorable area for businesses like retail shops, restaurants, and accommodations.
Alfama and Graça
Alfama and Graça are charming and traditional neighborhoods characterized by narrow streets, Fado music, and stunning views of the city. These areas have seen increased interest from tourists and property buyers, making them attractive for short-term rentals and vacation homes. The unique ambiance and cultural heritage of Alfama and Graça contribute to their investment potential. Alfama is situated in the Santa Maria Maior neighborhood, while Graça is in São Vicente parish, providing slightly more affordable housing.
Príncipe Real
Príncipe Real (Santo António parish) is an upscale neighborhood known for its elegant architecture, trendy shops, and pleasant gardens. It has become a hub for boutique stores, design shops, and upscale dining establishments. Investing in Príncipe Real offers the opportunity to target a more affluent market and benefit from the neighborhood’s evolving reputation as a fashionable and desirable location.
Avenidas Novas
Avenidas Novas is a residential and commercial district characterized by wide avenues, a mix of modern and historic buildings, and various amenities. This neighborhood is popular among young professionals and families due to its central location, good transportation connections, and proximity to educational institutions and services. Investing in Avenidas Novas can provide stable rental income and potential property value appreciation.
Parque das Nações
Parque das Nações is a modern waterfront district developed for the 1998 World Expo. It features contemporary architecture, a marina, gardens, and a range of leisure facilities. The area has experienced significant urban regeneration and attracts tourists, business travelers, and residents alike.
Lapa and Santos
Lapa and Santos are adjacent neighborhoods known for their elegant mansions, art galleries, and vibrant nightlife scene. These areas attract a mix of young professionals, artists, and expatriates. Investing in Lapa and Santos can involve renovating historic properties into luxury apartments or boutique hotels, capitalizing on the neighborhoods’ upscale image and cultural appeal. If you are looking to buy property to rent out long-term, then Lapa and Santos could be good options. Lapa and Santos are in the parish of Estrela.
Campo de Ourique
Campo de Ourique is a residential neighborhood with a village-like atmosphere. It offers a range of amenities, including local markets, charming cafes, and tranquil streets. Investing in Campo de Ourique can be advantageous for residential real estate and small businesses targeting the local community. The neighborhood’s authenticity and quality of life attract residents seeking a more peaceful and family-friendly environment. There are also many green parks here, adding to its appeal to families.
Marvila
Marvila is an emerging neighborhood with a thriving creative scene and a growing number of art studios, galleries, and trendy venues. The area is undergoing urban revitalization, attracting young entrepreneurs and artists. Investing in Marvila can involve converting industrial spaces into artistic or commercial ventures, taking advantage of the neighborhood’s evolving reputation and potential for future growth.
Ajuda
Ajuda is a neighborhood located near Belém and known for its historic sites, including the Ajuda National Palace and the Botanical Garden. It offers a mix of residential areas and tourist attractions. Investing in Ajuda can involve short-term rentals, guesthouses, or small businesses catering to tourists visiting nearby landmarks, benefiting from the neighborhood’s historical and cultural significance.
Outside Lisbon: Belem, Sintra, Cascais, Oeiras
Investing outside Lisbon provides investors with an array of benefits. Some of the most lucrative options include Belém, Sintra, Cascais, and Oeiras. Belem boasts historical landmarks and a high footfall of tourists, while Sintra is a UNESCO World Heritage site, attracting tourists and offering investment potential in hospitality. On the Lisbon Coast, Cascais offers luxury properties and a thriving international community, while Oeiras is a well-connected business hub with tech companies and a desirable residential area near Lisbon.
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.
How does buying property in Portugal compare with buying property in Spain?
In general, the property market in Portugal is less expensive than the property market in Spain.
While both will have areas where you can secure a high return on your investment, the range of options in Lisbon, such as short-term rentals, long-term rentals, touristic properties, and co-living spaces, make it one of the best European cities to buy property and invest in.
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.
Frequently Asked Questions about Investing in Lisbon Real Estate
Why is Lisbon an attractive location for real estate investment?
What sets Lisbon apart as an attractive market for investors is its booming tourism industry, competitive property prices, and government incentives, in addition to the potential to secure a solid return on your property investment. Lisbon is one of the best European cities to invest in now.
What types of properties are available for investment in Lisbon?
There is a wide range of properties available in Lisbon, including apartments, villas, and houses. You will also find a selection of waterfront properties. The diverse range of properties available is one of the key advantages of buying in Lisbon.
Is now a good time to invest in Lisbon?
As there are no restrictions on foreign property ownership, investing in Portugal is more straightforward than it would be in some other countries. Compared with other European cities, Lisbon real estate provides an array of opportunities.
Is real estate in Lisbon a good investment?
It is a good investment to buy property in Lisbon, as it is a major tourist attraction in Western Europe and living expenses in Portugal are considerably affordable compared to other European countries. It is also possible to secure a Portuguese mortgage, and, before you start the buying process, it is important to budget for additional expenses, such as agency fees, property taxes, and other expenses related to property investment in Lisbon Portugal.
What are the key areas in Lisbon for real estate investment?
The best area will depend on what you are looking for. Baixa, Alfama, and Principe Real are good options, as are up-and-coming areas such as Beato and Marvila.
How does the property buying process work in Lisbon?
The buying process in Lisbon can be broken down into the following steps:
- Step 1. Decide whether you’d like to take out a mortgage to finance your property.
- Step 2. Find the perfect Portugal property
- Step 3. Negotiation
- Step 4. Reservation Agreement
- Step 5. Promissory Contract (CPCV)
- Step 6. Sign the Escritura (Final Deed)
What are the legal considerations when investing in real estate in Lisbon?
When investing in Lisbon real estate, it’s important to consider legal aspects such as property ownership regulations, tax obligations, and hiring a reputable lawyer for guidance.
What are the risks and challenges involved in real estate investment in Lisbon?
Risks and challenges in Lisbon’s real estate market include market fluctuations, understanding the costs and taxes that come with purchasing property in Lisbon, and the need for thorough market research before investing.
How is the resale market for properties in Lisbon? Can I expect a good return on my investment?
The resale market for properties in Lisbon is generally strong, driven by high demand, tourism, and a vibrant rental market, offering good potential for a return on your property investment. Compared with other European cities, Lisbon has a thriving real estate market.
What are the tax implications of real estate investment in Lisbon for international investors?
When foreigners buy property, they will need to be aware of property taxes to pay both at the time of purchase and on an annual basis. Taxes during the process include Property Purchase Tax/ Property Transfer Tax (IMT) and Stamp Duty, while taxes that you will be required to pay on an annual basis include Municipal Property Tax (IMI). You should also bear in mind the Capital Gains Tax if you are thinking about selling your property. You can find out more in our article: Property Taxes in Portugal 2024: An Overview.
How is the real estate market in Lisbon affected by economic fluctuations?
The property market in Lisbon can be influenced by economic fluctuations, but overall, it has shown resilience and steady growth, attracting investors even during challenging times. The market responded well following the COVID-19 pandemic, for example, showing only a slight decrease in prices, however according to the latest reports from the 2023 financial year, prices stabilized quickly.
Are there sustainable or green real estate investment opportunities in Lisbon?
Lisbon offers sustainable and green property investment opportunities, with an increasing focus on eco-friendly developments, energy efficiency, and sustainable urban planning initiatives.
