Sunny Porto in Portugal is the perfect place for a happy work-life balance. It’s a safe city comprised of a rich culture and heritage, a booming tech-driven economy and a renown Research and Development environment. In addition to this, the city has a plethora of high-quality health services, international schools and excellent flight connectivity.

Porto is also known for being very welcoming and open to foreigners. This allows for easy cross-cultural integration, whilst offering a unique quality of life for everyone who has chosen Porto as their home.

In 2018, Porto was crowned Europe’s most start-up friendly city by The World Excellence Awards, following on from the successful Scale-Up Porto initiative launched back in 2015.

The aim was simple: support the growth of local tech start-ups with the potential to scale internationally and position Porto as a city open to creativity, innovation and entrepreneurship.

The current ecosystem provides 69 research and development centres, 20 incubators, 14 co-working spaces, and 8 technology and transfer centres.

The city is now a pioneer in the creation of tech start-ups, accounting for 36% of the national total and home to several leading high-tech companies. Porto’s top start-ups include: Farfetch, Porto.io, Opolab, NOW, Porto Innovation Hub and Muratto Open Space Porto. A flourishing market has subsequently evolved within the city, as it continues to draw in a growing pool of talented workers and students.

Why is Porto thriving as a start-up hub?

An esteemed business mentality is not new to the running of Porto, as Rui Coutinho, Executive Director of the Centre for Business Innovation explains, “our DNA is one of business people, manufacturers, industrialists and traders. There is a strong and long entrepreneurial background to the city”.

Porto is also Portugal’s leading education hub, attracting 72,000 students (the country’s highest number of students in higher education) and is home to several of the country's best universities.

The city's large pool of highly qualified, multi-lingual, and extremely motivated graduates has fostered Porto's importance as an area to produce entrepreneurs and start-up founders.

This in turn has made Porto the industrial and business hub of the country, as opposed to its sister, Lisbon, which is very much the creative and tourism hub of Portugal.

Why is Porto property a great investment?

Porto is experiencing soaring rental and property prices. House prices in the city’s historic centre have more than doubled since 2014, albeit from a lower base. Like other Portuguese cities, Porto is suffering from a residential supply shortfall and property prices will continue to rise. As of Q1 2020 the city saw 19% annual growth in house prices.

In the last two years there has been significant redevelopment efforts across the city; large public investment in new roads, libraries and universities are providing a welcomed facelift to the city. Previously run-down buildings in the city centre are being refurbished and these projects are rightfully attracting international capital.

Despite mounting demand, the square metre price of property in Porto remains lower than Lisbon and more affordable than other global investor hotspots. A 300% increase in jobs created by foreign investors was seen between 2013-2016 and in late 2018 Amazon announced it would be opening a new European base in the city.

According to EY’s European Investment Monitor, Porto’s levels of foreign direct investment (FDI) grew at a rate of 11.4% between 2013 and 2018. This growth rate is faster than other Portuguese regions as well as the EU average.

The 2020 EY Portugal report tracked 51 FDI projects across Northern Portugal accounting for 5,722 new jobs. This equates to an 88% annual increase in FDI projects and a 93% annual increase in the number of jobs created to 2019.

Porto’s investment profile is strengthening not only in Portugal but worldwide. Future forecasts remain strong and robust. To take advantage of this unique investment opportunity, see IP Global's latest Porto residence below.

Litoral Living is IP Global’s second development in Porto and is located within the southern part of the Matosinhos neighbourhood. If you would like to find out more about investment opportunities in Porto and Litoral Living, contact us today.

Portugal’s Golden Visa programme has become hugely popular among non-EU citizens looking to invest in Portuguese property.

Since the Portuguese government launched the scheme in 2012, it has generated an impressive EUR5.2 billion as of June 2020 in foreign investment and is a strong incentive for property investors worldwide.

But how exactly does the programme work and what makes it so popular among would-be investors? Check out our guide answering the top 10 questions.

Q1: WHAT IS THE GOLDEN VISA PROGRAMME?

Portugal’s Golden Visa programme is essentially a government scheme which offers citizens of non-European Union countries the opportunity to obtain residency – and potentially, citizenship – in Portugal once they have invested in Portuguese property. It is dealt with by the Portuguese Immigration and Borders Service, or the Servico de Estrangeiros e Fronteiras (SEF) and has helped Portugal generate foreign investment and employment in the country.

