Investing in Portugal Real Estate: Lisbon Property Guide 2024

Who wouldn’t want to live in a friendly place where the sun shines year-round, the standard of living is high, crime is low and the prices are some of the best in Europe?

Portugal’s capital, Lisbon, meets all those ideals, along with many more. It’s admired by many for its friendly people, fine cuisine, colonial history and ornate architecture.

Additionally, sitting on a hilltop overlooking the Tagus River this historic city provides some of the most spectacular vistas in the entire EU region.

For investors, Lisbon has a strong and growing economy with great ROI potential. In recent times, real estate has gained considerable popularity among investors owing to the high demand for properties and a limited supply which helps to keep prices competitive.

Over the past few years, much of the attraction for real estate investment in Portugal has come from its Golden Visa program. However, due to recent changes, this program has removed the real estate investment option.

However, there are still great real estate options outside of the Golden Visa program that are worth considering. And, as Portugal has other attractive resident and citizenship schemes, like the D7 visa , there are many good reasons to move here and invest in property.

Simply put, now is a great time to start investing in Lisbon real estate, and this guide is full of all the details of what Lisbon real estate investment offers, why you should get involved now and the step-by-step process to do so.

Why is Investing in Portugal Real Estate a Good Idea?

Portugal, and especially Lisbon, has been getting a lot of international attention as a popular tourist destination and a great place for investment.

Luckily, there are no restrictions for foreigners who want to buy a home in the country.

Lisbon is a great place to invest in real estate, listed as having some of the best-priced properties in a European capital city. While it’s more expensive than the countryside of Portugal, there are better options for investment returns in the capital.

You can find nicely renovated properties in the city centre for prices ranging between €300,000 ($325,062) to €600,000 ($650,124).

Another benefit is that the prices for buying and renting continue to rise. On overage, Portugal’s property prices have gone up by 9.2% each year since 2017. Look to the metropolitan area of Lisbon, and property prices have increased 4.9% over the last year, putting median prices at €2,333 (US$2,532) per sq. m.

While property prices are increasing, it’s still relatively affordable for Europe, especially for a capital city.

However, it’s important to factor in the transaction costs associated with buying and selling property in Lisbon. These costs, which include real estate agent fees, value-added tax (VAT), transfer taxes‌ and legal fees, can add up.

In Portugal, legal fees are typically around 1% of the property’s sale value. Estate agent fees typically range from between 3% – 5% (plus 23% VAT) of your property’s value.

What makes Lisbon real estate such a good investment, though?

Lisbon’s popularity as a tourist destination fuels a strong rental market. Purchasing real estate, especially in the centre area, is a great investment, even if you don’t plan on living there. You could generate income through long-term rentals or lean on platforms like Airbnb for short-term lets (remember to stay informed about local regulations, though).

There is a fixed net rental income tax of 28%, but repairs, maintenance expenses and local taxes are deductible from the gross rental income. In comparison with other European cities, the rental income yield is quite high in Lisbon, making it a great investment.

Furthermore, purchasing a property as a permanent home in Portugal will also qualify you to become a tax resident of Portugal . While the country’s highly beneficial Non-Habitual Resident (NHR) tax regime has come to an end, there are still some decent tax benefits in Portugal, depending on what country you come from.

Unlike most European countries where second citizenship doesn’t significantly impact your tax
burden, Portugal offers potential opportunities for tax reduction through residency.

Why Buy a House in Lisbon, Portugal?

Lisbon is one of the oldest cities in all of Europe and is such a great deal all-round that we’ll always rate it as one of the best places to live in Portugal .

With a high quality of life and a low cost of living, it also made our list of 7 European Cities to Live in Luxury for Cheap .

What else does Lisbon have to offer? Whether you plan to live in your Lisbon home or rent it out to tourists or locals, investing in Lisbon real estate means you can enjoy all of the following.

Growing Startup Hub

There’s been plenty of buzz about Lisbon lately, thanks to its economic restructuring and efforts to attract startup companies . While local jobs around parts of the country might not pay much, Portugal has really been working to draw in entrepreneurs and, specifically, skilled workers.

Large Expat Community

Lisbon is home to an extensive network of expats.

Most expats comment on the friendly, warm atmosphere as well as the active community with much to do and easy ways to get to know people.

Cultural Diversity and Things to Do

Lisbon is a city known for its cultural diversity. It is very open and welcoming to expatriates, creating a safe atmosphere with one of the lowest crime rates in Europe.

It’s a pleasant place to live with mild weather year-round, plenty of sunshine, an easy-going pace of life and friendly locals. There are plenty of beaches in the vicinity and with 10 months of amazing weather, people are often found outdoors.

