Portugal’s Real Estate Outlook for 2024

As a leading name in luxury real estate, Roca Estate Agency is committed to providing our clients with the most accurate and insightful information about the Portugal property market. The year 2024 is poised to be a significant one for real estate in Portugal, and understanding the market trends is crucial for anyone considering an investment in this beautiful country. The real estate market, inherently influenced by a multitude of economic, political, and social factors, is subject to fluctuations and shifts that can impact investment decisions. In Portugal, these dynamics are particularly pronounced, given the country’s growing status as a prime European real estate destination. The upcoming year, 2024, is anticipated to be a defining period for the Portugal property market, with various indicators suggesting new trends and directions. As a premier luxury real estate agency, Roca Estate Agency is uniquely positioned to analyze these trends and provide insights into how they might shape the market.

The Current State of the Portugal Real Estate Market

A Decade of Growth: 2010-2023

Portugal's Real Estate Outlook for 2024

The Portugal real estate market has experienced a remarkable journey over the past decade. From 2010 to 2023, house prices in Portugal have almost doubled, showcasing a robust growth trajectory that contrasts sharply with the trends observed in many other European Union countries. This period has been characterized by a consistent upward trend in property prices, defying the broader European context of fluctuating real estate values influenced by rising bank loan interest rates. The resilience of the Portugal property market during this time is noteworthy, particularly in light of the European Central Bank’s interest rate policies, which have generally exerted downward pressure on house prices across the Eurozone.

Comparative Growth and Market Dynamics

The growth rate of Portugal’s housing market stands out even more starkly when compared to its European counterparts. Between 2010 and 2023, house prices in Portugal surged by 95.5%, a significant leap compared to the 79% increase in Germany, 46.7% in the Netherlands, 33% in France, and a mere 0.9% in Spain, according to data from the IESEG School of Management. This exceptional increase in Portugal’s house prices has predominantly been concentrated in existing properties rather than new developments. While the average price of new homes in Portugal rose by 3.8% during this period, this rate of increase was modest compared to the overall market growth, and notably higher than the increases seen in countries like the Netherlands and France, and in stark contrast to the decrease observed in Germany.

Factors Influencing the Market

Several factors have contributed to this extraordinary growth in Portugal’s real estate sector. One significant element has been the special tax regime for non-habitual residents, which is speculated to have played a role in driving up house prices. This regime, however, is set to conclude at the end of 2023, leading to speculations about its potential impact on future market trends. Despite this impending change, the governor of the Bank of Portugal has expressed skepticism about attributing the steep rise in house prices solely to such programs. This suggests that the market’s strength may be rooted in more fundamental aspects of Portugal’s economy and real estate sector, indicating a more complex interplay of factors behind the sustained growth in property values.

Golden Visa Changes and Market Stability

The recent amendments to Portugal’s Golden Visa Program, as part of the “More Housing” bill, have been a topic of discussion in the real estate sector. Contrary to concerns, these changes are unlikely to negatively impact the property market. According to Mansion Global, the end of the Golden Visa is not expected to have a significant effect on property values. The Property Market Index report supports this view, asserting that home prices in Portugal will continue to rise regardless of the alterations to the Golden Visa Program. This resilience suggests a robust and adaptable property market in Portugal, capable of maintaining its growth trajectory even amidst regulatory changes. The ongoing strength of the market, despite these adjustments, underscores the enduring appeal of Portugal as a destination for real estate investment.

Predictions for the Portugal Real Estate Market in 2024

Portugal's Real Estate Outlook for 2024

Sustainable Growth in the Face of Change

As we look towards 2024, the Portugal real estate market is expected to continue its trajectory of growth, albeit in a landscape that is adapting to new regulatory frameworks. Notably, despite the phasing out of the Golden Visa program, the market is showing remarkable resilience. According to Mansion Global, an 8.7% increase in home prices is anticipated. This growth is particularly pronounced in luxury areas such as the Algarve’s Quinta do Lago, where a staggering 19% rise in property prices is projected by 2025. These figures not only reflect the market’s robustness but also its ability to thrive amidst regulatory changes.