Q2: WHO CAN APPLY FOR IT?

An individual must be a citizen of a third-party country to apply for a golden visa, which means Portuguese and EU nationals are not eligible to apply.

Since launching in 2012, the scheme has mainly attracted high-net worth individuals, highly-skilled professionals and retirees.

Q3: HOW DO YOU QUALIFY?

To qualify for a golden visa, one of the following three key criteria must be met:

In some cases, people who are investing in small and medium businesses, or in the arts and culture or scientific research may qualify too but the vast majority (90%) receive the visa through real estate investment.

Q4: ARE THERE ANY EXCEPTIONS?

In some cases, property investments valued at €350,000 or above may qualify, but the SEF will only approve these if the property being purchasing is more than thirty years old, is located within specific regeneration areas and requires extensive renovation work. If an investor elects to pursue this route, it is important to seek legal advice first.

Q5: WHAT ARE THE REQUIREMENTS?

The scheme requires that the investor maintains their investment for five years and complies with the minimum required periods of stay during this time. Most applicants need to provide proof of medical insurance to stay in the country, and the government may carry out checks to ensure applicants have a clean criminal record.

Q6: WHY IS IT SO POPULAR?

Many investors like Portugal’s Golden Visa programme because it is a fast-track way to acquire residency and allows investors to gain residency permits not only for themselves but also their spouse and any dependent children they may have. It also allows for travel throughout the EU Schengen zone without any additional visas - and once residency or citizenship has been gained investors and their dependents can live, work and study freely throughout the zone.

Once a golden visa is issued, the holder is also entitled to tax exemptions from other overseas income, if the investors lives in the country for less than 183 days per Portuguese tax year. Please speak to a tax advisor for more information.

Q7: HOW LONG IS IT VALID FOR?

The visa is valid for one year and it must then be renewed every two years after that. After five years, most people can apply for permanent residency and after six years, it is generally possible to apply for full citizenship by investment.

Q8: ARE THERE ANY CATCHES?

To keep a golden visa valid, the holder must spend at least seven days in the country during their first year as part of the programme, and after this, two weeks in the country every two years. Once an investor applies for permanent residency, they may have to pass a basic language test.

Q9: WHAT DOCUMENTS ARE REQUIRED?

When applying to the scheme, the following documentation must be provided:

Q10: HOW LONG DOES IT TAKE TO RECEIVE?

Once a qualifying property has been purchased and the paperwork submitted, an investor should be able to expect to receive their visa within three months or more, depending on if any problems exist with the application and supporting documentation.

If you are interested in the Portuguese Golden Visa programme, IP Global is happy to help investors through the process. Simply contact us here.

*Update: The Portuguese government announced in February 2020 that it intended to omit the coastal cities from the regions applicable to the golden visa programme in order to boost inland investment and create more jobs. This, however, has been tabled due to the COVID-19 pandemic. For the foreseeable future Porto and Lisbon remain the best options for investors in terms of capital upside and visa acquisition.

One of Europe’s oldest countries, Portugal has recently distinguished itself as an undeniable destination for investment, both on the European and world stage.

Signs of economic and employment growth paired with solid real estate indicators and a thriving tourism industry have firmly cemented Portugal as a key location on the radars of many international investors.

Portugal’s fundamentals work in both Lisbon and Porto’s favour; a hot climate, rich culture, low cost of living, acclaimed culinary tradition and very low crime rate mix with political stability and strong economic recovery to create an attractive investment case in 2020.

WHY INVEST IN LISBON PROPERTY?

In the PwC Emerging Trends in Real Estate, Europe 2019 report Lisbon was the rising star. Ranking cities based on investment potential, the report awarded Lisbon the top position, rising ten spaces from the previous year. Lisbon has similar dynamics to Berlin and Barcelona; a lot of international companies are moving into the city and there is a boom in tourism numbers.

The city’s rental yield is one of the best in Europe, yet Lisbon remains remarkably affordable for international property investors. Its prime prices are still only one fifth of London’s and a third of those in Paris, despite the city’s continued economic recovery and growth.

Beyond the property market, Lisbon offers a lively lifestyle to its residents and visitors. From historic architecture to trendy tech hubs, Lisbon’s appeal is obvious. While old trams move along colourful cobbled streets, this city rivals Berlin for its cool art scene and has become Europe’s tech start-up capital as the new host of the annual Web Summer.

