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Before and after moving to Portugal you have probably come across articles, posts and videos telling you the reasons to buy real estate in Portugal. Many of those, of course, are authored by real estate agents who would like to sell you a house. They might include facts and good reasons for buying or just state the obvious triad of sun, beaches and food and try to derive a rationale for buying from that.

A lot will surely be relevant for you in regard to moving to Portugal, but let us have a look at the factors that determine whether Portugal is also a good place for your money.

We will start with general reasons which give buy-to-let investment an advantage over other investment opportunities and then see if there are any additional advantages that apply to Portugal more than to other countries.

Focus in this post will be on reasons and, hence, advantages. Follow the respective link if you would like to learn more about the 5 biggest threats to the real estate market in Portugal in 2023 or the troubles that the Governments housing law package ‘mais habitação’ might bring.

The terms investment and buy-to-let will be used interchangeably.

What are the main reasons to do buy-to-let investment in general?

Investing in buy-to-let has some advantages over other types of investment. These are not universally true but apply to most developed markets and buildings most of the time.

Cash flow and passive income

On the top of the wish list of many digital nomads and part-time investors is passive income and cash flow respectively. Despite the obvious required tasks that are still needed, like search, selection and financing process as well as various property management tasks, real estate is very suitable to generate a constant, long-term and low maintenance income stream.

Further, many tasks can be outsourced to advisors, which can make it even easier to implement.

Capital appreciation and leverage effect

On top of the above-mentioned cash flow returns there is a fair likelihood that the value of your asset (meaning house, apartment etc.) increases in the long-term. Although this is usually hard to cash in on without selling it builds and stores wealth.

This is even more the case when debt financing is applied, since the value increase applies to the market value of the total investment which is higher and often a multiple of the invested equity. This is also known as the leverage effect and we will shed light on that in a future post.

You might argue that a big share of the mortgage rate go into interest payments which you will never see again. However, you still have the returns:

  • Firstly, the difference between the income of the property and the costs of the mortgage.
  • Secondly, the part of the monthly rate that is the repayment.


Depending on your personal tax rate this may or may not apply to you. In many countries taxation of real estate investments is more favourable compared to other asset classes because it is often considered a retirement provision. Regulations vary and it may be worthwhile to stay on top of the topic to align your decision with it.

Often tax advantages come in the form of:

  • reduced capital gains tax at sale after a certain minimum holding period or when the reinvestment meets certain criteria
  • reduced tax for buildings under monument protection or in dedicated development areas
  • increased write-off options to reduce the taxable profits
  • deductibility of costs to reduce the taxable profits
  • special deductibility or direct subsidies for improvements of energy consumption
  • reduced tax for rent coming from affordable housing
  • tax reductions to transform short-rentals to long-term rentals

In Portugal some of these are about to change with the implementation of the housing law package ‘mais habitação’.


Since the underlying factors which determine the performance of real estate are rather slow and the market is very large, volatility is lower than in many other asset classes. This is also supported by the fact that property is not very liquid (or tradeable) and often held long-term.


Often called an inflation hedge, one reason for buy-to-let investment is that it offers relatively good protection against inflation. This will depend on the type of real estate, rental law as well as the tenancy situation. However, the following contributes greatly to safeguarding your money:

  • Firstly, market rents (the rent that a unit could be let at) move freely, so at time of high consumer inflation and-or rising incomes, new lease contracts are entered into at respective higher rents. Each time a lease ends and a re-letting takes place this can be repeated.
  • Secondly, most lease contracts have an indexation clause which links them to consumer inflation. Variations of it also exist, e.g. step rents (fixed increase) or rent updates according to market rents. Even when these often cannot reflect the entire inflation, the adjustment is much better than in many other investments.

Limitations often occur when governments apply rent caps trying to maintain affordability. In Portugal, an example of this would be parts of the housing law package ‘main habitação’.

What are the reasons to do buy-to-let investment in Portugal specifically?

There are some reasons for doing buy-to-let investment that currently apply more to Portugal than top many other European markets.

Supply and demand

In Portugal, more than in many other European real estate markets, limited supply meets rising demand. A lengthy licensing process, one of Europe’s highest GDP increases, rising average incomes and a strong immigration have led to annual double digit increases in rents and sales prices in Lisbon and some other locations.

Whereas most countries in the EU face stagnating decreasing property values, Portugal has only seen a slower increase and current forecasts expect a moderate decrease of 3% that is yet to be seen.

Further, the governments housing law package ‘mais habitação’ has the potential to put further pressure on housing supply.

Market development

The Portuguese real estate market has become significantly more professional, international, transparent and investible over the past 10 to 15 years. This was also supported by politics that incentivise investment and create stability for market participants.