Diverse Factors Steering the Market

Portugal's Real Estate Outlook for 2024

The dynamics of the Portugal real estate market in 2024 are shaped by several key factors:

  1. Economic Stability and Growth: The foundation of the market’s strength lies in Portugal’s stable political and economic environment. The country’s GDP is on an upward trajectory, fostering a conducive climate for real estate investments. This economic stability is a significant draw for both domestic and international investors, underpinning the market’s growth prospects.
  2. Population Wealth and Rental Yields: The increasing wealth of Portugal’s population, coupled with attractive rental yields, is creating lucrative opportunities in the real estate sector. As reported by Investropa, these factors are not only encouraging property purchases but also making real estate a viable option for generating rental income. This trend is expected to gain further momentum in 2024, bolstering both the residential and investment segments of the market.
  3. Demand and Supply Dynamics: Despite a forecasted 2.1% drop in house prices by CaixaBank Research, the demand for properties, especially in sought-after locations, is likely to remain robust. The ongoing shortage of new homes, compounded by high construction costs, will continue to influence the market, potentially leading to a tighter supply and sustained demand.
  4. Market Cooling and Price Adjustments: The anticipated market cooling, characterized by a potential decrease in sales and a slight drop in prices, suggests a shift towards a more balanced market in 2024. This could pave the way for more sustainable and stable growth in the long term, providing a healthier environment for both buyers and sellers.
  5. Impact of Regulatory Changes: The end of the Golden Visa program and other regulatory adjustments are expected to have a limited impact on the overall growth trajectory of the market. While these changes may alter the dynamics in certain segments, the fundamental attractiveness of Portugal’s real estate market remains strong.
  6. Regional Variations: Different regions within Portugal are likely to experience varying trends. Areas like the Algarve and Lisbon are expected to continue attracting strong demand, leading to sustained or even increased property prices. These regional variations highlight the importance of localized market knowledge for making informed investment decisions.

Navigating the Future of Portugal’s Real Estate Market

Portugal's Real Estate Outlook for 2024

As we conclude our exploration of the Portugal real estate market predictions for 2024, it is clear that the sector is poised for a year of dynamic growth and transformation. Despite facing regulatory changes and market adjustments, the resilience and appeal of Portugal’s property market remain strong. The anticipated growth, coupled with the stability of the country’s economic and political landscape, presents a compelling case for both investors and homebuyers.

For those considering entering or expanding their presence in the Portugal real estate market, 2024 offers a landscape rich with opportunities. The key to success lies in understanding the nuanced dynamics of the market, from regional variations to the impact of economic and regulatory factors. It is a market that rewards informed decision-making and strategic planning.

At Roca Estate Agency, we are committed to guiding our clients through this evolving landscape with expert insights and tailored advice. Our deep understanding of the market nuances and our dedication to excellence position us as your ideal partner in realizing your real estate aspirations in Portugal.

Whether you are seeking a luxury home, a strategic investment, or a picturesque retreat, we invite you to leverage our expertise and market knowledge. Contact Roca Estate Agency today to embark on your journey into the vibrant and promising world of Portugal’s real estate market in 2024. Let us help you turn your property dreams into reality.

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Dasha Ponomarenko
Analyst / Customer Manager

Market Analytics

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FAQ

Investment opportunities

What kind of properties do you offer?
  1. Properties under development for buyers with patience to benefit from the price appreciation after the project’s completion.

     

  2. We offer land plots for residential and commercial use to those who want to maximize their profits from the full cycle of value-adding activity.

     

  3. Commercial properties are for those who bet on more stable and long-lasting relationships with corporate tenants.

     

  4. Income houses for investors looking for steady income streams from residential property tenants.
How do you provide the investment opportunities?

We offer personalized investment opportunities to our investors through a tailored investment newsletter. Each newsletter is customized to match the investor’s specific budget and aligns with their unique investment strategy.

What are the criteria for evaluating income house investment opportunities?
  1. Growth Markets: We identify areas experiencing robust economic activities, such as job creation, population increase, and rising GDP. Infrastructure projects like new transportation systems, schools, and hospitals indicate a region’s potential for growth, attracting more residents and boosting the rental market.

     

  2. Positive Cash Flow: The property should generate rental income that not only covers all operating expenses (mortgage payments, property taxes, insurance, maintenance, and management fees) but also leaves a profit. Securing loans with low-interest rates and reasonable terms can enhance cash flow.

     

  3. Appreciation Potential: Properties in neighborhoods with growth potential or undergoing revitalization are likely to appreciate in value. The condition of the property and the potential for improvements (renovations, additions) also play a crucial role in its future value increase.

     

  4. Turnkey and Rent-Ready: We choose properties that require little to no refurbishment before they can be rented out. This ensures a quicker start to income generation. Properties should also meet all local building codes and regulations and have passed necessary inspections to avoid future legal issues.

     

  5. At or Below Fair Market Value: We conduct a comparative market analysis that helps assess the investment property’s value by comparing it to similar properties in the area. We identify motivated sellers or properties that have been on the market for a long time and may offer negotiation leverage, allowing purchases below market value.