A recent report by Savills ranked Lisbon above world cities including Madrid, San Francisco and Paris for quality of life, value for money and investment potential. All in all, it is an ideal destination for international businesses, investors and tourists alike.

 

WHY INVEST IN PORTO PROPERTY?

Porto has changed significantly since 2015, running hand in hand with Portugal’s economic recovery. Already one of Europe’s most acclaimed holiday destinations, winning the prestigious ‘European Best Destination’ award in 2012, 2014 and 2017, the city is benefitting from a digital revolution which is bringing record numbers of new residents to this seaside city.

Porto is experiencing soaring rental and property prices. House prices in the city’s historic centre have more than doubled since 2014, albeit from a lower base. The Porto region accounts for approximately 30% of all real estate transactions in Portugal, with the number of property transactions increasing 18.4% between Q3 2017 and Q3 2018.

n the last two years there has been significant redevelopment efforts across the city; large public investment in new roads, libraries and universities are provided a welcomed facelift to the city. Previously run-down buildings in the city centre are being refurbished and these projects are rightfully attracting international capital. A 300% increase in jobs created by foreign investors was seen between 2013-2016 and in late 2018 Amazon announced it would be opening a new European base in the city.

Despite mounting demand, the square metre price of property in Porto remains lower than Lisbon and more affordable than other global investor hotspots.

INVESTMENT PROPERTIES CURRENTLY AVAILABLE IN PORTUGAL

Alvaro is ideally situated to benefit from the city’s perfect storm of affordable property prices, a strong economy and an increasing population, pitted against a major housing shortage. It is also only 10 minutes’ drive to Faculdade de Medicina da Universidade do Porto, where one of the most prestigious Higher Education Institutions of Europe is located.

Given the above and a great quality of life, this is a first-class investment opportunity. You can learn more about Alvaro here.

Besides, you can learn more about our another Portugal Investment opportunity - Bela Vista.

 

Long considered Lisbon’s quieter sibling, Portugal’s second city is undergoing an incredible moment of transformation. On the steep banks of the Douro River, Porto is establishing itself through its rich culture, thriving culinary scene, and growing student population, as well as being one of Europe’s leading start-up centres.

Portugal’s property markets are currently some of the most attractive in Europe. More than just a desirable holiday destination, the country is now also a hotly desired place to live and invest in. Portugal’s northern jewel is playing an instrumental role in the country’s revival and we expect Porto’s growth to continue.

So, why is IP Global investing in Porto?

strategic location

This Unesco heritage city in Northern Portugal is strategically located within a well-connected region. Already attracting record tourism levels – Portugal saw double-digit growth in visitor numbers every year between 2014 and 2017 – Porto is increasingly appealing to students and young professionals looking for an alternative to other, more expensive European hubs.

Only a 3-hour train ride from Lisbon and with over 8,000 weekly flights to international destinations, Porto offers residents and visitors an ideal position within the continent.

education

Home to The University of Porto, the city hosts over 72,000 higher education students and is known as the main university hub within Portugal. With the highest number of students in higher education in Portugal, the University of Porto is Portugal’s highest ranked institution, according to the QS World University Rankings 2018. Other universities, including Porto Polytechnic and Porto Business School contribute to the city’s energetic student population and attract a high number of international students.

With only 1,250 dedicated university or religious housing units available in Porto, the majority of students in the city must rent in private accommodation, which is good news for property investors.

technology hub

Thriving business is not new to Porto. ‘Our DNA is one of business people, manufacturers, [industrialists] and traders. So there’s a strong and long entrepreneurial background to the city,’ explains Rui Coutinho, executive director of the Center for Business Innovation at Porto Business School.

Historically, foreign investment in the Porto region took the form of blue-collar factories from IKEA, Continental and Bosch. However, more recently, these companies have upgraded and expanding into technological development, creating some of the most innovative centres within their sectors.

In 2018, The World Excellence Awards named Porto Europe’s ‘Best Start-Up Friendly City’. ScaleUp Porto is an initiative launched by the Camara do Porto in 2015 aimed at supporting the growth of local technological start-ups with the potential to scale internationally. ScaleUp has been instrumental in successfully positioning the city as a European hub open to entrepreneurs. The city is now a leader within Portugal, accounting of 36% of the nation’s total number of technological start-ups and housing offices of Farfetch, BLIP, Critical Software and Talkdesk, among others.

infrastructure improvements

Porto has world-class infrastructure systems and is only improving its offerings. The Porto Airport is an award-winning and highly connected hub, and an international entryway to Europe. One of the best airports in Europe, it served almost 12 million passengers in 2018 and offers flights to over 110 destinations.