There’s also a lot to see in Lisbon. Monuments and historical markers abound, museums are first-rate and the architecture is beautiful. The streets themselves, especially in the older neighbourhoods, are fun to explore.

Low Cost of Living

The cost of living in Lisbon is one of the lowest in Europe, with affordable groceries and transportation costs.

Numbeo estimates that consumer prices in Lisbon are 41.4% lower than in London, while rent prices are nearly 44.5% lower.

Groceries, transportation‌ and utilities are also significantly more affordable than those in London. For example, a monthly public transportation pass costs around €34 in Lisbon, compared to €200 in London.

Portugal Real Estate for Expats: Best Neighbourhoods in Lisbon

Lisbon is the capital and biggest city in Portugal, with a handful of neighbourhoods of interest to foreign investors.

So, without further ado, what areas do we recommend when buying Lisbon real estate?

Alfama and Graça

If you’re looking for a quiet, traditional Lisbon neighbourhood, look no further than Alfama and Graça. These charming districts are known as ‘the heart of Lisbon’ with a close-knit community that treats you like family.

As the oldest neighbourhoods of Lisbon, these charming villages are home to many historical areas with narrow medieval streets and some of the best views in the city. They are also home to where Fado, Portugal’s traditional style of music, was created.

While it’s a calm neighbourhood nestled in the heart of the city, it is also near public transportation and is a popular tourist area. So yes, it’s quiet, but it’s definitely not dead.

Much of the housing is in need of renovation, but you can definitely find affordable prices on renovated properties. For the best houses, look around the cathedral quarter.

For a flat in this area, expect to pay around €5,900 per sqm. For a house or villa, you’ll be looking at €6,100 per sqm.

Bairro Alto

Known as the bohemian nightlife centre, Bairro Alto is where everyone will be on Saturday nights.

It’s home to the most popular restaurants, nightlife‌ and shopping, as well as many immigrants and expats, giving it a culturally diverse feel.

The side streets have many nice apartments (as well as many in need of renovation). If you don’t mind the loud weekends, it can be a fantastic central location to live in.

Apartments here sell for around €6,500 per sqm.

Príncipe Real

Príncipe Real is a quiet, charming neighbourhood known for its gardens. It’s probably one of the trendiest places to live in Lisbon.

If you’re looking for less of the wild nightlife of Barrio Alto and more of a sophisticated residential area, Príncipe Real is where it’s at.

The buildings in this neighbourhood are more stately, giving off a more expensive vibe. It has some of the best boutiques and places to get food and drinks, especially along the Rua Dom Pedro V.

Rent and house prices are higher. But those seeking more of a socially elite district of gardens and high-end shopping will enjoy this neighbourhood.

The average price for an apartment here is around €8,000 per sqm, while houses in this neighbourhood go for €11,000 per sqm.

Baixa and Rossio

The neighbourhoods of Baixa and Rossio make up the heart of downtown Lisbon.

This area is home to the main historic landmarks in Lisbon as well as many great places to shop and eat. As a tourist destination, it’s mostly busy during the day but quieter at night.

Apartments in these areas are quite spacious and there are many great investment opportunities.

As mentioned before, if you’re looking for an investment property where you wouldn’t live, but are looking to rent out, these neighbourhoods ‌offer great opportunities as tourist-friendly spots.

Real estate in this district can vary, with prices averaging anywhere from €5,000 to €7,500 per sqm.

Alcântara

Alcântara is a great neighbourhood along the Tagus River and right next to the city centre.

Here, you’ll find great attractions like the Docas de Santo Amaro, which has fantastic bars and restaurants along the docks, and the LX Factory, which is a renovated factory with trendy shopping, eating, offices and more.

Apartments in Alcântara start at around €250,000 (approx. US$271,913) for a nice one-bedroom apartment. You can easily pay €1 million (US$1,87 million) for a more spacious apartment, but there are many nice apartments for less than that.

Investing in Portugal Real Estate Beyond Lisbon

While Lisbon is the most popular destination for real estate investment, Portugal offers diverse and valuable opportunities beyond its capital.

Cities like Porto, the Algarve region and lesser-known locales like Braga, Coimbra and Évora are becoming increasingly attractive to investors.

These areas offer appealing alternatives to Lisbon, often with lower property prices, emerging tourism and appealing rental yields, particularly as demand for coastal and rural properties has surged among international buyers and retirees.

Porto

Porto is Portugal’s second-largest city and an economic hub with a rich cultural heritage. Known for its wine industry and UNESCO-protected city centre, Porto has seen significant growth in property values and rental demand, especially in neighbourhoods like Cedofeita and Baixa.

