Investing in Portugal’s Real Estate continues to draw international attention in 2025. The market offers much more than just a sunny coastline. As housing markets around the world grow increasingly volatile, Portugal stands out, offering a rare combination of affordability, stable appreciation, attractive yields, favourable taxes and a legal framework that remains open to foreign capital.
From urban redevelopment in Lisbon to tourism assets in the Algarve, Portugal has high-yield strategic opportunities across residential, commercial and hospitality sectors.
In this in-depth guide, we analyse the country’s property investment potential for 2025 and hope to empower you to make a well-informed investment decision that aligns with your financial objectives.
Why are Foreign Property Investors So Attracted to Portugal?
When it comes to investing in real estate, there’s several factors to weigh, including political and economic stability, and general growth being among the most important.
According to Reuters, and multiple other sources, Portugal’s GDP grew by 1.9% in Portugal in 2024, with a particularly strong performance in Q4, where it grew by 2.8%, beating out government projections and the European Commission’s own forecast for 2024, which averaged at 1.7%.
During 2025’s 1st quarter, Portugal’s GDP recorded a real growth rate of 1.6%, already evidencing a superior result when in comparison to 2024’s Q1, which displayed a 1.5% growth, according to Statistics Portugal (INE).
Portugal’s economy has consistently shown resilience and growth, and despite challenges all modern economies face, it has managed to improve in multiple sectors, also revealing a favourable outlook for public finances.
This continued upward trend signals sustained economic momentum and reinforces Portugal’s appeal among foreign property investors seeking long-term growth in a stable market.
With borders and ports fully open for seamless trade with other EU member states, Portugal also boasts political stability with a democratically elected government that warmly welcomes foreign business and investment, establishing an advantageous economic and regulatory environment that is conducive to overseas contribution.
Reasons to Invest in Properties in Portugal: A Real Estate Overlook for 2025
In the past decade, Portugal has emerged as an attractive financial destination, offering a thriving real estate market with a range of opportunities for investors.
The growing demand for short and long-term rentals, fuelled by a booming tourism industry and the growth of the foreign resident population, has created a favourable environment for property owners.
Thanks to its pro-expat policies in recent years, Portugal has garnered even further international attention. From the current resident population of approximately 10,600,000, according to the latest 2023 data, with over 1 million foreign nationals now calling Portugal their second home.
Due to a recent population growth, Portugal continues to demonstrate strong real estate market performance, attracting investors worldwide. The latest official data shows that property values more than doubled over the last decade, rising from the country’s average of €763 per square metre (€70.89 per square foot) in July 2014 to €1,736/m² (€161.28/ft²).
This significant appreciation underscores Portugal's property market’s robust growth, making it a highly attractive investment destination for both local and foreign buyers.
Average House Prices: The Definitive Proof of How Portuguese Real Estate Delivers High ROI
Whether you are considering an investment opportunity, planning to purchase your dream home, or even retiring in Portugal, make sure that you are well-informed regarding the average house prices and the ever-evolving dynamics of the Portuguese housing market.
The Past and Future of the Portuguese Real Estate Market: 2024 Recap
In 2024, the Portuguese real estate market underwent a significant change. The election of a new government saw the announcement of a 4-Year Executive Plan to tackle issues in the property market, including revoking the plan which discontinued the Real Estate investment option for the Golden Visa. After a snap election called in early 2025, the same party was elected once again, with much of the same staff and members of parliament remaining, indicating that the executive plan will go ahead.
Also in 2024, the same government that has been since re-elected, announced a €2 billion initiative to build around 33,000 homes by 2030, facilitating access to an increasingly pressured market. Furthermore, 2024 also saw the introduction of certain tax exemptions for young individuals up to the age of 35 when buying their first home, something also accessible to foreign residents.
Portuguese Real Estate Market: Breaking Down 2024 Prices and What It Means for 2025 and Beyond
The most recent indicators for 2024 confirm that Portugal’s real estate market remains one of the most attractive in Europe for foreign investors, reflecting the positive impact of the policies introduced and enacted throughout the year.
According to the latest official data from INE (Statistics Portugal), the national median house price reached €1,870 per square metre in Q4 2024, representing a 15.5% increase compared to Q4 2023, and a 10.8% rise over the previous quarter (Q3 2024).
Total housing transactions in Q4 2024 amounted to 44,115, showing a significant growth of 34.2% year-on-year. Among all regions, Madeira stood out with the highest annual growth rate at 54.9%, cementing its position as one of the fastest-rising markets in the country.
The Lisbon Metropolitan Area continued to top the list of most expensive regions, with a median price of €3,032 per square metre, followed closely by Madeira (€2,895/m²), Algarve (€2,851/m²), Setúbal (€2,222/m²), and the Porto Metropolitan Area (€2,049/m²).
In terms of municipalities, Lisbon (different from the Metropolitan Area, which contains 17 other municipalities) commanded the highest prices at €4,425 per square metre, followed by Cascais (€4,201/m²), Funchal (€3,693/m²), and Oeiras (€3,622/m²). These figures highlight the continued premium placed on key urban and coastal areas.