Reaching key European cities including London, Paris, Frankfurt or Rome within three hours by air, future route expansions by Ryanair and Emirates will encourage increased levels of traffic.

The Leixões port, just outside Porto, serves as a logistics platform to the city and the airport. Responsible for 20% of Portuguese international trade, it has also recently inaugurated a new cruise terminal in 2015 at a cost of EURO50 million which now sees tens of thousands of passengers every year.

Public transport in Porto’s city centre is reliable and good value for money, featuring an extended and diverse network of metro and tram systems, and various urban buses. Managed by a state-of-the-art contactless ticketing system, Porto also has the largest network of buses in the world that have Wi-Fi. An expansion of seven new stations is projected to be completed by 2022 and will increase ridership by an estimated 30,000 rides per day.

housing shortage

House prices in Porto’s city centre have more than doubled since 2014, albeit from a lower base, and demand will continue to exceed the city’s supply across the sales and lettings markets for the foreseeable future.

The housing shortage is driving even more rapid growth in the rental market, with the average rent nationwide increasing by 13% in 2018 alone. Porto’s growing tourism industry has led to many homeowners pursuing opportunities such as Airbnb, and subsequently the city’s housing supply for residents have become increasingly squeezed. Many of the one-bedroom units on the market are targeted at the large student population and growing entrepreneur base.

value

Lisbon has led Portugal’s property market story since the country’s recovery period began. Porto is approximately three to four years behind the capital, boasting greater value and strong growth potential.

Porto is a highly affordable major city in Western Europe. According to Porto.ForTalent, the living cost in Porto is 46% lower than Paris, 32% lower than Frankfurt, and 25% lower than Barcelona. Porto’s house prices also remain affordable in comparison to other global investor hotspots.

investor incentives

Investors are taking note that Portugal’s tax regime offers a low effective tax burden, free overseas remittances and no gift, inheritance or wealth tax. Property buyers whose purchase qualifies them for a Golden Visa are offered the additional benefit of being able to apply for Portuguese nationality to obtain an EU passport for both themselves and any dependents they have.

quality of life

Jose Neves, the founder and CEO of Farfetch has reflected that, ‘Porto quickly became an extremely attractive city to live in and invest. I believe that what really makes a difference are the people, the fact that the city is welcoming and that everything is close, the sea, the river and the best of Portuguese cuisine’.

The city offers 39 museums, 20 cinemas, 12 theatres, numerous art galleries as well as a busy cultural agenda throughout the year. Young and imaginative chefs are reinventing the region’s culinary traditions while artists are renovating previously neglected corners of the city. It is unsurprising that CNN has hailed Porto as Portugal’s ‘Most Creative City’ and in 2012, 2014 and 2017 the city was named Europe’s ‘Best Destination’ by Lonely Planet.

Consistently warm weather, a vibrant cultural life, a resurgent entrepreneurial scene, a world-class university and a unique city centre which carries a culture of diversity in its genes support Porto’s growing profile and government schemes will ensure that the attractiveness of Porto remains strong.

270 days of sunshine a year, a laid-back lifestyle based around the sea, and a city centre bustling with restaurants, shops and art make it easy to understand why Lisbon has been ranked as a top European travel and investment destination for 2019.

Long seen as a picturesque and affordable city, it has only been in the past several years that Lisbon has started to move away from its conservative roots to deliver a trendy vibe of its own. Thanks to an influx of young creatives and entrepreneurs attracted by the city’s reasonable rents, thriving café and bar culture and growing career opportunities, many commentators are beginning to brand Lisbon as one of Europe’s coolest cities.

Rua do Poço dos Negros, located in the formerly run-down central district of Santos, perfectly showcases the city’s transition. This important axis in the city centre is receiving renewed attention, offering new opportunities for residents, tourists and investors.

RICH HISTORY

Santos is one of Lisbon’s oldest neighbourhoods, with the area’s full name of Santos-O-Velho meaning ‘Santos, the old’. Along the narrow streets you can find many well-maintained palaces and old churches from previous centuries.

With its historical importance, Santos is also the perfect home for Lisbon’s Museum of Ancient Art, one of the city’s best historical museums.

