_International property digest: Foreign investment in Portugal
Lisbon is booming. You can sense it in the crane-filled city skyline and in the soaring tourism figures—up for eight consecutive years and reaching 4.5 million international visitors last year—but you can see it most clearly in official figures.
The Portuguese economy has outperformed the Eurozone’s average GDP for the last four years while professional services company PwC ranked Lisbon in top spot as the best city in Europe for investment and development prospects in 2019, up from 11th place in 2018.
There are many reasons for Lisbon’s popularity. The city is a beauty, its churches, homes and even metro stations filled with decorative and colourful tiles that shimmer with reflected light from the River Tagus.
But it is the financial reasons that are especially compelling for many of these new arrivals. Portugal has no inheritance tax, gift tax or wealth tax. In 2009 the government introduced the Non Habitual Residency (NHR) initiative allowing anyone who has not been a resident in Portugal for the past five years to benefit from tax incentives on pension and rental income, capital gains on real estate and non-Portuguese income for ten years.
Three years later the government added to that with their own Golden Visa allowing non-EU residents who invest in Portugal, for example, by spending a minimum of €500,000 on property—to live in Portugal and gain entry to the 26 European countries in the Schengen agreement.
Buying property in Portugal
French and British buyers have been enthusiastic participants in the NHR and Chinese, Brazilian and Turkish buyers most active through the Golden Visa with close to 8,000 residence permits granted between 2012 and March 2019. They have joined with increasingly affluent Portuguese buyers looking to invest in the city.
In addition Lisbon has become an important hub for creative industries and tech start-ups, encouraged by pro-business policies, low-living costs and a blue-sky climate. The city has three tech parks and government incentives include a 10-year tax-free welcome to existing businesses.
Lisbon is now the permanent host for Web Summit, the largest tech conference in the world that attracts Fortune 500 companies and global leaders among the 60,000 attendees.
Overall this demand matched by a shortage of rental stock is driving up yields to 6 per cent in the city centre and 8 per cent on the outskirts.
With a new airport due to open in 2022 capable of handling 50 million passengers each year and a €210 million Metro project underway that includes the remodelling of Cais do Sodré, Lisbon’s main transport hub, historic Lisbon is having a thorough infrastructure regeneration to provide efficient modern day living.
For investors, this adds up to a compelling investment opportunity and one area of particular interest for them is Park of Nations. This waterfront area to the east of the city centre, formerly a dowdy industrial zone, was entirely transformed in 1998 when Lisbon hosted World Trade Fair Expo.
Today it is a vibrant and dynamic city neighbourhood, fifteen minutes from the centre, with modern apartments and outdoor restaurants including one by Portuguese Masterchef José Avillez.
Vodafone and Microsoft are among the multi-national companies with new headquarters there, there’s a large concert hall, a marina and an excellent aquarium, while the waterfront itself has a tree-lined promenade and a cable car that runs towards Lisbon’s trademark Vasco de Gama bridge.
For further information on investment opportunities in Lisbon, contact Oliver Banks on Knight Frank’s International Residential Development Desk.