Buying in Portugal: Lisbon charm still works, but …

Após vários anos de imobiliário em alta, Lisboa não é mais uma cidade barata. Além da tributação branda, o país não tem escasssez de atrações para atrair os franceses.

“The French who buy in Portugal are all looking for the same thing: a beautiful view, a terrace and a garage, if possible without work. Which generally corresponds to luxury accommodation here, “said Carlota Pelikan, representative of Athena Advisers in Portugal, an international real estate consulting agency. There are at least 50,000 French expatriates in this country, according to the Franco-Portuguese Chamber of Commerce and Industry ( CCIFP).  

Since 2012, between 5,000 and 7,000 of our fellow citizens have settled there each year, the vast majority being retirees. The Portuguese government introduced a scheme in 2013 that allows non-residents of Portugal not to pay tax for 10 years on certain income received abroad, such as retirement pensions. This status of Non-habitual Resident (RNH) is intended for people residing in Portugal more than 183 days per year and who have not lived in this country in the five years preceding the request.

In addition, this soft taxation, the country does not lack attractions to attract the French: 300 days of sunshine per year, a quality of life which is unanimous, a quality health system and a cost of living significantly lower to that of France. A monthly pension of 1,400 euros thus represents 2.5 times the Portuguese minimum wage, which does not exceed 600 euros. By settling in Lisbon, the gain in purchasing power for a Frenchman is around 25%, and it can reach 40% inland.

Until recently, house prices were particularly attractive … But they have increased a lot in recent years. It is true that the Portuguese economy, which had been badly affected by the sovereign debt crisis in the euro zone in 2010, is doing much better.

Portugal, Lisbon, Alfama

GDP growth should come out at 1.8% in 2019, with the unemployment rate at its lowest (6.3%). In 2018, prices for old real estate rose 10.3% according to the National Institute of Statistics. With a number of transactions up 16.6%: 178,691 goods were sold last year in Portugal.

The real estate euphoria mainly affects the Lisbon region, where most French expatriates settle. The average price per square meter now reaches 4,000 euros, twice more than in 2012. In Chiado, the most expensive district of the city, the average price per square meter to buy is around 10,000 euros . “It’s twice as much as five years ago. Gentrification is underway, ”comments Ms. Pelikan.

It is always possible to do good business by targeting property to renovate. There are many left in the historic center of Lisbon, notably in Graça and in Alfama, the birthplace of Fado, around the São Jorge Castle which dominates the city. But beware, finding artisans is difficult, so the cost of construction has increased significantly. “It takes between 1,500 euros and 1,800 euros to renovate a square meter in Lisbon. The demand is very strong. A few years ago, the range was from 1,000 to 1,500 euros, ”continues Ms. Pelikan.

Aerial view of Lisbon cityscape, Lisbon, Portugal

nflation has spread to more popular areas on the outskirts of the center, such as Santos, which stretches along the Tagus River, known for its interior design and furnishing stores. In six years, the price per square meter has gone from 2,000 euros to more than 6,000 euros.

Unlike Barcelona or Berlin, renting for short periods to tourists is relatively easy in Lisbon. One downside: it is now compulsory to apply for a rental permit from the town hall, and the town hall refuses when the proportion of rentals in a district reaches 25% of dwellings, which is already the case in five districts of the historic center, including Alfama, Moravia, Bairro Alto and Castello.

Otherwise, buying to rent in the traditional way is profitable in Portugal because the rental offer is not enough to meet demand. “It’s easy to get a rental return of more than 4%,” said Cécile Gonçalves, associate director of Maison real estate agencies in Portugal

Portugal, Setúbal, Alentejo, Alcácer do Sal

With Lisbon’s historic heart becoming expensive, more and more foreigners are buying from the Setubal peninsula, on the other side of the Tagus, where prices are cut in half compared to the capital. “At the edge of the river, a two-room apartment with terrace, view over Lisbon and swimming pool in a new residence sells from 217,000 euros in Alcochete and 175,000 euros in Seixal”, specifies Ms. Gonçalves.

According to this expert, the French who settle in Portugal have an average budget of between 350,000 euros and 450,000 euros, most of whom have sold a property in France. A budget that can allow them to buy a beautiful house with three bedrooms and a swimming pool in the Algarve, Albufeira or Vilamoura, west of Faro.

The French are also numerous in Tavira and Olhao, further east, where the sea is warmer. In Porto, prices are significantly lower than in Lisbon: between 2,500 and 3,000 euros per square meter on average, but the water is icy, a detail that generally cools French retirees.

By Jérôme Porier