ALONG THE 28 TRAM ROUTE

Lisbon’s famous 28 Tram route weaves through many of the city’s key neighbourhoods, including making a journey past Rua do Poço dos Negros in Santos.

Popular with tourists, this tram offers visitors the ability to hop on and off at various points along the tram route. This is good news for local business owners as shops close to the track benefit from increased foot traffic.

 

START-UP BASE

Lisbon’s entrepreneurial spirit, like Berlin’s before it, has been encouraged by the city’s surplus of empty buildings that are available at low prices. Young creatives have clustered in the central Santos area and, in particular along Rua Poço dos Negros.

A formerly run-down district, Santos has been reborn thanks to local not-for-profit organisations that work to revitalise abandoned ground floor spaces and start-ups who have populated many of the area’s buildings.

Previously forgotten storefronts are now occupied by young fashion designers, product designers, architects, graphic designers and other creatives.

Co-working spaces have also appeared throughout the area, offering space to companies and individuals with smaller space requirements.

 

LOCAL HIGHLIGHTS

Dear Breakfast – An architectural highlight in the neighbourhood, this all-day café strives to extend and elevate mornings through their extensive menu of breakfast foods and natural drinks. An ideal place to relax and enjoy a good meal, Dear Breakfast offers a great start to the morning.

The Mill – This small Nordic-style café offers endless brunch options and even sells its own ceramics. Diners can choose anything from fresh fruit salads with yougurt to spicy bowls of ragout of red beans, peppers and baked tomatoes. For lunch and dinner, The Mill serves light meals and also operates as a wine bar.

Hello, Kristof – A popular coffee shop along Rua Poço dos Negros, visitors can expect a fantastic latte and to see many young workers on their MacBooks. Offering an extensive magazine selection and a Nordic-style menu, this is a lovely place to stop for a mid-afternoon break.

Grandma Came To Work – This intergenerational creative hub is bringing Lisbon’s elderly population into closer contact with the growing younger generations. Focused on handing down traditional crafts and highlighting the importance of the city’s history, the hub welcomes various art, music and cultural organisations to take part in their programmes.

Portuguese Tea Company – Don’t be surprised if you smell this shop long before you see it. With innumerable tea pots full of aromatic tea blends, visit here for a unique souvenir and to learn more about tea’s history for the knowledgeable staff.

The Carvalho, IP Global’s latest investment opportunity in Lisbon, Portugal, re-imagines a historic building along Rua Poço dos Negros. Learn more about how you can invest in Europe’s leading market today.

The Portuguese capital of Lisbon is one of Europe’s most thriving cities, but that hasn’t always been the case: one of Europe’s oldest cities, Lisbon was among the worst-hit areas during the country’s sovereign debt crisis in 2008.

Fast forward a decade and this vibrant city on southern Europe’s Iberian Peninsula has made a remarkable recovery. Since the country received a bailout of EUR78 billion from IMF and the EU in 2011, Lisbon and other Portuguese cities have gone from bust to boom.

Here are six reasons why Lisbon is now the perfect place to buy property.

1. ECONOMIC GROWTH AND RECOVERY

Since the 2008 Great Recession hit Portugal, the county has undergone an extraordinary revival, and economic growth continues. Five years after exiting the 2011 bailout programme, the country now boasts a stable macro economy, with the headquarters of many multinational companies occupying its thriving capital and many imports and exports passing through Lisbon’s port.

The Lisbon HQs of Portugal’s financial companies represent almost half of the national GDP and a labour productivity rate that’s 1.3 times higher than the national average.

Another by-product of Lisbon’s financial evolution has been its transformation from a service-based economy to a more digital one, and with a decreasing unemployment rate – which fell from 16% in 2013 to 6% in 2019 – and a growing employment rate, Lisbon is now among Europe’s most competitive cities.

2. SUPPLY AND DEMAND IMBALANCE

A discrepancy in supply and demand means there’s a growing need for real estate in Portugal and, as cited by the real estate agency Golden Tree, the cities of Lisbon and Porto create 50% of the country’s total housing demand alone.

According to Colliers, international demand has accounted for a quarter of Lisbon’s residential market since 2015 and CBRE reported that as a result, the city’s house prices had soared by 9% by 2017.

While average house prices may have plateaued, the residential market is still performing well. A further 70,000 new homes were said to be needed in Portugal last year and this supply and demand discrepancy only strengthens the appeal for real estate investors from overseas.