Often foreign investors plan to divest in their home market and invest in Portugal after they have moved. What becomes obvious during that step is that, despite being exceptionally expensive for locals, real estate purchase in Portugal is still rather affordable for foreigners. This shows in absolute terms (price of a unit), in square meter terms (price per sqm) and in rental returns (yield):

  • Instead of one apartment you can often buy a building and maintain more control over your investment.
  • Instead of buying a unit in a secondary location you can often buy in a prime location.

International attention

This is a relatively soft factor, but should not be underestimated.

Despite being rather small country the international attention of media, tourists, digital nomads and immigrants is significant and poses a relevant support to the economy and, therewith, the real estate market. It benefits the important hotel & hospitality sector, allows Portugal to attract foreign investment and direct funds to areas of the economy that need improvement. This strengthens employment and support incomes and eventually the real estate market.

Is buy-to-let investment in Portugal for me?

As you will probably already have learned from other posts on Real Estate Bricks, this will always depend on your personal risk-return-profile.

Compared to some markets, where foreigners typically come from, Portugal is a bit less transparent and professionalised. Although this is constantly improving, real estate investments in Portugal have higher risks and higher returns.

Always consider the risk exposure that suits your lifestyle, the mix with other investments as well as diversification of investment types or even real estate types.

Also, what should be kept in mind is that the investment process as well as potential refurbishments and the property management may be more difficult than in your home country.

Be honest to yourself and define the amount of risk and hassle you are able and wiling to deal with.


If you have made all of the above outlined considerations and still find yourself optimistic about making buy-to-let investments in Portugal you can benefit from some untapped potential and achieve higher than usual returns from a very dynamic rental market and strong capital appreciation.

Stay informed about the market, understand key topics such as the housing law package ‘mais habitação’ or transparency of the national real estate market and sign-up for the Real Estate Bricks newsletter.

If you are looking for advice that helps you to understand the Portuguese market, limits your risks, supports your buying process or you want to get connected to other services along the investment process, drop us a line.

In case we put you in business with 3rd-party servicers we may collect a referral fee from them.


Once one of Europe’s worst performing economies and housing markets, Portugal has shown a remarkable upswing over the past 10 years and, more recently, resilience against some of the covid-related as well as post-covid challenges.

Shaken up by international and national issues many investors ask themselves if it’s now all over and the market is about to plummet as rapidly as it rose.

‘One man’s joy is another man’s sorrow’, meaning that you could also say that something that poses a threat to one investor is an opportunity for another one.

In the following we understand threats as any disruptive development that reduces the performance of the market rather than just specific groups of market participants.

We will look at arising opportunities in troubled markets in separate posts if and when the discussed threats gain traction in the market.

Political threats

Whilst not the most obvious threat to residential real estate investment markets, political factors impact all areas of life and are on of the most important framing factors.

Traditionally, but especially in the past few years leftwing parties represented the majority in parliament. One of their goals has been to improve the populations’ living conditions by increasing regulations of parts of the economy.

In 2023 the housing law package ‘mais habitação’, drawn up in March and very likely to come into effect end of October, changes significant parts of the investment environment. Some of the most severe changes regard short-term letting, Golden Visa, licensing, forced letting and rental caps.

Not only do these measures have direct impact on supply and demand as well as prices; they also shake investors’ confidence and have the potential to reduce future capital inflows and, hence, property prices. One of the major factors to attract international capital are political stability and a favourable investment environment. Therefore, short-notice and strong changes can have a strong negative reaction.

What is more, some of the planned measures have not yet been worked out all the way to the practical implementation. That means that at least for the end of 2023 and maybe beyond friction and unclarity remains around fundamental topics such as the licensing process.

Economic threats

Like most countries and asset classes, the abrupt rise in interest rates creates difficulties for many market participants. Since interest rates are decisive for investment decisions, values and the costs of financing the impact is very strong.

The consequences will only become visible with time since many occur with time lags.  

This can lead to gaps between sellers’ and buyers’ pricing expectations which may not be bridged in the short term and the transaction market get stuck with the situation (as it is already the case in most European commercial real estate markets).

However, this threat may be offset or even reversed if mortgage rates are updated (most private mortgages are not fixed) and many owners are forced to sell at the same time.

Market threats

Firstly, more and more investors remain in standby position since they expect pricing corrections as a result of interest rate changes.

Secondly, the termination of real estate investment as a path to obtain a Golden Visa removed a share of the demand from the market.

Thirdly, domestic demand is very dependent on debt conditions which have worsened significantly.

The above market threats, amongst other factors, have already contributed to a slowing dynamic in Portugal’s residential market – apartments remain longer in the market and the rise in prices has been much lower in Q2 2023 than in most quarters of the previous years.