     

  6. Risk Management: We evaluate potential risks, including market downturns, property damage, or prolonged vacancies, and devise strategies to mitigate these risks. This may involve insurance, reserve funds, or diversifying investment portfolio.

     

  7. Legal and Tax Implications: Fully understand the legalities of property ownership and management, including landlord-tenant laws and local regulations. Awareness of property taxes and potential tax benefits (deductions, depreciation) is crucial for financial planning and compliance.

     

  8. Exit Strategy: We develop a clear understanding of investors’ end goals (e.g., long-term rental income, property flipping). This strategy informs all decisions, from property selection to financing and management.
What are the criteria for evaluating land plot investment opportunities?
  1. Location and Zoning: The value of land is significantly influenced by its location and the zoning regulations governing what can be built on it. We look only for prime locations or areas poised for future development. Zoning determines the type of development allowed, and we aim for residential and commercial types.

     

  2. Growth Potential: We choose land plots in areas with strong growth indicators, such as population growth, economic development, and infrastructure projects, which suggest future demand for property.

     

  3. Accessibility and Utilities: We pick land with good access to roads, public transport, and essential utilities (water, electricity, sewage), as it is more valuable and easier to develop.

     

  4. Topography: The physical characteristics of the plot, including its topography and soil quality, affect its usability and potential development costs. We prefer flat land or land with gentle slopes that is generally less expensive to develop than hilly or flood-prone land.

     

  5. Environmental Restrictions and Easements: We are aware of any environmental protections or legal easements that could restrict the development or use of the land. This includes protected habitats, wetlands, or historical sites. We carefully choose land plots without anything forementioned.

     

  6. Future Development Plans: Information on planned infrastructure or commercial projects in the area can significantly impact the future value of land. We gather and analyze this kind of information to make meaningful decisions.

     

  7. Cost vs. Value: We carefully evaluate the purchase price against the potential for increased value. Land for development or likely to be rezoned for higher-value uses can offer significant returns.

     

  8. Exit Strategy: We understand how it’s better for investors to profit from the land purchase, whether by selling after appreciation or developing the land.
What are the criteria for evaluating new build investment opportunities?
  1. Builder Reputation: We investigate the builder’s track record, quality of construction, and reliability. Established builders with a history of delivering high-quality projects on time are preferable.

     

  2. Location: The property’s location is crucial. Look for new builds in areas with strong demand for housing, good schools, amenities, and transport links, which can drive up property values.

     

  3. Price Comparison: We compare the price of the new build with existing properties in the area to ensure you’re paying a fair price. New builds often come at a premium, so we ensure the extra cost is justified by the benefits.

     

  4. Warranty: We choose new builds that come with warranties (like a 10-year structural warranty). These can add value and reduce maintenance costs in the early years.

     

  5. Energy Efficiency: We choose new builds with high energy efficiency ratings and modern technical features that can be more attractive to tenants and buyers, potentially lowering operating costs and increasing attractiveness.

     

  6. Potential for Appreciation: We pick properties with the potential for appreciation based on location, quality, and market dynamics. Properties in areas expected to see growth in infrastructure and amenities offer higher appreciation potential and are on our radar.

     

  7. Rental Yield: We calculate the potential rental yield and compare it with other investments. Only properties with “working” math are on our list because this eases the execution of the exit strategy and may be beneficial for investors willing to get the “passive” rental income.

     

  8. Financing and Incentives: We look into financing options and any incentives offered by builders or their partnering banks, which can affect the investment’s affordability and attractiveness for investors.

     

  9. Exit Strategy: We choose properties that provide a clear and easily implemented strategy for maximizing return on investment, whether through long-term rental income or selling after appreciation (or both, by leasing while selling).
  10.  
What are the criteria for evaluating commercial property investment opportunities?
  1. Location: Prime location is crucial for commercial properties. We look for areas with high foot traffic, good accessibility, and proximity to amenities if it’s retail or a desirable business district for office spaces, or a touristic hot spot if we’re talking about hotels.

     

  2. Tenant Quality: We carefully study the current situation with tenants and analyze our possibilities. Properties that can be leased to reliable, long-term tenants (e.g., national chains) offer more stable income streams and are primarily on our radar.

     

  3. Market Demand and Vacancy Rates: We investigate the local commercial real estate market for demand trends and vacancy rates. Lower vacancy rates and higher demand indicate a healthier market – and that’s exactly what we are looking for.

     

  4. Economic and Area Development: We look into the economic health of the area and any planned developments. Growth indicators include new infrastructure projects, population growth, and employment rates.

