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Portugal’s Real Estate sector sees major changes and adaptations to the current market in 2023

In the years following the Pandemic - property interest soared and there was a real race to catch-up in Portuguese real estate sales – which regressed in spring / early summer 2023. This trend was exacerbated by new proposals from the Portuguese government to make changes in the Housing sector; with the end of the ‘Golden Visa’ for non-Europeans buying properties, the debate about the Alojamento Local (AL) rental licence, and a discussion regarding ending the successful Non-Habitual Residency regime. Together with the worldwide economic and political situation, high inflation, and high interest rates, rising construction costs and a shortage of properties - a mood of uncertainty has spread into the market. Fewer homes have been sold, and the real estate market has cooled as competition has increased. Construction companies and developers have increased their prices as well as a vast number of property vendors – pushing the market to relatively over-inflated peaks. This makes advising on valuations more difficult and sometimes unrealistic.

Wednesday, 20 December 2023 - Real Estate

The Real Estate agencies

In this sense it makes it very difficult for real estate agencies to work with elevated prices which will rarely or never be accepted by buyers, and therefore obtain smaller commission payments. The real estate agency – depending on its size, alignment and orientation needs an annual marketing budget to promote its properties with trained and qualified staff, posting on several portals, advertising in print media, social media, press work, exhibitions, marketing material…. until the final point of sale. For this an agency requires reasonable remuneration through commission. In Portugal the normal procedure is the vendor signs a mediation contract with the agency and pays commission to them. As such buyers do not pay commission to the agent. To market properties with low commissions in a very competitive market with decreasing purchasing power can lead to a major market ‘shakedown’.

Portugal is a sought-after destination by Portuguese, Europeans, and non-Europeans. Portugal ranks as one of the best countries to go to retire, to buy a second home, frequently shines at the World Travel Awards, and is nominated as good value-for-money for US citizens. Within Europe it is normally easy to reach within approx. 3 hours. From 2024 onwards, there is a new flight connection from Algarve’s airport in Faro, directly to New York. Lisbon already offers many non-European flight connections.

Portugal offers beautiful and diverse landscapes, interesting and lively towns, breathtaking beaches accessible to the public, dream weather throughout most of the year, especially in the Algarve. It is rich in history, with friendly welcoming locals - many speaking English, numerous golf courses, hotels and night life, good food and wine, internal security, good internet access, top online payment terms, a reasonable cost of living depending on where you are, improved health system with many private hospitals, low pollution and environmentally friendly. In October, 67 % of the energy consumed in Portugal came from renewable sources, an increase of 3.1% compared to the previous month. It is also important to mention that Portugal is not overcrowded and hectic (except for large metropolitan cities). There can be occasional bureaucratic delays but aside from that, the country has been successfully offering many visa and tax opportunities.

Rental Licence, Visa Possibilities and the NHR (Non habitual Regime)

The AL-Rental licence – especially popular in large towns and cities like Lisbon and Porto for short stays with tourists has had a shake-up this year. The government would like to provide more housing to the locals and to improve the long-term rental market. But there are always possibilities to buy and rent a property, depending on location, for example in tourist condominiums with their own reception, tourist resorts, on golf courses, guest houses or hotels and in rural areas. 

The successful golden visa for non-Europeans buying properties has come to an end, the law was passed and published in October, but there are still other possibilities and options to invest under this regime. 

The most attractive visa type is the D7 visa for retirees or those who live off their own passive income which must be proved.

The new visa type is the Digital Nomad, D8 and is suitable for professionals who work remotely on their own account or for others in a foreign country.

There are numerous other visa types for non-Europeans, such as for work activities, or Migrant entrepreneur, teaching purpose and highly qualified and cultural activities, research, and family reunifications.  Please see the link here:

The NHR (Non-Habitual Tax Regime) will also come to an end in 2024 and for new applications but continues for those who already have benefits.

Adaptation to the current market

The Portuguese market is strong and very attractive but urgently needs to correct its lower supply when facing high demand.  A major price revision for real estate is essential and will happen. High material costs of development and completion in the construction industry should be more transparent. Transaction time and associated costs should be accelerated, especially for banks and valuations. There is a need to renegotiate existing mortgage contracts. This issue has sparked huge demand for rentals and building to rent. Another good solution would be to buy a building plot now, because there are getting less and build later when prices have fallen and stabilized. Please see the link here:

The decrease of high property prices is already foreseen to adapt the current market. Some owners have already reacted and reduced their property prices. Portugal is a beautiful country and with these measures, many old and new projects will find their way to buyers in 2024. Portugal is also an interesting market for investors looking for profitable commercial real estate with good yield and return on investment.

Copyright December 2023

Real Estate Agency: Togofor-Homes, Susanna Gross, Sales & Marketing Manager Algarve/Alentejo


Fim do regime dos residentes não habituais preocupa imobiliário — idealista/news

Martinez Echevarria & Ferreira, Law Firm - Tax Department

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