3. INFRASTRUCTURE DEVELOPMENTS AND REGENERATION

The influx of both business and leisure travellers in Lisbon continues to increase. The number of passengers moving through the city’s airport reached a record high of 29 million last year and the country’s strength of infrastructure shows no signs of wavering. Thanks to a EUR1.15 billion contribution from the French construction company VINCI, the airport is set to undergo an ambitious expansion, alongside a new civil airport in Montijo, while both Lisbon and Porto have received a EUR517 million investment for a Metro network expansion.

On a broader scale, the urban renewal project, known as the City of Lisbon Investment Plan 2016-2020, will see everything from drainage networks to cultural venues being revived. According to sources from Carris, Aurobus and Civitatis, local transport, school facilities and public green spaces will also benefit from EUR523 million worth of funding to help boost Lisbon’s smart city status.

4. EUROPE'S NEWEST TECHNOLOGY HUB

Thanks to new strategic approaches to regeneration, Lisbon is proving itself to be a powerful player in the global technology world. In 2014, this innovative metropolis became the first European city to set aside EUR1 million for the development of start-up incubator networks in historic centres and through initiatives such as Horizonte 2020 and the StartUp Visa programme, it’s becoming a magnet for talented investors and entrepreneurs.

Now a host of the annual Web Summit conference, the city is making noticeable efforts to maintain its position within the European start-up ecosystem. The Portuguese government is contributing EUR110 million toward the conference, which will be hosted in Lisbon for ten years. With participant numbers set to increase by an estimated 30,000, this will only strengthen Lisbon’s credentials as a Smart City and maintain its reputation as the newest tech capital in Europe.

5. EDUCATION

As Portugal’s key university hub, Lisbon’s student population has thrived in recent years, reaching a total of 130,000 across the city’s three highly-regarded universities.

While some 20,000 undergraduates attend the Universidade NOVA de Lisboa, Portugal’s most highly-ranked university, the University of Lisbon now accommodates more than 50,000 full-time students. With a strong international student population – 17% of the student body – the institution is set to receive a brand-new campus, thanks to EUR16 million in funding.

Meanwhile, the Instituto Superior Tecnico, ranked the 11th largest engineering school in Europe, continues to strengthen Lisbon’s academic prestige. Many graduates are electing to stay in Lisbon following their studies, thanks to the city’s now-thriving jobs market.

6. GOVERNMENT INCENTIVES

Thanks to the Non-Habitual Residents Initiative which launched in 2009 and offers preferential tax treatment for foreign investors, Portugal has become extremely appealing to those looking to buy property from overseas.

Launched with foreign, highly-skilled professionals, wealthy individuals and pensioners and retirees in mind, this fiscal incentive rewards foreign buyers with double tax exemption for ten years. High-net worth individuals who take residency in Portugal are also awarded a range of benefits.

In addition to the Non-Habitual Residents Initiative, the Golden Visa Programme has heightened the appeal for any non-EU citizens investing in Portugal. So far, the initiative has attracted huge interest from Chinese nationals, generating EUR3.9 million in foreign investment for the country.

You can find out more in our Golden Visa guide here.

We don’t anticipate Lisbon’s appeal faltering any time soon. The city’s population is set to increase to more than three million in 2025 and tourism numbers continue to grow. Firmly on IP Global’s radar for top European investment locations, Lisbon’s fascinating Mediterranean heritage and growing cultural attraction continue to attract travellers and investors alike.

What to learn more about Lisbon? You can download IP Global’s Investor Guide today or read our recent Q&A with IP Global Director Grant Reynolds.

oday, Lisbon finds itself among the best European cities to buy property in. With its fascinating heritage, evolving start-up culture and range of government schemes that help foreign investors acquire real estate here, there is no better time to invest in Lisbon’s property market.

But, how easy is it for international buyers to get a mortgage in Portugal? Pretty easy - if you know how. To help simplify the process, here is our mini-guide to successfully navigating Portuguese mortgages.

SPEAK WITH A MORTGAGE ADVISER

Always consider working with a mortgage adviser when purchasing property in Portugal. On the whole it is best to find a lender in Portugal - and having the right mortgage adviser on hand will help you avoid any language barriers. Furthermore, a qualified adviser will already know who the most suitable lenders are, and they will advise you on the most competitive products to apply for, according to your investment strategy and budget.