Legal threats

Parts of the above-mentioned housing market law package ‘mais habitação’ is a change in the licencing process, which is designed to ease and speed up the licensing. However, some of the details have not been entirely defined, which means an adjustment period with some insecurity regarding responsibilities and steps may hamper the process before it becomes a routine for all stakeholders and gets more efficient. This will affect new construction and refurbishments that require a licence from the municipality.

In the medium-term to long-term it can be expected that more licences will be granted quicker, which increase supply of residential space to the market. This may put pressure on the sales prices, however, there is a fair likelihood that there will not be surplus supply.

Construction cost threats

Lack of qualified labour and strong demand for construction services have already caused costs to increase year after year before covid. With the beginning of the war in Ukraine building materials have become more expensive and drove those costs further up.

In addition, labour costs are still rising supported by high inflation in correlation with high interest rates. Further, demand for construction and refurbishment services remains strong.

The above combined with pressure on house prices can led to decreasing margins for developers and owners.

Ownership threats

Most of the above will affect owners of residential real estate more indirectly than directly. However, there are some direct threats that owners should have on their radar in 2023.

Firstly, this would be the new law contained in ‘mais habitação’ that allows for the forced leasing of permanently vacant residential units. It limits the owners’ options to use their property as planned and may bind to an unfavourable tenancy which they have to stick to.

Secondly, with 2023 bringing some summer temperature records the requirements for isolation of façades, windows, doors and roofs as well as technical parts, such as air conditioning are rising. Buildings which do not fulfil these requirements may face limited rentability and saleability in the future or respective works need to be factored in.


2023 is undoubtedly a year with some unusual threats to residential real estate markets in Portugal.

These include threats on the macro level, such as politics and the economic environment, but also some specific to the real estate market and its legal framework. Depending on the respective market participants construction cost threats and challenges for existing owners add to that.

It is important for aspiring investors as well as owners to keep an eye on upcoming changes and evaluate options for action and react timely where necessary.

However, some of these threats are still in their infancy and may not come through as strong as expected at all.

It should be remembered that Portugal’s, and especially Lisbon’s, residential market still benefits from limited supply and stable demand which can keep many problems away. This applies to the sales market and even more so to the rental market and, hence, which adds an additional layer of safety.

If you would like to:

  • Get assistance on potential acquisitions and arising opportunities,
  • Analyse your existing assets in regard to your risk exposure,
  • Assess the impact of the above or other threats on your planned investment or
  • Evaluate your options for action in the Portuguese real estate market

just contact Real Estate Bricks to discuss a potential service proposal or get linked to respective experts.  

In case we put you in business with 3rd-party servicers we may collect a referral fee from them.

The Situation

Various locations in Portugal rank amongst the best worldwide for digital nomads whilst providing high quality of living and proving an excellent investment in the past.

Although digital nomads are increasingly integrated in everyday life and not only enjoy, but also contribute to the well-being of urban spaces and local economies they rarely find themselves on the owner’s side of real estate investments. Instead, they are usually renters who often lack ways of making long-term investments to accumulated wealth. 

Despite being well-educated and working, their lifestyle often prevents them from ‘getting on the housing ladder’, which puts them at a disadvantage compared to their more domestic counterparts or previous generations.

Aside from the general challenges that await any buyer or investor in real estate, there are some additional hurdles that are specific to digital nomads and that they should be aware of. Depending on the individual situation those can be easy or hard to overcome. 

Overall, there are five challenges specific to any digital nomad who intends to invest in real estate in Portugal or elsewhere. In addition, you should not lose sight of the two more general issues relevant to any foreigner buying in Portugal, the most important being visa and moving without buying.

Challenge 1: Geographics

Anything real estate is local, whereas the digital nomad, by definition, is anything but local. Ranging from reaching out to a broker in a different time zone, over visiting the potential investment, understanding the micro location, making contracts to refurbishing and meeting potential tenants.


  • Use your time in the respective location to visit a broad range of apartments. Over time your skills of relating between the real estate listing and what is to expect in reality will improve. An in-person visit will still be very important, but you will be able to screen and pre-select much better based on photos, 360º-walkthroughs and videos.  
  • Also, try to make some connections while you are on the ground. Meeting a consultant, a sales broker or an architect in person and discuss a potential investment will be a good basis for collaboration in times you are not around and need to rely on someone. 

Challenge 2: Language

Whereas in places like Portugal and especially within the real estate sector most people will assist you in fluent English, you may encounter problems nevertheless. The common step of double-checking what a local advisor (who may, at times, act in their own interest rather than in yours) told you becomes tricky.

