Foreign investors continue to show great interest in Portuguese real estate, contributing €682 million to the property market in the first quarter of 2024.
Despite a slight dip from the €853 million in the final quarter of 2023, real estate still comprises the majority of foreign direct investment (FDI) in Portugal during this period.
Overall, foreign investment in Portugal totaled €1 billion between January and March 2024. Real estate accounted for more than 60% of this, confirming the sector’s enduring appeal to international investors. However, these figures mark a decrease compared to mid-2023 when the summer quarter saw a peak of €1.137 billion in property investment.
Breakdown of FDI by Region
The bulk of FDI in Portugal came from European countries, which collectively invested €544 million in the first quarter. Asian investors followed closely, contributing €211 million, with the Americas adding €159 million and Africa €108 million.
FDI and Portugal’s Economy
FDI is a key driver of the Portuguese economy, representing 67% of the country’s GDP in Q1 2024, according to data from the Bank of Portugal. However, the overall stock of FDI in the country fell by €1.1 billion from the end of 2023, despite positive transaction values. The Bank of Portugal attributed this decline to factors such as price fluctuations, exchange rates, and statistical adjustments.
In contrast, Portugal’s Direct Investment Abroad (DIA) increased to €65.4 billion, equating to 24% of the country’s GDP. This uptick was largely fueled by €1.8 billion in international transactions.
The Appeal of Portuguese Real Estate
Portugal remains an attractive destination for international investors, offering a favorable tax regime, the potential for high returns on property investments, and a growing tourism industry. The Golden Visa program and Non-Habitual Resident (NHR) tax regime, although recently adjusted, have historically contributed to the strong demand for property among foreign buyers.
While the numbers reflect a short-term dip, the long-term potential for real estate investment in Portugal remains solid, particularly in high-demand areas like Lisbon, Porto, and the Algarve. Investors continue to see value in the country’s affordable property prices compared to other European markets, along with its pleasant climate and quality of life.
Conclusion
With foreign investment representing a significant portion of Portugal’s economic growth, the real estate market remains a pivotal sector. Although Q1 2024 saw a slight decline, the country’s appeal to international investors remains robust, particularly from Europe and Asia. As Portugal continues to adjust its tax regimes and property laws, real estate is expected to stay a prime investment sector for those seeking both profitability and lifestyle advantages.
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