Why Portugal is the Perfect Destination for Your Next Investment!

Portugal stands out as a prime destination for real estate investment, fueled by steady economic growth, a thriving tourism sector, and significant foreign interest. With GDP growth projected at 2% in 2025, the nation showcases economic stability that reassures investors. Its strategic location, political stability, and investor-friendly policies further solidify Portugal’s position as an increasingly attractive and lucrative market for global real estate ventures.

The Real Estate Market in 2025: What’s Hot?

  • Rising Demand: Areas like Lisbon, Porto, and the Algarve continue to see steady price increases, though the rate of growth is stabilizing compared to previous years. Smaller cities like Braga and Coimbra are gaining attention for being more affordable.

  • Short-Term Rentals: Lisbon and Porto are major hubs for short-term rentals, which offer higher returns than long-term lets. But be mindful of changing regulations around Airbnb-style rentals. Learn more here!

What to Expect for Prices in 2025

Portugal’s recent pro-immigration policies have fueled population growth, especially from foreign nationals, adding momentum to the demand for both short- and long-term rentals. Property values have surged over the past decade, with regions like Greater Lisbon and the Algarve witnessing high demand from foreign investors. Investors targeting the rental market can find favorable yields, particularly in tourist-centric areas, with short-term rentals often yielding 5-10% annually. Long-term rentals offer stability, yielding 5-7%, and benefit from flexible leasing laws that cater to investor preferences.

  • Lisbon: Offers some of the highest rental yields, particularly for short-term rentals. In central areas, the average price per square meter ranges from €4,000 to €5,000. In prime locations like Chiado, prices can exceed €7,000 per square meter, while more affordable options can be found in peripheral neighborhoods at around €3,000 per square meter.

  • Porto: Gaining traction with foreign buyers due to its affordability compared to Lisbon, with prices ranging from €2,500-€3,500 per square meter in prime locations. Up-and-coming areas like Bonfim and Cedofeita are worth watching.

  • Algarve: Perfect for vacation homes and short-term rentals. Lagos, Tavira, and Faro have excellent potential for returns, especially in the luxury market. Prices vary drastically. Coastal towns like Lagos and Albufeira can go as high as €3,000-€4,000 per square meter, but more inland areas like Silves or Tavira are often cheaper and still offer beach access.

  • Smaller Cities: Are excellent for long-term investment, offering more affordable options and good rental yields for students or retirees. Cities like Braga, Coimbra, Évora, and Funchal (Madeira) offer properties for €1,200-€2,500 per square meter, with growing appeal due to their lower cost and high quality of life.

Real Estate Process: What You Need to Know

Investors should be mindful of costs such as Property Transfer Tax, Stamp Duty, and annual property taxes. Additionally, obtaining a Portuguese Tax Identification Number (NIF) is a straightforward process and is required to engage in financial transactions. This simple step ensures seamless participation in the local market and facilitates all investment activities.

  1. NIF (Tax Identification Number): Before purchasing property, you need an NIF. It’s required to open a bank account, sign contracts, and buy property.

  2. Pre-Contract: Once you find a property, a promissory contract is signed, typically requiring a deposit of 10%-30%.

  3. Final Contract: The final deed is signed at a notary’s office, where the remaining balance is due. The entire process usually takes 4-8 weeks if everything goes smoothly.

  4. Fees: Expect closing costs of around 6%-10% of the property value. This includes taxes, notary, registration, legal and mortgage fees.

Ready to turn your plans into reality?


Let’s explore the perfect property for you—whether it’s a dream home, a smart rental investment, or a blissful vacation retreat in sunny Portugal.

The Kream Team is here to provide guidance, answer any questions, and assist throughout the entire process, ensuring a smooth and successful investment experience.

For more information please contact us.

January, 31th 2025.