REGISTER AT THE PORTUGUESE TAX OFFICE

If you are buying property in Portugal, you are required by law to have your own personal tax number - known as a Numero de Identificacao Fiscal (NIF). Issued by the Portuguese tax office, this nine-digit number is a legal requirement for anyone who resides, works or is buying real estate in the country.

The law for EU and non-EU citizens varies and you may initially be issued a temporary NIF number. Make it a priority to register at the tax office before you submit your mortgage application. Once you have your fiscal number, it is also a good idea to open a Portuguese bank account.

 

GET YOUR LEGAL DOCUMENTS IN ORDER

There are various documents you will need to provide when preparing your Portuguese mortgage application.

In most cases, you will need to provide photographic ID, proof of address, as well as proof of income and deposit (in the way of pay slips, tax return statements and two to three months’ worth of bank statements).

 

KNOW YOUR STAMP DUTY & FEES

There are various fees you will need to get to grips with before you purchase your property.

A Property Transfer Tax, or IMT, is applied to every property sale in Portugal and ranges from 1% to 8%, depending on the value and use of the building. You will have to pay the government a Stamp Duty on your mortgage of 0.6% and an Acquisition Stamp Duty of 0.8% of the declared purchase price.

Don’t forget valuation fees and any arrangement fees that your mortgage lender and mortgage broker may charge. By law, you are expected to pay a Land Registry Fee for the property deed and mortgage deed, as well.

BE PREPARED TO PROVIDE PROPERTY DETAILS

It is best to apply for a mortgage in principle. However, if you’ve already placed an offer on Portuguese real estate, you will need to provide details of the property, which could include a property plan or land registry documents. You may be asked for your credit report and NIF (tax) number too.

PICK THE INTEREST RATE THAT’S RIGHT FOR YOU

Many mortgage lenders in Portugal will provide both variable and fixed rate interest options, so choose the type of rate that works for you.

  1. Variable rate mortgages are determined by the 3, 6 or 12-month Euribor rate. This is set by a panel of European banks and the interest rate margin, or spread, will be confirmed on the day your mortgage is approved. Future payments are then based on averages of this 3, 6 or 12-month Euribor rate.
  2. If you choose a fixed rate mortgage, (which usually range from one to thirty years), your re-payments remain constant and you will not be affected by any changes in the European base rate.

 

THE VALUE OF YOUR PROPERTY WILL BE ASSESSED

The benefit of taking out a Portuguese mortgage (rather than sourcing one from overseas) is that your lender will assess the property and carry out their own legal checks. Once this is complete, you will receive a letter confirming the valuation and your mortgage will be officially approved.

TOP THINGS TO REMEMBER ABOUT YOUR PORTUGUESE MORTGAGE

 

Our expert teams at IP Global are happy to provide our clients with advice on investing in Portugal. We can also provide assistance with golden visas, mortgage applications and recommend local solicitors ahead of the process. If you are interested, you can request your free consultation here.

There is no single measure which indicates if a real estate market is worth investing in.

Rather, there are various criteria the IP Global Investment team considers when researching emerging markets. Today we review key signs of investment potential and three new European markets IP Global sees strong potential in.

Population growth, which leads to increased demand for residential property, is a primary factor to consider. This is followed closely by economic growth; if consistent across a diverse range of industries, this demonstrates that the demand for property will likely increase further.

If a region also boasts a well-developed infrastructure network, this can also be an indicator of the area’s strong and stable economy.

A city’s public transportation network, for example, plays a vital role in connecting households across metropolitan areas and leads to higher quality opportunities for employment, healthcare and education.

SUPPLY AND DEMAND

Increased transparency has led to more new markets being placed on our radar and when we identify an under-supplied housing market, it suggests that there will be upward pressure put upon both property prices and rents. As more investors move into under-supplied markets, a snowball effect often takes place across many industries, and with it we see job growth, an increase in infrastructure developments as well as a rise in tech innovations across the region.

IS NOW A GOOD TIME TO INVEST?

Established real estate markets such as London and New York have track records which demonstrate that through politically uncertain times the cities’ property markets remain resilient and a good investment. This offers investors piece of mind, but also ensures that prices remain high.

Emerging markets can feel more uncertain. Without a lengthy history to review, investors need to look at indicators such as those above to know whether a new property venture is wise. Our investment experts rightfully point out that times of political uncertainty can mean great things for investors, as real estate will always be a relatively stable asset, providing consistent rental income along with capital appreciation of the property.

