Investing in Portugal Top Economic factors to consider

Here are our top six economic factors as to why Portugal has become a destination worth considering when investing in property internationally.

1) The Stable Political Climate

Portugal has been a stable democracy since 1974, and its political landscape is relatively uncomplicated. The country is a member of the European Union, and its currency is the euro. Portugal’s government is committed to supporting the real estate market, and there are many programs available to help investors purchase the property (link to tax scheme NHR or Golden visa).

2) Property Demand 

Property demand within Portugal has gone through the roof, the country posted a record increase in homes due to strong demand and a housing shortage in the nation. According to Portugal’s statistics institute, Home prices rose from 13 % from a year earlier in the first quarter this year. That’s the biggest increase since the institute started collecting data on the housing market in 2010.

Newly built properties are seem to be finding buyers effortlessly as suggested by the data released by Confidential Imobiliário, “Buildings for Sale”, 48% of the properties that have entered the market this year have already been sold. 

We have seen unprecedented demand from American, Australian and European buyers throughout the first quarter of 2022, with many after the Portugal Golden Visa for access to the European Union.

2.1 Housing transactions 

In the 1^st quarter of 2022 , Housing transactions were close to 8.1 billion euros compared to the same period in 2021, of which 6.1 billion euros were related to existing dwellings, which represent 75.5% in total.

The values for 2022 represent a increase of 44.4% in the case of total value :

• 41.8% in the value of the value of existing dwellings 
• 53.4 increase in new dwellings in the value of new dwellings
• In Algarve alone, residential property transactions reached 4129 , almost 10% of the total property transactions of the first quarter of 2022’s total value.

3) Economic Growth (GDP)

After a strong start to the year, Portugal’s growth is anticipated to be moderate in quarterly terms however continue to be significant in annualised terms in 2022. 

Exports of services are projected to make a contribution most to growth, reflecting an exceptional expansion of 75% y-o-y in the first quarter of the year

Summer 2022 Economic Forecast (14/07/2022)

In full-year terms, growth is forecast to remain strong at 6.5% in 2022, reflecting the accumulated carry-over and the continued rebound in tourism.

4) Tourism 

The tourist boom itself translates into a growing demand for more luxury resorts and holiday apartments, both of which present a good value proposition for the investor. However, it is not just the conventional tourism business that has attracted foreign property buyers. A growing number of people looking to buy are those looking at having a retirement home, a holiday home or just simply a second home.

The tourist accommodation sector registered 2.7 million guests and 7.2 million overnight stays in June 2022, corresponding to year-on-year rates of change of +97.3% and +110.2%, respectively (+162.3% and +221.7% in May, in the same order). Compared to June 2019, there were decreases of 2.6% and 0.4%, respectively. 

In June, the domestic market also contributed with 2.3 million overnight stays (+16.5%) and the external markets totalled 4.8 million (+241.8%). Compared to June 2019, the domestic market grew by 7.0%, with overnight stays from non-residents exceeding 2019 levels in RA Madeira, Norte and RA Açores.

5) Crime & Retirement

Portugal comes in third in the most peaceful countries rankings. In 2014, Portugal was ranked 18th globally and has since made huge strides to be ranked third. The country is also one of the three with the lowest violence cases in the European Union, according to a crime report by the EU Agency for Fundamental Rights. Hate crimes are not a norm, and people are progressive.

Unlike Iceland and New Zealand, Portugal has armed police; however, it seems that an increased police presence has resulted in a decreased crime rate in the country. Due in large part to its level of safety, Portugal is ranked as the best country for retirement in 2020 according to the Annual Global Retirement Index.

If you’re a solo traveler or a family with children, roaming around the streets of Portugal will be something you’d look forward to every day. You can drop your children off at a recreational park and enjoy a cup of warm Arabica coffee at a cafe nearby.

5.1 Employment 

Recently, Portugal was ranked #1 on a CNN-endorsed travel website as a favourable destination for digital nomads. Shortly following Lisbon’s fantastic boom with regard to business opportunities, the country is attracting many entrepreneurs, foreign investors, and remote workers.

In the past six years, Portugal has made an economic resurgence, decreasing its unemployment rate from over 17% to under 7%. The unemployment rate in Portugal fell to 5.7 percent in the second quarter of 2022, down from 5.9 percent in the previous period as stated by statistics Portugal.

There is plenty of great local talent: Portugal has a very high proportion of STEM graduates and engineering talent at a competitive cost. According to Eurostat, the country has the third highest rate of Engineering graduates in the European Union, with around 90,000 students graduating each year.

There’s a highly diverse, collaborative and innovative atmosphere: Lisbon is a growing destination for digital nomads as well as remote programs, here you can find all of our Lisbon property for sale. Everyone from entrepreneurs, freelancers, remote workers to digital nomads with diverse backgrounds and professions can come together. If you’re planning to look for a job in Portugal, there are many options in the areas of IT, Digital Marketing, Tourism, Healthcare, Agriculture, and Construction.

6) Innovation 

Recognising the pivotal impact the startup scene has had in reviving Portugal’s economy after the 2008 financial crisis, the Portuguese government and the City of Lisbon really put a lot of effort in providing support and resources for developing the country’s enterprise landscape. the city is one of Europe’s fastest-growing tech ecosystems, making a name for itself as Europe’s Silicon Valley.

Initiatives like Startup Lisboa, a non-profit incubator founded by the Municipality of Lisbon in partnership with bank Montepio and IAPMEI which supports early-stage enterprises, and Invest Lisboa, a partnership between Lisbon City Council and the Portuguese Chamber of Commerce aiming at attracting investment, companies and talent to the city, among many others, have played a major role in this.

Universities like Instituto Superior Técnico and Nova School of Science and Technology, in Lisbon, churn out hundreds of excellent developers every year. A very high level of English language proficiency overall is also a great plus.

The city’s strong tech crowd cultivates an active co-working scene, providing a great environment to meet others, collaborate, and have fun. This contributes to Lisbon emerging as a hub of entrepreneurial innovation and technology, with tech companies of all sizes and innovative start-ups setting up offices all over, as the tech talent swarms the tech city. Google, NFON, Cisco, Uber, Volkswagen and Mercedes-Benz are some of the big names who recently have established their tech hubs in the Lisbon area.

6.1 Villa Nova Gaia 

Vila Nova de Gaia, an otherwise quiet town in the north of the country, close to the city of Porto, has received an investment of more than 700 million euros intended to found the effort of a new tech hub. The total investment from the Brazilian investors is expected to exceed 1 billion euros in five years.

Vila Nova de Gaia: The European Silicon Valley

According to the city’s official website: “Gaia Innovation City will be a tech innovation hub, with a complete structure focused on technology and education, bringing together the academic and professional worlds”.

The project consists of a 21-hectare space to attract tech giants like Google, Facebook, IBM, Amazon, and Netflix. It will also be the home of a tech campus to strengthen the relations between academics and the industry. Constructions shall start in 2023 and be finished in around 2030, and the project shall create about 15000 jobs.

The Vila Nova de Gaia city area is already home to many young expatriates and digital nomads. With initiatives like this, however, the expectation is that, with so much business being done in Portugal, the Portuguese will also dedicate themselves to staying and thriving. The boom in the technology sector has led to increased tenancy demand and a stronger rental market.

Conclusion 

Portugal remains a formidable destination to consider when investing in international property. If your looking for more information on investing in Portugal property check out our guide on the Portugal golden visa or view our available property for sale in Portugal 

For any anything else contact us directly

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