Latest Report Forecasts Portugal's Real Estate Market to See Continued Growth in 2025

International interest, regeneration, and tax incentives for affluent expats in Portugal is driving more relocation and real estate investment, propelling the country's property market.

New analysis by Property Market-Index, a global luxury real estate research firm, highlights Portugal's progress in its latest 'Portugal's Property Hotspots 2024-25' report and predicts the country will continue to surpass expectations in 2025.

The report reveals that the Portuguese property market is forecast to grow by 5.8% in 2025, with key regions like Lisbon, Algarve, and Porto leading the way. Portugal will also outperform the broader EU market, which is expected to decline by 2.5%.

Property Market-Index also found that many regions across Portugal are seeing significant growth in property prices, including the Central Algarve, which saw increases of up to 10.9%, and Lisbon, which saw a 9.1% increase as of November 2024.

For more detailed insights into the latest property hotspots in Portugal, you can access the full Property Market-Index report here.

Amanda Collison at Property Market-Index believes Portugal's property market growth is due to multiple factors, including the country's growing demand for luxury property, regeneration, and the opportunities that come with real estate, life and investment in Portugal:

"The Portuguese property market continues to be fuelled by an influx of international investment and affluent expats moving to Portugal for lifestyle and investment reasons as well as safety, security and freedom of access to the twenty-nine EU Schengen region countries that residency brings."

"These factors ensure that Portugal's real estate market is growing at double the pace of the rest of Europe and most of North America in terms of property price values."

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€2.1 billion in foreign investment is also expected to have been invested in Portugal in 2024, with strong foreign interest continuing despite changes to programs like the Golden Visa residency-by-investment.

Portugal Pathways chairman Paul Stannard has seen this reinforced investor confidence and property market in Portugal first-hand:

"Portugal continues to see a steady stream of high-net-worth individuals relocating, drawn by its unmatched safety, vibrant cultural heritage, favourable tax policies, the Golden Visa residency-by-investment program, and a booming luxury real estate sector, particularly in Lisbon and the Algarve.

"The revised Golden Visa residency-by-investment program remains a major attraction, offering dual residency in Portugal and EU Schengen freedom of movement for a €500,000 investment in regulated Portuguese funds. While property investments are no longer eligible as part of the Golden Visa program, funds are still channelled into dynamic sectors like renewables, healthcare, technology, tourism, and hospitality."

"The new framework potentially benefits Portugal more, broadening investment options and opening doors to more impactful sectors. While investing in Portuguese luxury property and developments is now separate from the Golden Visa residency-by-investment, it still has strong appeal due to the strength of the market."

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Portugal's growth coincides with the country outperforming the EU and other international markets in multiple variables.

According to a recent 2024 Ernst & Young survey, 84% of investors said they plan to establish or expand operations in Portugal over the next year, compared to 72% for the rest of the Eurozone.

77% of respondents also expected Portugal's attractiveness to improve over the next three years, compared with just 49% three years ago, overtaking the Eurozone, which had been at 67% last year based on the same metrics.

The European Commission reported that Portugal's GDP growth is forecast to rise from 2.0% in 2024 to 2.3% in 2025, significantly higher than the Eurozone's projected growth of 0.8% and 1.3% over the same period.

Comparatively, the UK's growth predictions stand at 1.0% for 2024 and 1.2% for 2025, underscoring Portugal's stronger economic trajectory.

Portugal's inflation rate is also set to improve, decreasing from 2.3% in 2024 to 1.9% in 2025, compared to the Eurozone's 2.5% dropping to 2.2% and the UK's 2.6% falling to 2.2%.

North America has also seen inflation drop to around 2% in 2024, according to global investment company Abrdn. However, the real estate market is still seeing 1% capital growth, which is still significantly lower than Portugal.

This lower inflation environment reflects Portugal's adept handling of economic challenges, enhancing its appeal to investors and expats alike.

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The latest report ranked property hotspots in Portugal based on their capital growth potential, cultural and educational offerings, heritage, robust investment opportunities, land availability, infrastructure, connectivity, amenities, health and well-being, sustainability, safety and security. The Algarve was highlighted as a leading location.

Property Market-Index's Amanda Collison commented: "The luxury real estate markets in the Algarve continue to experience strong growth. Ongoing investment in regeneration and high-quality developments reinforces their reputations as exceptional destinations for property investment."

One example of regeneration in the Algarve is Brookes Property Group's Quinta Heights, a luxury new homes development launching between Carvoeiro and Ferragudo in the central Algarve this summer, already seeing significant demand.

Quinta Heights will feature top-tier specifications and amenities, including wellness and yoga spa facilities, garden walks, and even an observatory for stargazing.

Collison also highlighted Lisbon and its surrounding areas as a luxury relocation destination to consider:

"Lisbon, its neighbourhoods Lapa, Liberdade, Principe Real, and other nearby locations such as Cascais, Estoril, and Sintra are some of the most sought-after real estate locations, and this trend is set to continue with similar growth in property prices to the Algarve."

If you would like Portugal Pathways to help you with any research for luxury real estate in Portugal in any of these property hotspots, please get in touch with us to arrange a meeting with one of our real estate specialists here.

For more detailed insights into the latest property hotspots in Portugal, you can access the full Property Market-Index report here.

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Disclaimer: The information on the Portugal Pathways and Portugal Investment Owners Club (P Club for short) websites and in email communications is for general informational purposes only and should not be construed as legal, tax, or financial advice. You should consult and check with a qualified professional advisor before relying on any information provided on this website or in email communications. As it relates to investments in Golden Visas or other wealth management solutions offered by regulated and professional advisors, it is important to note that past performance is no guarantee of future returns. Private equities can be highly illiquid and come with risk and should always be under professional independent advice.

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