The Portuguese real estate market continues to attract many local and international investors, as well as foreign nationals who wish to move to Portugal.

According to the National Institute of Statistics, INE, Portugal’s statistical authority, the median price of family dwellings in Portugal reached €1,870 per square meter in the fourth quarter of 2024, in a total of 44,115 transactions. This reflects a significant year-on-year increase of 15.5% compared to the fourth quarter of 2023, up from a 10.8% rise in the previous quarter (based on preliminary data from INE). Additionally, the number of family dwelling sales surged by 34.2% over the same period in 2023.

The average price per square meter in the metropolitan area of Porto was, in October of 2024, at €2,789, while prices in the Lisbon area were set even higher, at €4,152.

Lisbon remains one of Western Europe’s more affordable capitals for housing, despite a steady rise in property values.

The average price in central Lisbon ranges between €6,000 and €7,000 per square meter, with prime properties reaching €10,000. While this figure reflects a premium segment of the market, it is still lower than comparable properties in cities like Amsterdam, Madrid and Barcelona.

Nationwide, Portugal’s housing market has shown robust growth, fuelled by increased foreign investment and a thriving tourism sector.

Portugal’s real estate investment market in 2024 and 2025 shows robust growth in the hotel and retail sectors and a renewed momentum in office and logistics fuelled by economic growth, falling interest rates, and a market-wide focus on sustainability and prime asset quality, leading to increased number of transactions and higher values.

According to CBRE, overall investment volume is projected to reach €2.5 billion in 2025, an 8% year-on-year increase.

Lisbon continues to dominate investment flows, capturing 54% of volumes, followed by Porto at 7%.

The hotel and retail sectors will continue to attract the largest capital flows, with office and logistics also seeing upward trend due to occupational demand and modernisation pressures.

THE PROPERTY MARKET

Like in other civil law countries, there are two types of property rights under Portuguese law:

• rights in rem (direitos reais) which can be enforced against any third party or entity; and
• rights in personam (direitos pessoais) which can only be enforced against the person (individual or legal entity) with whom a contract obligation exists.

Rights in rem, as defined in the Portuguese Civil Code and other relevant legislation, are limited to those explicitly recognised by law and include property and property-like interests. Rights in rem must be created, mortgaged, or transferred through a deed executed before a Portuguese notary or attorney and must be registered with the land register.

In contrast, rights in personam, such as lease agreements and other usage rights, generally do not require registration with the land register, although certain leases can be registered, e.g. leases exceeding a duration of 6 years. As a rule, these rights can be created or transferred via contract.

Public records of properties, including registrations of acquisitions, mortgages, and other liens or encumbrances on immovable assets, including registered leases, are accessible online, and such registrations can be filed digitally.

THE RENTING MARKET

Portugal’s housing prices continue to rise strongly during improved economic conditions.

Rental properties are advertised on many websites specialising in real estate. In addition, ads can be found in local newspapers or magazines, some in English. Real estate agencies all over the country also offer short and long-term rentals.

Local Lodging, promoted through platforms like Airbnb, has become an increasingly popular trend in Portugal.

Before 2024, Local Lodging operators were subject to an extraordinary contribution (a special tax) that imposed a significant financial burden on hosts. Additionally, municipalities had limited power to control where and how Local Lodging could grow.

In 2024, the legal framework for Local Lodging was revised to address these issues. The extraordinary contribution (special tax) was revoked, and municipalities were given greater decision-making power to better manage Local Lodging locally.

Municipalities can now designate containment areas where new Local Lodging registrations are restricted and set specific conditions and limits for new registrations. Although national restrictions on transferring Local Lodging registrations were lifted, some municipalities may still impose transfer limits on certain registrations.

Furthermore, approval from the condominium owners’ assembly (assembleia de condóminos) is only required for installing hostels within individual units, simplifying regulations for most Local Lodging operations.

FORMALITIES

To purchase a property, it is advisable to verify both the legal status and the actual condition of the property. This requires reviewing the documents that identify the property and confirming the legitimacy of the seller.

LAND REGISTRY CERTIFICATE

The land registry certificate can be requested either in hard copy or in digital format online. It provides information on the composition of the property, the legitimacy of the seller, and any encumbrances that may affect the property, such as mortgages or collateral.

TITLE CERTIFICATE

The property title certificate may be requested from any tax office (repartição de finanças) and contains information about the property's tax situation.

USAGE LICENCE

It certifies the authorised use of the property and may be requested in the City Hall of the district where the property is located.

PROPERTY TECHNICAL DATASHEET

This document contains information about technical and functional features of a property and may be requested in the City Hall of the district where the property is located.

PROMISSORY AGREEMENT OF SALE AND PURCHASE

In most cases, the process of buying a property begins with the execution of a promissory sale and purchase agreement. While not mandatory, these agreements are crucial to ensure the sale is completed when the seller cannot deliver the property immediately; for instance the building's construction or renovation has not been completed at the time, the lack of registration of ownership or building and other administrative permits, the property being used by the seller or a tenant, or the buyer not yet having obtained financing.