     

  5. Property Condition and Age: We evaluate the property’s condition and age, as these will impact maintenance costs and the attractiveness to tenants. Newer or well-maintained properties are often more desirable but we also consider other options if the math works.

     

  6. Zoning and Regulations: We ensure the property complies with local zoning laws and is not subject to unfavorable regulations that could affect its use or value.

     

  7. Financial Performance: We analyze the property’s financials, including income (rental income), expenses (operating costs), and net operating income (NOI). We look for properties with a strong NOI and potential for growth.

     

  8. Financing: We understand the financing options and conditions. Commercial properties often require larger down payments and have higher interest rates than residential properties, so the finance product should be considered carefully.

     

  9. Exit Strategy: Whether it’s selling after appreciation, refinancing, or holding long-term for steady income, we ensure the property aligns with investors’ investment goals and timeline.
  10.  

Investment newsletter

What is your investment newsletter?

This is a tailored investment proposal newsletter that we send to each client who’s in the process of capital allocation. Usually, we send one investment opportunity each week or two (depending on the complexity of the request). To stop receiving it, you may just ask the customer service manager.

How does your investment newsletter look like?

We send a pdf file to any type of communication channel you preffer (email, whatsapp, etc.) with the following information that is well enough to consider if this property fits your interests:

  1. Property description
  2. Location description
  3. Market analytics
  4. Calculations breakdown
  5. Investment terms of the acquisition

Investment allocation

Can I participate in a deal with only a part of capital required to acquire the property?

Yes, you can. For this purpose, we propose certain investment opportunities to clients with similar investment preferences. We manage to form a sort of co-investment group where the participants may make a co-investment agreement and become partner-investors.

Who may be my partner-investors?
All our investors share our vision for transparency and “fair play” business ethics, and among them, we choose who may be a good fit as partner-investors based on similar investment preferences and goals.
What is the minimum investment amount?

The minimum real estate investment amount required in a co-investment scheme is € 250,000. If you are eager to acquire property on your own, the minimum amount should be € 1 million.

Holding of the investment

Do I need to do anything after investing?

No, you will only need to make the investment, and we will handle all the rest – from value-adding activities to selling the property or managing it to obtain passive income.

Do you provide any reports?
Yes, we provide monthly reports regarding the investment status with detailed information, and of course, our customer service is here to answer all the questions you may have on a daily basis.
Do you guarantee any return on investment?

No. And if some companies do – be careful. We provide you with viable and very probable scenarios how we consider things will go, which may, in fact, not happen. And this is something to remember – no one can predict the future.

Is it safe to invest in properties you provide?
Maybe the best thing many consider real estate’s main advantage is that the price almost can’t go to zero. Can the property market fall? Yes. Can the “black swan” fly by? Yes. Can we do our best to keep your investment safe? Yes, and so we do.

Quick Facts

  • Founded in 2020

  • Experienced management of 20+ years in real estate

  • 50+ HNW clients trust us with their real estate investments in Portugal

  • Operating throughout the country

Mission

We operate a real estate company dedicated to enhancing our clients’ wealth through investments in properties with high profit potential and low risk.

Investors working with us aim to preserve their capital while earning returns significantly above long-term inflation rates, through property appreciation and/or obtaining passive income.

Management

Why We

  • We provide weekly offers to our client base on an individual basis – we know exactly who wants what.

  • We offer only properties with high potential and moderate risk.

  • We provide detailed analytics for each investment opportunity.

  • We do thorough due diligence on each and every property.

  • We accompany you throughout the investment – from studying the potential deal to the exit.

  • We partner only with the best service providers in every local market.

  • Oftentimes, we invest along with our clients.
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Investment Terms

  • Minimum investment – € 250,000
  • Holding period – 1-3 years
  • Target capital growth – 20-40% (10-30% yearly)
  • Target passive income yield – 5% and more

Our Fees

Finding Fee
€1500 This fee is paid when the investor makes an individual request for a property. It does not apply to the properties we provide in our proposal list.
Deal Structuring Fee
0,1 — 0,5% This fee is paid if the deal needs a tailored investment vehicle, usually an LLC, for tax efficiency, liability protection, and transparency between partners. This fee does not apply if the deal goes straightforward without any such structuring.
Value-Adding Activities Management Fee
10% This fee is calculated as part of the total construction (reconstruction, refurbishment) cost.
Performance Fee
10 — 15% This fee is calculated as part of the gross profit. It is paid if value-adding activities were performed or/and managed by us. It is calculated based on the difference between the total investment cost and the current appraisal of the property made by an independent professional.
Exit Fee
5% It is the same as the brokerage fee when selling the property. This fee does not apply if the investor decides to keep the property for use or lease.