Interestingly, foreign-based buyers continue to invest significantly more in the more expensive areas of the country than national buyers. In the Lisbon Metropolitan Area, the difference reached 65%, while in Porto, it was 36.7%, underlining the strong international demand.
When looking at 2024 as a whole, the national median house price averaged €1,777/m², up 10.3% from 2023, with 151,784 transactions across the year.
All these initiatives prove that purchasing real estate in Portugal continues to be a decisive choice, whether to settle down in one of the best EU countries, or to obtain a solid return on your investment in 2025.
Portuguese Real Estate Market in 2025: Data-Backed Growth
As of the most recent data available (updated March 21, 2025), Portugal’s real estate market continued to demonstrate strong momentum through the end of 2024. The Housing Price Index reached 235.68 in Q4 2024, reached 235.68 in Q4 2024, while housing transactions totalled €10.17 billion in the same quarter. Construction activity also remained high, with 2,247 buildings licensed in February and 2,127 in March 2025. The national median price per square metre over the past 12 months stood at €1,777, highlighting sustained investor interest and robust market performance.
Deloitte’s 2025 Real Estate Players’ Insights report further confirms this trend, with 69% of respondents focusing on investment strategies for the first half of the year and 50% prioritising portfolio management. Despite only 25% planning to divest, nearly half had already sold assets in the previous semester, indicating continued liquidity. High demand and limited supply continue to drive prices up, especially in Lisbon’s residential sector. Meanwhile, the Algarve is attracting renewed investor interest, particularly in alternative asset classes like senior living and student housing, positioning it as a high-growth, high-yield opportunity in 2025.
Portuguese Real Estate Market in 2025: Renting for Profit
Choosing where to invest in Portugal must be a carefully made decision, as rental yields, quality of life, and average incomes can vary significantly across regions. However, there are always favourable ventures and lucrative opportunities to be had and collaborating with Portugal Homes’ trusted local experts increases the chances of success and enables investors to maximise returns on their Portuguese real estate ventures.
In 2025, the latest available data reveals that rental prices continued to steadily rise in 2025, largely due to the limited availability of properties for lease and rising demand, which stems from affordability challenges in the housing market.
The median house rental value per m² of new lease agreements of dwellings in Portugal was €8.43 in the 4th quarter of 2024, while the national average for the year stood at €7.97 per m², highlighting a healthy rental market, as per data released by Statistics Portugal. Average monthly rents in Lisbon and Porto were €15.93/m² and €12.58/m², respectively.
The government's commitment to promoting innovation and attracting foreign transactions further enhances the country’s and Lisbon's appeal as one of the best destination for entrepreneurs, indicate the potential for solid returns on investment in the Portuguese rental market.
Long-Term Vs. Short-Term Rental in Portugal
Reasons and Places to Invest for Long-Term Rentals
With stable income, reduced turnover, and a growing market, long-term rentals provide a solid foundation for investors seeking to maximize their returns and build a sustainable real estate portfolio.
According to Act No. 31/2012, measures have been put in place to boost the urban rental market. The law allows greater freedom in stipulating the rules regarding the duration of rental contracts, providing flexibility for both landlords and tenants. It also introduces a transitional regime for rental contracts established before the enactment of Law No. 6/2006.
From an investor's perspective, long-term rentals in Portugal offer promising potential, with a steady increase in prices on new leases contracts in Portugal. The average annual rental yield in major cities like Lisbon and Porto is estimated to be around 5% to 7%, making it an attractive option for investors seeking stable and consistent returns.
Read more:
Best Neighbourhoods in Lisbon: Main Attributes and Properties' Style
Where to Benefit from Short-Term Rentals
The market’s demand for short-term rentals is robust, thanks to the country's popularity as a tourist destination. According to Decree Law 128/2014, the dynamics of the accommodation market led to the emergence and proliferation of new accommodation options. This trend highlighted the need for an updated and specific legal framework to regulate these new realities. The creation of a dedicated legal regime is essential to address the unique circumstances and fiscal implications associated with these evolving accommodation trends.
To investors, short-term rentals in Portugal offer a lucrative opportunity, since the average occupancy rate for short-term rentals in popular cities like Lisbon and Porto is consistently high, reaching up to 90% or more during peak seasons. In 2024, short-term rentals in Lisbon and Porto continued to thrive. According to Turismo de Portugal, short-term rental properties in Lisbon can generate an average annual gross yield of 5% to 8%, while in Porto, the range is between 6% and 10%.
Investing in Portuguese Real Estate in Areas with Greater Returns
It is not difficult to understand that the main investment locations in Portugal include the capital, Lisbon, the Porto Metropolitan Area, and the Algarve region, and the island of Madeira. These locations represent a lucrative opportunity in Portugal's real estate sector, and as showed before in this article, they represent the highest increase in property prices in Portugal as of 2025.
Lisbon Metropolitan Region
In 2024, several areas within the Lisbon municipality stood out for their exceptionally high median housing prices.