Once the promissory agreement is executed, typically the buyer makes a down payment to the seller of 10 to 20% of the sale price.

Promissory agreements may also give priority over third parties’ rights when registered with the Land Registry Office. This ensures that the property cannot be sold to another person. The registration is valid for six months and can be renewed for equal periods, or until one year after the date set by the parties for the execution of the deed of sale and purchase.

DEED OF SALE AND PURCHASE

The purchase of property must be made through a deed of sale and purchase executed before a notary (escritura pública) or an attorney.

The acquisition of property is subject to municipal property transfer tax and stamp duty, which must be paid in advance of the execution of the public deed of purchase, and, when applicable, notary’s fees.

Once the sale and purchase deed has been registered, the provisional registration with Land Registry Office, in case it was made after the execution of the promissory agreement, will become definitive. When the promissory sale and purchase agreement has not been registered, the purchaser should register the deed of sale and purchase as soon as possible after execution.

Registrations with Land Registry Office can be carried out online through the website https://www.predialonline.pt/PredialOnline/.

OVERVIEW

Investments in property in Portugal may be carried under any of the following structures:

• direct ownership by the investors; and
• indirect ownership by way of the incorporation of a Portuguese or foreign special purpose vehicle ("SPV").

Portuguese SPVs may take one of the following forms:

• a commercial company; and
• a real estate investment undertaking.

PORTUGUESE COMMERCIAL COMPANIES

Commercial companies, such as quota companies and joint stock companies, are generally suitable for real estate investment.

Historically, joint stock companies were the preferred choice due to tax benefits, as the transfer of their shares did not trigger municipal property transfer tax. However, following amendments to the relevant legislation, public and quota companies are now treated equally, eliminating any tax advantage for joint stock companies.

Nevertheless, for companies with multiple investors, a public limited liability company may still offer corporate advantages. Notably, the transfer of shares is straightforward and does not require registration at the Commercial Registry Office.

REAL ESTATE INVESTMENT UNDERTAKINGS

The incorporation of collective investment undertakings is increasingly common in Portugal, driven by recent legislative changes. These entities are governed by the provisions of Decree-Law No. 27/2023, dated 28 April 2023.

Collective investment undertakings are classified into two categories:

• Undertakings for Collective Investment in Transferable Securities ("UCITS"); and
• Alternative Investment Undertakings ("AIU"), which include Real Estate AIUs.

Real Estate AIUs can take the form of either:

• an Alternative Investment Fund ("AIF"); or
• an Alternative Investment Company ("AIC").

These entities may be structured as open-ended, closed-ended, or mixed, depending on whether the participation units or shares issued are variable or fixed in number.

Real Estate AIUs are permitted to acquire property rights over immovable assets for purposes such as leasing, resale, or other economic activities. They may also hold shares in real estate companies, subject to specific legal restrictions.

The incorporation of a Real Estate AIU requires authorisation from the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários, "CMVM"). However, in cases of private subscription, a prior notification may suffice, provided that, for an AIC, it is managed by an authorised management company.

In recent years, there has been a significant increase in the number of AICs investing in real estate in Portugal.

AICs are subject to the following rules:

• Legal Form. AICs must be incorporated as a public limited liability company
•  Management. AICs may be either self-managed or managed by an authorised management company.
• Minimum Capitalisation Requirements. If management is not delegated to a management company, the AIC must comply with specific managing and minimum capitalisation requirements. AICs must be established with a minimum share capital of €50,000 if managed by a management company, or €300,000 if self-managed. The share capital must be represented by nominative shares.
• Main Centre of Business. AICs registered in Portugal must have its head office located in Portugal and be managed from within the country.

Open-ended Real Estate AIUs are generally subject to corporate income tax, but some specific income streams, such as rental income, real estate capital gains, capital income, and dividends, are exempt from taxation.

Additionally, open-ended Real Estate AIUs benefit from an exemption on municipal property transfer tax.
Real Estate AIUs are liable for stamp duty on their net asset value at a rate of 0.0125%.

Income distributed to investors is taxed as follows:

• Resident individuals are taxed at a rate of 28%.
• Resident companies are subject to corporate income tax at the applicable rates.
• Non-resident investors (both individuals and companies without a permanent establishment in Portugal) are generally subject to a withholding tax at a rate of 10%.

Relevant legislation

Civil Code [Portuguese Only]

New Urban Lease Regime [Portuguese Only]

Macedo Vitorino's briefings

«Investing in Real Estate in Portugal» (2021)

Important notice

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We are used to working on all aspects of real estate, planning and construction. We act regularly in domestic and cross-border transactions involving real estate assets, including mergers and acquisitions, financings and foreign investments involving real estate assets.

We can assist you in all aspects related to real estate and planning, including:

• Negotiating property acquisition, transfer and lease agreements
• Conducting due diligencse on real estate assets
• Preparing applications and dealing with construction and use licenses
• Handling real estate disputes

If you have any question or wish us to provide a budget, please contact us to: whyportugal@macedovitorino.com

For more information on our practices and expertise please go to www.macedovitorino.com/en/expertise