Why Investing in Portugal is a Great Idea?

Portugal is becoming a popular location to foreign investors and has a strengthening property market with positive returns on rent in popular tourist areas. Most recently, Portugal’s growth has slowed slightly, however, this hasn’t hindered its appeal as a country to invest or to reside in. Plus, with its stable political and economic climate, Portugal continues to lure investors far and wide.

Like many countries in the Eurozone, Portugal’s economy is recovering. Since the financial crisis in 2008, Portugal has made attempts to boost its economic recovery by making it easier to invest and carry out business in the country. The country has made investing easier by reforming competition laws, the employment market and the tax system. 

The legal system in Portugal is very pro-business, as it doesn’t restrict any foreign investment, furthermore, it doesn’t discriminate over the origin of investment. Foreign investors can pretty much invest in any business sector, with the only restrictions being investments in defense, maritime and air transportation, water management and public telecommunications. 

The Portuguese government increased their efforts to encourage more foreign investment with tax incentives in investments in particular sectors. In addition, corporate tax rates have been lowered and for new investments, stamp duty and property tax is waived for a duration of ten years. 

Investor incentives don’t just come from the main Portuguese government, they also come from local government authorities who further incentivise investors who create jobs in the area. 

Other reforms the Portuguese government have put into effect is the dilution of some employment laws to increase workplace flexibility. In recent years, some investors have complained about some of the processes, such as, registering companies and filing taxes can be very bureaucratic and very time-consuming. In an effort cut some of the red tape, the government created a website, the Empresa Na Hora which allows investors to register their business in less than an hour. 

Since the 2008 financial crisis, property prices are in recovery, so there has been increasing interest in property investment in the country. So now, is the perfect time for foreign investors to grab a bargain before prices on property begin to soar out of reach. In the last few years, foreign investors have arrived in Portugal in high numbers, accounting for 1 out of 5 properties sold. To further encourage foreign property investors, the Portuguese government do not impose any limits on property investment, plus fees involved in property sales are substantially lower than other countries. 

Portugal has another ace up its sleeve to woo potential foreign investors. It’s called the Golden Visa Program. The Golden Visa Program entitles foreign investors from outside of the EU full residency if they invest at least €500,000 of property in the country. Other countries that are also going through economic recovery also have similar incentives, however, the Portuguese proposition is a bargain compared to most. For example, in Cyprus, non-EU investors need to invest a minimum of €2m to full residency. 

Portugal continues to be a very lucrative investment location. As previously stated, house prices are increasing year on year. In the last part of 2016, house prices rose by 3% to an average house price of €1,080 psm. 

Lisbon, the Portuguese capital, saw one of the highest property appreciations in the country, going up to 1.72% during the same period, up €1,308. 

In addition to the property values increasing, so has the demand. More than 31,000 properties were purchased toward the end of 2016. This is also good news for investors who are looking for buy-to-rent opportunities, as returns on rentals properties are very healthy across the country. Lisbon, however, is the most lucrative, with returns ranging from 5.5% to 6.3% for apartments in the surrounding areas of the capital city. Smaller apartments smack bang in the centre of the capital will yield more of a return. That said, villas situated in Lisbon also yield healthy returns.