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%.
This change coincides with Portugal outperforming the EU and other international markets in multiple variables. According to a recent 2024 survey completed by Ernst & Young, 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.
Meanwhile, the European Commission reported in November 2024 that GDP growth in Portugal is expected to increase from 1.7% to 1.9% in Portugal for 2025, while GDP in the rest of the Eurozone will only reach 1.3% in 2025. According to KPMG, UK GDP growth is expected to be 1.0% in 2024 and 1.2% in 2025.
The European Commission also found that Portugal’s inflation is set to reduce from 2.6% to 2.1% in 2025, while the European Central Bank reported this year the rest of the Eurozone inflation of 2.5% in 2024, moving to 2.2% in 2025. The British Chambers of Commerce found that inflation in the UK is expected to be at 2.6% in 2024, falling to 2.2% in 2025.
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.
Amanda Collison at Property Market-Index believes Portugal’s overtaking of the EU and other international markets 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:
“Property Market-Index’s latest report 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.
“Meanwhile, ten properties in Portugal were sold for every new one built in 2024, creating persistent upward pressure on prices, especially in sought-after regions. Similar trends are expected in 2025.
“€2.1 billion in foreign investment is also expected to have been invested into Portugal in 2024, with strong foreign interest continuing despite changes to programs like the Golden Visa, reinforcing investor confidence in the market.
“Portugal’s culture, heritage, weather, quality of life and the incentives for investors and wealthy expats looking to take advantage of the Golden Visa residency-by-investment programme, alongside the countries’ burgeoning luxury property market, are key indicators as to why Portugal is outpacing the rest of the Eurozone and other international markets.”
The latest Property Market-Index report also 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, which is 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.”
For more detailed insights into the latest property hotspots in Portugal, you can access the full Property Market-Index report here.