INCENTIVES FOR OVERSEAS BUYERS

It is worth closely examining the foreign investors laws and incentives that a given region has in place, along with the availability and affordability of buy-to-let financing. Savvy investors will recognise that particularly good incentives for overseas buyers boost a market’s appeal and investment potential.

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WHICH NEW MARKETS ARE ON THE RISE?

Using the indicators discussed above, our most recent research has revealed three European cities with fantastic potential for investment: Lisbon, Porto and Leipzig.

Lisbon

It’s no secret that Lisbon has emerged as a leading destination for travellers. However, this coastal capital city, with its exciting start-up scene and forward-thinking culture, is now firmly on the radar of investors too.

Portugal’s stable political and social environment makes it instantly appealing for low-risk investment. Despite a 2008 recession, the country has seen a remarkable recovery, with the Bank of Portugal reporting economic growth of 2.1% in 2018 and an anticipated 7% unemployment decline.

 

The soar in tourism numbers and rise of established companies, start-ups and freelancers operating in the city has only added to the city’s investment case, leading to a substantial increase in housing and rental prices. The city is undergoing major infrastructure improvements which will only increase Lisbon’s appeal. A EUR210 million Metro project and the opening of a new airport in the nearby municipality of Montijo, which is expected to service 50 million passengers each year, will allow far more people to travel to Lisbon.

With its dynamic business and booming tourism economy, PwC awarded the city of Lisbon first place in their 2019 Emerging Trends in European Real Estate report. Raising from eleventh place in 2018, Lisbon is now Europe’s number one city for investment and development prospects in 2019 and ranked second for projected capital and rental price growth, outranking major capitals including Paris, London and Madrid.

See Bela Vista, IP Global’s exciting development in Lisbon now

PORTO

Portugal’s second largest city, Porto, is fast becoming one to watch. Already home to approximately 1.3 million residents, Porto is set to welcome 65,000 new inhabitants in the next fifteen years.

Foreign investment across Porto and northern Portugal is booming, thanks to the area’s growing population. Greenfield* foreign investment has been particularly strong, with the number of jobs created by overseas investors increasing by an impressive 300% between 2013-2016. Porto also received the highest amount of foreign direct investment (FDI) in the whole of the country between 2016-2017.

Porto’s thriving start-up and freelance culture has played a huge part in its growing economic success. 2018 proved to be one of the city’s key turning points when it was named the ‘Best Startup Friendly City of Europe’ in the World Excellence Awards. In that same year, Porto attracted thirteen foreign investment projects across sectors outside of tourism and real estate which were valued at EUR210 million – a fifteen-year high for the city. This was also the highest number of greenfield foreign investments Porto had ever acquired in one year, a further sign that Porto is a market investors should not overlook.

LEIPZIG

With an expected population growth of 22% by 2030, Leipzig is benefiting greatly from its close proximity to Germany’s capital city. Often dubbed ‘the little Berlin’, Leipzig shows all the key signs of investment potential – the city’s population growth for example, has led to a 100% increase in house prices since 2009 and, according to Deutsche Bank, housing is in short supply and vacancy rates have dropped from around 6% in 2011 to just 2% in 2018.

 

As a result of Leipzig’s housing shortage, capital and rental growth rates have soared across the entire property market. In 2018 the price of new and existing apartments rose by an accumulated 80%, while the price of new homes almost doubled, leading Deutsche Bank to name Leipzig the ‘most interesting property market’ in the east of Germany.

Alongside its population growth, Leipzig’s economy and labour market have undergone a transformation in recent years. Between 2005-2018, the unemployment rate fell from 22% to 6.1% and employment rates have increased 28.5% since 2009. The University of Leipzig is recognised as one of Germany’s leading universities with regards to top-class research and medical expertise and the passing in 2009 of the 2020 Leipzig Integrated City Development Concept – a commitment to improving the city’s housing, education, cultural and historical preservation and overall infrastructure - is a sure sign that Leipzig is becoming a strong market to invest in.

*Greenfield investment is where a company sets up a subsidiary property in a foreign country, by building its own brand new facilities from the ground up – as opposed to purchasing or leasing an existing facility.

Sources: JLL, Knight Frank, CBRE, PwC, Deutsche Bank, The University of Leipzig

All figures accurate at time of publication – August 2019

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