Properties here are often more affordable than in Lisbon, with promising rental yields due to the city’s steady influx of tourists and expatriates. Porto’s appeal extends to its balanced lifestyle, blending urban conveniences with a relaxed coastal atmosphere, which draws retirees and young professionals alike.

The median property price around here is only €3,569 per sqm – far more affordable than Lisbon’s best neighbourhoods.

The Algarve

The Algarve – Portugal’s sun-soaked southern coastline – is known for its stunning beaches, luxury resorts and thriving expat community.

This region offers a range of investment opportunities, from holiday rentals to luxury villas in high-demand areas such as Lagos, Albufeira and Vilamoura.

Properties in the Algarve are sought after by retirees and second-home buyers, and the strong tourist market supports high seasonal rental yields.

This demand makes it an excellent choice for those interested in holiday rentals and high-end property investments.

The median price of an apartment for sale around here is €3,866 per sqm, while a house will set you back €3,944 per sqm.

Braga and Coimbra

For investors interested in smaller cities with vibrant history and university towns, Braga and Coimbra offer some interesting real estate opportunities.

These cities are experiencing revitalisation with investments in infrastructure, technology and tourism.

Braga is known for its historical landmarks and has a growing technology sector, attracting younger residents and professionals. Coimbra, home to one of Europe’s oldest universities, offers a stable rental market fueled by students and academic staff.

Prices in these cities are generally lower than in Lisbon and Porto, yet they provide stable returns with potential for growth.

In fact, you’ll only pay around €1,441 per sqm for a house in Braga, while an apartment in the city centre will set you back €2,394 per sqm.

How to Invest in Real Estate in Lisbon, Portugal

As previously mentioned, Portugal’s golden visa no longer allows for real estate investments. However, there are still options beyond the golden visa program. After all, you don’t technically need a visa to purchase real estate anywhere in Portugal.

Let’s discuss the step-by-step process for investing in Lisbon real estate. It’s important to note that buying a property is rarely a simple process, and buying internationally adds a few more steps and some additional work. So be prepared.

Step 1: Obtain a Portuguese Tax Number

Whether you’re a resident or non-resident, to invest in real estate in Portugal, you’ll need a tax identification number, known as a Número de Identificação Fiscal (NIF). To acquire one, simply reach out to any of the government finance offices.

You’ll need to provide proof of your current address and passport information.

Aside from that, you can use this tax ID number to open a bank account in Portugal, which can help you avoid fluctuations in exchange rates.

Step 2: Find a Property

To kick off your property search, you can lean on a few of these local websites: OLX , Imovirtual , Idealista , Trovit and Nestpick . These websites offer a comprehensive overview of available properties, helping you understand market trends and refine your search criteria.

Once you’ve shortlisted your chosen properties and/or area, it’s best to consult with a local real estate agent. They can take your requirements and work with you to find exactly what you’re looking for in the right location.

Alternatively, you can choose to work with the Nomad Capitalist team — our main goal is to find you a good deal, not an ‘expat-friendly’ (and overpriced) deal like many of the local agents specialised in dealing with English speakers will try to get you.

Once you have narrowed your options down, go view them and choose which one you would like to buy. You can skip this step if you’re buying your property remotely.

Step 3: Purchase the Property

After finding the property that you want and settling on a price with the owner, the next step is to work through all the formalities of executing the contract. 

If you haven’t already found a local lawyer or solicitor or chosen to work with our team, now would be the time to seek professional help. You’ll need to review the terms and promissory contract with your lawyer or solicitor. Then both the buyer and the seller will sign the promissory contract.

At this point, you will be required to pay a deposit, which is generally 10% of the cost. If you back out of the deal after this point, you will lose your deposit.

Step 4: Signing the Promissory Contract

This is quite a simple step. When all the terms of the promissory contract have been met, the buyer and the seller or their lawyers/solicitors will meet in front of a notary to finalise the sale.

At this point, the buyer will pay the remaining amount owed on the property and the seller will hand over the keys.

Step 5: Pay the Fees

In Portugal, the seller typically pays the agency fees, but the buyer also incurs several additional costs:

• IMT (Property Transfer Tax) – based on the purchase price value and your situation. For non-residents buying a second or third home, it can be as high as 10% of the purchase price.
• Stamp Duty – a fixed rate of 0.8% of the purchase price
• Notary fees and Land Registration Fee – generally between 0.2% and 1.2% of the property value

Maintaining your Lisbon Real Estate

There really isn’t much to maintaining your property in Lisbon that would be different from anywhere else in Europe. 

