Real Estate Investment Lisbon: Your Complete Guide

The captivating Portuguese capital city, Lisbon, has cemented itself as one of the most sought-after cities for real estate investments in the world. With a range of property types, diverse neighborhoods to suit the needs of any buyer, and attractive returns on investments, there are many reasons why you should consider Lisbon as a lucrative investment opportunity. In this article, Real Estate Investment Lisbon: Your Complete Guide, we’ll provide you with essential information on the topic, from exploring rental yields through to top neighborhoods to consider.

An Overview of Lisbon's Real Estate Market

The simple fact is that Lisbon has something for everyone, whether you are looking for a modern apartment, waterfront property, or spacious family home. With a 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 to buying real estate in Portugal, making it easy for foreign buyers to snap up property.

History of Lisbon's Real Estate Market

Property prices in Portugal have been increasing gradually since 2013 and more steeply in the last six years or so (as shown below). This is the result of a combination of factors, for example, the Portugal Golden Visa was launched in 2012 and put Portugal on the map amongst investors, and, if we look specifically at Lisbon, Web Summit relocated to the Portuguese capital in 2016, underlining that Lisbon was the place to be for start up and tech companies.  

Since 2017, Lisbon Metropolitan has experienced a growth of almost 85 percent, while Lisbon City has experienced a 50 percent growth. Prices only dropped very slightly in 2022, highlighting the resilience of the property market in the face of the COVID-19 pandemic.

The current state of the real estate market

The property market in Lisbon is strong at the moment, with continued high demand over the past few years, which is reflected in property prices. If we take a look at the most recent data, in 2022, the average asking price for Lisbon City stood at €6,223 per square meter, while prices for the Lisbon Metropolitan area were €4,250 per square meter. This indicates that if you move a little outside the city itself, you should find property prices drop accordingly, plus more spacious properties.

Predictions for the market

While the future is obviously uncertain, leading data and analytic forecasting companies have forecasted that house prices in Portugal will decrease by 4.4 percent in 2023, while Moody’s, another analytics company, has provided a more conservative estimate of 3 percent. Note, however, that this leveling off will not be consistent across the whole country – some locations may see a continued increase while others may level off and experience price stabilization.

Property prices in Lisbon are expected to keep increasing in 2023 as a result of strong demand and a limited supply of housing. In addition to this, foreign property ownership will likely continue to increase. Nevertheless, it should be emphasized that various factors, including the property’s location, type, and amenities, contribute to the property price.

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 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. Looking back over the first six months of the year, we’ve seen the property market growing. With demand still outweighing supply, we can safely say that now is a prime time to buy.

Please keep in mind that the asking price can differ from the sales price. In reality, 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 in getting 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.

Buy to Rent

If you are looking into buying real estate as an investment opportunity, it can be a very lucrative venture. While short-term rentals typically provide a better income, there is often less hassle with long-term rentals. For example , you have more consistent tenants, in comparison with short-term renters, who are usually only in Lisbon for a few days.

You can check out our article, Buy-to-Let, for information on how to buy property with the intention to rent it out.  

Yields in Lisbon City

While the Lisbon City average for rental yields is 4.1 percent, some neighborhoods will prove to be a better investment option than others. Take Ajuda, for example, which has relatively cheap properties for sale and high rental yield potential (5.82 percent).

Tips for buying property as an investment

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 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 property management company 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.

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 located in the 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 a 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. Both Lapa and Santos are located 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 the help of a property surveyor, who will be able to ensure that there are no problems with either the interior or exterior of the property. 

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 he 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.

The following articles may also be of interest to you:

• An Expert Guide to Buying Lisbon Real Estate 
• Homes for Sale in Lisbon: Top Ten Neighborhoods 
• How to Find a Real Estate Agent in Lisbon 
• How to Find the Best Properties for Sale in Lisbon 
• Buying Lisbon Real Estate 

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: 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.