As the summer draws to a close, who among us has not dreamt of moving permanently to a warmer and more appealing climate? As energy costs soar, and the UK faces an unappealing winter in the face of mounting post-Brexit and post-Covid problems, many of us are thinking wistfully of moving lock stock and barrel to Portugal.
Indeed, the statistics bear this out. Residency figures from SEF, Portugal’s immigration and borders ministry, show that, as of December 2021, of Portugal’s population of approx. 10 million inhabitants, nearly 700,000 were foreign born.
Unsurprisingly, the majority of those (205,000) are Brazilians, but the second largest foreign community (42,000) are from the United Kingdom.
From Europe, the Italians (31,000) and the French (27,000) also make up sizeable communities, alongside the Indians (30,000), Romanians (29,000), Ukrainians (22,000 – although this number has increased a great deal since March 2022) and Chinese (23,000).
Many of these foreign residents live in the coastal areas, with 68% (or 467,000) registered as living in the districts of greater Lisbon, Faro and Setubal, compared to the 450,000 foreign residents who were living in the coastal areas in December 2019, pre pandemic.
Apart from its appeal to Europeans and the British, Portugal is also seeing a great influx of investors from the US.
According to investment by migration specialists Henley & Partners, in 2022 Portugal is ranking among the top ten countries for migrating millionaires, as the country attracts increasing attention from around the globe.
High net worth Americans worried about the increasing polarity of the US’s political system are looking for alternatives for their retirement, and a European investment giving them a residence in Portugal with access to the other 26 countries of the Schengen Area sounds inviting. That the dollar is currently at parity with the euro is also a major attraction.
Since 2017, the Portuguese Chamber in the UK has been organizing regular Moving to Portugal Shows and Seminars in London and around the country, enabling British buyers and movers to come and meet companies who are members of the Chamber, and get all their questions answered about the practicalities of how to buy a second home in Portugal, how to retire there, or how to move there to live and work.
Companies that take part in the Shows and Seminars include real estate agents offering new and resale properties from all over Portugal, resort developers, tax specialists, wealth and investment managers, lawyers and lifestyle and relocation experts.
Over 7,000 visitors have now attended these events, and recently we have observed several interesting trends.
Many of our visitors have now heard of Portugal’s Golden Visa programme, which grants non-Europeans residency for five years in return for an investment of 500,000 euros into real estate or qualifying investment funds.
The programme was established by the Portuguese government in 2012 in order to attract foreign investment and dynamize the Portuguese economy.
So far it has attracted over euros 6 billion into Portugal and is deemed by immigration experts to be probably the most attractive programme of its kind in the world.
For British citizens who wish to stay resident in the UK but want a residence permit in Portugal and be able to travel freely in the Schengen Area without the constraints of only being able to spend 90 in any 180 days in Europe, the Golden Visa is an interesting option.
We also notice that investing in Golden Visa funds (as opposed to buying a property directly to qualify for the scheme) appeals to investors on several levels.
It can be more tax efficient, – the funds can offer greater diversification into assets like commercial and residential property, sustainable farm land and high growth companies. The funds also offer the chance for capital gains and attractive yields and they are highly regulated by Portugal’s CMVM statutory authority.
Since January 2022, we have noticed increasing demand for information on this topic and the Chamber now holds regular seminars (both in person and online) for investors and buyers explaining the real estate and investment options that qualify under the Golden Visa programme.
The other new trend we are observing is that an increasing number of British residents are planning to move to Portugal permanently, either for work or retirement reasons. We notice than many of our visitors are asking for detailed advice on schools, for example.
We believe this is due in no small part to Portugal’s Non-Habitual Resident programme (NHR), which was first established in 2009 and updated in 2020.
Under this programme, any Portuguese or non-Portuguese who has not lived in Portugal for the past five years, can apply to live and work permanently in Portugal and pay a reduced rate of income tax on their salary or pension.
Even more than the Golden Visa programme, the NHR programme has attracted significant foreign investment into the country. As SEF made clear in their recent report, “The most relevant reasons for granting new residence permits (to non-Portuguese) during 2021 were for reasons of professional activity under the NHR programme (35,886), family reunification under the Golden Visa programme (20,718) and study under the NHR programme (10,919).”
Portugal also appeals to workers and retirees from around the world thanks to its sixth place in the Global Peace Index, its stable political framework, its functioning public health and education systems, low pollution, and a cost of living substantially lower than most EU countries. Portugal’s outdoor lifestyle is also very appealing, as is the fact that so many Portuguese are so proficient at English.
Indeed, foreigners bought 40% of the homes sold by real estate consultancy JLL in the first quarter of 2022, with North Americans the most active in a market that the company says continues to have more demand than supply.
“The Portuguese residential market continues to be a magnet for international buyers,” said JLL in May 2022, stressing that it remains “strongly dynamic, exhibiting increasingly high levels of activity, not being harmed by increases in inflation and construction costs, or by changes in the Golden Visa programme or the war between Ukraine and Russia.”
In Lisbon’s prime residential areas, in March 2022 JLL recorded an average sale price of 4,200 euros per square metre, up 7.6% on the same period in 2021. In the case of newly built properties, this figure rose 11.4% year on year to 7,600 euros/m².
According to JLL, this upward trend was even more pronounced at the luxury end of the market, with the average sale price rising 7.8% year-on-year, to 6,500 €/m², and in the case of new homes, growth reached 35% year-on-year to an average of 10,200 €/m² in Avenida da Liberdade, Chiado and Príncipe Real.
In the northern city of Porto, in March 2022, the average sale price was around 2,800 €/m², rising to 3,900 €/m² in the case of newly built housing, reflecting year-on-year growth of 21.8% and 15.3%, respectively.
The prime residential resorts of Quinta do Lago and Vale de Lobo in the Algarve are also attracting record valuations – as buyers seek to secure trophy assets.
“Over the next few months, price levels are expected to stabilise, but with no downward adjustments in sight despite the increase in construction costs, or the continued mismatch between supply and demand levels,” said JLL.
According to JLL’s research, in 2021 a record 190,000 properties were sold in Portugal, 11% of them to international buyers and 89% to domestic buyers.
International buyers tend not to need mortgage finance (although Portuguese banks like UCI and Santander offer attractively low mortgage rates to foreign buyers).
For those in search of buying opportunities, where there is still room for capital growth, take a look at the rural areas of the Algarve around Tavira, Olhao and north of Loule. Focus too on the beach towns north of Lisbon – Ericeira, Peniche, Sao Martinho do Porto and Nazare still offer value for money.
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