You’ll be responsible for utility bills which consist of a recurring fee, as well as a metered usage fee. In other words, even if you’re not using ‌electricity or water, you will have to pay a set amount per month.

If you use the space, your utility fees should not exceed a few hundred euros. However, if you are renting it out, it’s customary for long-term renters to be responsible for all utility expenses.

If you’re using the property as a rental, there is a well-developed property management market, especially in the major tourist areas of Lisbon. For a fee, they’ll take care of all your rental concerns and needs.

Property owners are responsible for paying an annual property tax. Each municipality sets its own tax rates, which typically range from 0.3% to 0.8% of the property’s value.

Still, it’s definitely not like the property tax in the United States or in Western Europe, where they’ll make you pay through the nose just because you own real estate.

Challenges of Buying Property in Lisbon, Portugal

Buying foreign property can be an intimidating process. There is no scarier feeling than when you’re about to wire funds to a foreign country, possibly to somewhere you’ve never been before.

While some places in Latin America and Asia have their troublesome nuances regarding buying real estate, there’s less to worry about in Portugal and especially in Lisbon where foreign investment is common. The entire process is fully regulated and handled by notaries, lawyers, and government officials.

There is pretty much no room for scams or mishaps.

The biggest challenge with Lisbon real estate is probably finding properties for sale.

This is great for high selling prices and rental yields, but it can make it more difficult to find the perfect option at the price you want.

Another consideration specific to Portugal is the law of subrogation, which attaches debts to the property, rather than to the borrower. Most lawyers will catch this when putting together the contract, but if you’re not careful you can end up being liable for any unpaid taxes, bills or even mortgages connected to the property.

The final challenge concerns the title deed. Portugal has a dispersion of ownership clause where family properties will pass down through the generations and can end up belonging to several people — including relatives who have immigrated to a different country.

This can cause huge delays in finalising sales as you must hunt down everyone who has ownership of the property to facilitate the sale.

While it is less common in Lisbon, it is still something to be on the lookout for if you’re in any kind of hurry to get your property. And again, any good lawyer will catch something like this, so make sure you’re well-represented when getting involved in purchasing foreign real estate.

Obtaining Residence and Citizenship Through Portugal Investing

Despite the termination of the golden visa program, purchasing real estate in Lisbon remains a sound investment. However, if your primary goal is to obtain residency or citizenship, you’ll need to consider alternative investment options like capital contributions.

Outside of the golden visa program, you can get citizenship in Portugal after living there for five years. If you are a non-European Union citizen, you will first need to apply for a temporary residence permit, which is somewhat easy to get through programs like the D7 visa or D2 visa.

Most visas are granted for one to two years and can then be renewed every two to three years.

After five years of temporary residence, you can apply for a permanent residence permit which will need to be renewed every five years. Or, after ‌five years, you can apply for citizenship.

If you’re looking to buy real estate and live in Lisbon, this is a great option. You can simply find a nice place to live and apply for citizenship after five years. However, you will be required to have a clean police record with no jail sentences and demonstrate sufficient competency in Portuguese.

If you are married to a Portuguese citizen, you can apply for citizenship after three years and there are no requirements about living in the country under that option.

There are also citizenship options if you are lucky enough to claim parents who were Portuguese citizens. Citizenship by descent is probably the fastest and least expensive option to acquire citizenship in Portugal.

Investing in Portugal Real Estate: FAQs

Lisbon Real Estate: A Great Investment

As an open, diverse and beautiful city, Lisbon, Portugal has become a hotspot for tourists and expats alike. Its year-round warm weather and friendly people are hard to top.

It has a whole lot more to offer than just beauty, though. Some of the benefits of investing in Lisbon real estate are:

• It’s one of the most secure and attractive real estate markets in Europe
• It boasts the lowest real estate prices for a European capital city
• High rental income yields, especially in the downtown tourist areas
• Strong constitutional property protections
• A short timeline of five years to citizenship
• A top-notch Tier A passport
• The possibility of establishing non-habitual residence and tapping into the incredible tax savings

If you’re considering investing in foreign real estate, Lisbon is a great investment right now.

As the capital of Portugal, Lisbon offers all the charm and benefits of Europe but at some of the lowest prices in all of Western Europe. The important thing is that you don’t work with ‌local agents who have ‘specialised’ in investment real estate and will cost you a premium.

Here at Nomad Capitalist, we have a boots-on-the-ground perspective of Lisbon’s real estate market and can work with you to uncover the best deal and the best property for you.

Get in touch today to learn how you can benefit the most from your next investment.