Also, many steps in the investment process are subject to legal requirements. Your respective consultant, broker or architect will always be able to explain anything you need to know. However, it can become tricky when you want to verify primary sources, search for details online or use the original laws. 


  • Ask for bilingual contracts where possible. The Portuguese version will still be the legally binding, though.
  • Access original information and primary sources wherever possible. Ask for the precise Portuguese term and spelling of a topic that you are going dive in deeper. You can enter it in your search engine and then understand by using your browsers translation function or an online translator like DeepL.
  • Where information is crucial you might want to make use of translated, a translation service that lets you upload your text and choose between different qualities of translations of any language. 
  • When you have no way of verifying, consider getting a second opinion at least. This will reduce your risk of relying too much on a single person.

Challenge 3: Exchange Rates

When making any kind of investment you will always aim for a good relation of risks and returns. That means the more risk you take the more money you should earn. 

However, the equity (your own money) you invest may be in the currency in which your work gets paid, while the investment, any associated costs and your returns (rent, sales proceeds) maybe in another currency. With changing exchange rates these in- and outflows may vary significantly. The effect can be positive or negative and even increased in case of a mortgage.


  • See past volatilities of the two currencies in question. While past exchange rates cannot project future ones, they will give you an idea of the possible upside potential and downside risks.
  • Plan ahead: What are you going to do when an investment becomes too unattractive over time? Will you keep it and hope for an improved situation in the future or sell to cut your losses? Will you rather realise an unexpected gain by selling ahead of time or sit still and enjoy your growing wealth? Ideally, those decisions are made long-term and with respect to you respective phase of life. 
  • See if your mortgage bank offers protection against exchange rate changes. Some products tailored to foreign investors may protect you from unforeseen costs against small fees. 

Challenge 4: Digital Nomad Glasses 

When you do not spend all-year round in the same location, there is a higher possibility that you live disconnected from locals, their everyday lives and therewith from local dynamics. Places you go will vary less and you will be more likely to surround yourself with like-minded people.

While this might be exactly the setting you selected to invest in, keep in mind that real estate markets are largely impacted by a country’s politics and economy. A small change in those high-level areas (e.g. change of interest rates for mortgages) may easily overwrite a different development on the low-level (e.g. AirBnB rates in central locations) in the setting you are familiar with.


  • As a digital nomad you will already have developed some routine for connecting when you arrive in a location and disconnecting when you head somewhere else. Try to incorporate checking on local everyday life and the real estate market when arriving or even regularly. This can be through newsletters for foreigners (e.g. Essential Business, The Portugal News) or simply headline screening in Google News (remember to set location and interests). 
  • When you already have invested and you work with a local advisor, ask them to let you know when there are important news in politics or legislation that would affect you investment. This could be a property manager, a local friend or a good accountant.

Challenge 5: Reaction time 

Despite real estate being a long-term investment and an area where things usually do not change by the hour, you may be forced to react quicker than expected. A competitive bidder forces you to decide if you want to bid higher, the painter has a question, an urgent repair has to be made, a potential tenant wants to visit the apartment etc.


  • Have someone you trust on the ground. This can be an advisor you trust, a professional property manager or even a friend or an engaged neighbour who you trust and could compensate for their time. 
  • Plan ahead: When making your investment or before leaving the city at the latest work with an advisor to work out your personal investment strategy:
    • Are you going to be hands-on on all topics or are you going to save time and trouble chunking off as much as possible to local servicers?
    • What situations are likely to occur over the years when owing an apartment, e.g. tenant change, refurbishment, repairs etc?
    • Are you OK with coordinating different specialists on different topics or will you need a single-point of contact due to time-constraints?

Challenge 6: Visa

The end of the Golden Visa programme for real estate investment in 2023 limits the access ways for non-EU nationals to stay in Portugal permanently. Plans change and while you might not want to seek permanent residency for the time being you might want to be aware of your future options. 


  • Be clear and stay updated on visa regulations as, for instance, Portugal Digital Nomads Visa or the D7 Visa (‘Retirement Visa’).
  • Research your potential residence alternatives that suit your life and lifestyle, e.g. resident visa, short-term tourist visa, temporary stay visa or even a job-seeker visa. 

Challenge 7: Moving without buying

Surely the possibility of moving into your own apartment or kicking-off your first stay in a new country with a great investment seems intriguing. However, investing with limited knowledge of a location and only brief experience in living there stipulates an avoidable risk.


  • Consider moving without buying. See your time as a renter as a way to flexibly chose different neighbourhoods, find your preferred living situation and collect experience in the local real estate market. 
  • This will help you to make more informed decision on any future investment and you might even remain a happy and flexible tenant whilst buying and renting out to others in the future.