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Why Property Investors Should Consider Investing in Lisbon

Lisbon, the capital of Portugal, is a hilly coastal city, and it is not just a tourist spot. In recent years, it has become one of the hottest property investment markets in Europe, with investors from all over the world looking to invest in the city. Many factors have made the city very attractive including a stable social and political environment, low crime rates, a strong economy, and a modern education system. There are also programs created to attract investors to the country. Let’s take a closer look at why Lisbon is such a great city for investors.

Lisbon as a city that combines investment opportunities with rich beauty and culture
The city's attraction for property investments.

Good Quality of Life

Whether you are an ex-pat or someone looking for a second home, you want to live in a place with a good quality of life. Lisbon offers just that. It attracts investors to not only do business but also enjoy everything the city has to offer while they are there. Portugal is also one of the most peaceful countries in the world making it great for those looking to relocate.

Lisbon has about 300 sunny days out of the year, and it also has a rich culture. You will also not be disappointed by the rich cuisine, with international restaurants ready to provide all the dishes you could want.

All of these factors make the city very attractive, and those who move in or visit need somewhere to stay. Investors can step in a build or buy property to fulfil these needs.

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Growing Economy and The Development of Lisbon

Portugal’s economy has been growing for a long time and this is expected to continue in the coming years. The country also has a reduced employment rate and an increased production rate. Both of these have helped the country step out of a 19-year recession and become one of the fastest-growing countries in Europe.

Government programs like IFRRU 2020 aimed at making the city more attractive have also helped Lisbon become very attractive. These programs are targeted towards rehabilitating existing buildings to make the city more desirable.

Some programs are geared towards helping the city grow, increasing its population and the number of jobs available. These programs deal with streamlining urban services and systems, energy efficiency, developing underdeveloped areas, and the rehabilitation of dilapidated urban areas.

Lisbon is also part of the European Sharing Cities network where cities volunteer to be test areas for new technologies. Investors who want to be part of such a program have access to numerous opportunities for not only establishing new businesses but also growing ones.

Growth of Property Price

Residential price growth in Portugal in general and Lisbon, in particular, has been impressive over the last few years. The Confidencial Imobiliário reports that the annual growth in these prices sits at 12% for Portugal as a whole and 21.5% for Lisbon.

Another important factor to keep in mind is the growth of residential property sales. The increase in the demand for property and a growing economy are some of the reasons attributed to these growing sales numbers.

Focusing on Lisbon's skyline with a percentage symbol showing the city's impressive 21.5% annual price growth
Confidencial imobiliário report and 12% annual growth in Portugal's prices.

Many international investors say these factors are a significant reason they have turned their attention to Lisbon. Some have even admitted moving their capital there from Catalonia, which they deem more unstable.

Additionally, a state policy supporting startups has attracted a lot of young entrepreneurs seeking accommodation. Investors with properties in Lisbon can use property management companies like UpperKey to attract these young entrepreneurs to their properties, ensuring high occupancy and low vacancy rates.

Short-term Rental Investing is a Great Alternative

Lisbon has recently seen an influx of tourists who favour Portugal over other tourist destinations. The higher number of tourists has led to a higher demand for property and the market is having a hard time keeping up. This has opened up opportunities that investors can leverage.

Many property investors are leveraging this demand by opting to invest in short-term rentals. Once they do, they let companies like Upper Key manage the property for them. The best thing about doing so is that investors get guaranteed income regardless of the time and year.

As the demand for such rentals increases, investors can expect their revenue to keep going up. However, it is also important to understand that how much you can make from such investments will depend on its amenities, size, and location.

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Growth of Tourism

As mentioned above, Lisbon has become a preferred tourist destination for many. This is because the city has a very long summer season and warm winters, which makes it pleasant to live in throughout the year. Lisbon is also among the very few European cities with beaches, with many of these beaches within an hour of anywhere else in the city.

In addition to short-term rental demand, tourism growth also influences long-term and commercial property values. The best thing about investing in both is that as the tourist market grows, so do investor returns.

For this reason, there is a high number of investors interested in not only short-term rental properties but also commercial and long-term residential properties.

Favourable Investment Climate

Another critical reason why investors should consider Lisbon is that the government has made Portugal a very attractive investment destination. Since 2012, the country has had a residency by investment program where foreign investors can gain residency by investing in the country, including in property.

The Golden Visa is issued if the property's value exceeds €500,000 or €400,000 in low-density population areas. Investors can also invest €350,000 if the property they are interested in is over 30 years old.

To make it more enticing, the Golden Visa also applies to the investor’s family including their children, dependants, and spouse. Once an investor has been in the country for five years, they can apply for Portuguese nationality.

Residency by investment and unlocking opportunities in Lisbon
The residency by investment program in Lisbon, opening doors for investors.

Over 90% of all Golden Visa recipients since the program started have chosen to invest in property to fulfil the visa’s conditions. This is because, in addition to being a lucrative opportunity, investors do not have to actively manage their property as companies like UpperKey can do it for them.

Another reason the investment climate is so favourable is due to Portugal’s tax regime. The country has lower taxes than most other countries in the EU. There are also favourable conditions for tax residents to pay lower taxes to offset business expenses.

Lisbon has so many things going for it that make it a great investor destination. The government has put a lot of effort into making it so, leading to an influx of people visiting the city for different reasons. Such demand has led to short-term, long-term, and commercial properties being very lucrative investments in the city.

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