- Santo António, home to the prestigious Avenida da Liberdade: €5,879/m²
- Marvila: €5,623/m²
- Misericórdia: €5,405/m²
- Estrela: €5,474/m²
- Carnide: €4,917/m²
- Arroios: €4,271/m²
- Olivais: €3,523/m²
- Penha de França: €3,649/m²
- Benfica: €3,971/m²
Across the broader metropolitan area, Lisbon continued to lead at €4,340/m², followed by Cascais at €4,053/m² and Oeiras at €3,471/m². With 2025 promising to go above and beyond, it only reinforces the Lisbon’s Metropolitan Area’s status as one of Portugal’s most valuable investment regions.
Read more:
Property for sale in Lisbon
Lisbon Property Prices On The Rise Despite The Golden Visa End In Real Estate
Porto Metropolitan Region
In 2024, several areas within Porto’s municipality recorded median housing prices above the city average.
- União de Freguesias of Aldoar, Foz do Douro, and Nevogilde: €3,960/m²
- União de Freguesias of Lordelo do Ouro and Massarelos: €3,217/m²
- Campanhã: €2,891/m²
- Ramalde: €2,837/m²
- Bonfim: €2,835/m²
- Paranhos: €2,846/m²
These figures reinforce Porto’s growing prominence as a real estate hub in 2025, offering both premium and accessible investment opportunities across its landscape.
Read more:
Property for sale in Porto
The Algarve Region
The Algarve continues to be one of Portugal’s most attractive regions for real estate investment, particularly for short-term rental opportunities. Its natural beauty and year-round tourism, which truly comes alive during the summer fuel consistent demand, especially in high-end locations such as the Portuguese Golden Triangle, which includes Vilamoura, Almancil, and Quinta do Lago.
According to the most recent data from Statistics Portugal, the Algarve recorded a median rental price of €9.41 per square metre in 2024, surpassing the national average of €7.97/m². Among the Algarve’s municipalities, Lagos stood out with a price of €3,452/m², reinforcing its reputation as one of the most valuable property markets in the region.
Read more:
Property for sale in Algarve
I Want to Invest in Portugal: What Should I Do?
Investing in Portugal is a strategic move, but it takes more than just picking the right property. For international investors, long-term success depends on expert guidance to navigate local bureaucracy, maximise returns, and secure the investment with confidence.
At Portugal Homes, we offer a fully integrated, end-to-end service that supports you throughout your entire journey. Our tailored consultancy helps you identify the most profitable real estate opportunities, while ensuring full legal compliance and supporting you with residency by investment solutions, such as the Golden Visa, the D2 or other visa routes best suited to your profile.
But it doesn’t stop there. Once your purchase is complete, maintaining and growing the value of your property becomes key. That’s where our complementary services steps in. From property management to overseeing renovations, tax representation and property maintenance, we provide a turnkey solution that protects your investment while you’re abroad.
Surprised? That’s how Portugal Homes ensures your success goes far beyond the real estate asset or obtaining your residency visa because investing in Portugal means investing in peace of mind, future returns, all with the professional support of Portugal Homes along the way.
Buying & Investing in Real Estate in Portugal as a Foreigner - What Is Required?
Foreigners planning to purchase a property must:
- Obtain a Portuguese Taxpayer Number (NIF)
- Open a Portuguese bank account
The NIF is essential not only for property transactions but also for various financial activities in Portugal, such as opening a bank account, signing utility contracts, and paying taxes.
Additionally, foreign buyers should be aware of other critical steps in the process of buying real property in Portugal which include costs going beyond the amount of the purchase.
You have the Property Transfer Tax, levied on property transfers, with rates varying based on property value and buyer status. The Annual Property Tax, a local tax based on property value; the Stamp Duty (IS), applied to property deeds and contracts.
Other important taxes and fees to keep in mind:
- Property Management Fees;
- Capital Gains Tax;
- Financing and Mortgage Costs;
- Currency Exchange Considerations;
- Property Insurance;
- Market Research;
- Due Diligence.
Choosing a suitable legal representative can help guide you through the local laws and property rights. It is important to conduct thorough due diligence on the property, which includes verifying ownership, checking for any outstanding debts or legal issues, and understanding the zoning regulations. For overseas clients, Portugal Homes offers its tax representation service, so the whole process can be done without harass to the buyer.
Portugal Property Investment: Is it Worth it?
The country's strong rental market provides consistent income potential, supported by appealing taxation policies, and a stable real estate market. Considering the quality of life, rental income potential, and future growth prospects, Portugal is an appealing destination for property investors. By staying informed and working with local experts, they can maximise their returns in the Portuguese market.
Before you make your decision, consult Portugal Homes. We are the foremost specialists in Portugal’s real estate market, and our team of professionals is trusted worldwide by international investors. We:
- Deliver expert advice
- Help you find the right investment opportunity that better suits your demands
- Provide residency & citizenship consultancy
- Assist you in buying property
- And guide you through everything related to tax representation & property management processes
Contact us now so we can show you how you can have a seamless and worry-free investment in Portugal that is bound to bring you great returns.
