Top Luxury Property Trends Expats in Portugal Need to Know for 2025

As Portugal continues to attract affluent expats from around the world, its real estate market is undergoing significant changes. For those considering relocation or investment in Portugal from 2025 onwards, understanding these evolving trends is crucial.

Let's explore the key factors shaping Portugal's property landscape and what wealthy expats should keep an eye on.

Economic Growth and Market Outlook

Portugal's economy has shown resilience in recent years, with GDP growth rates averaging around 0.44% from 1988 to 2024.

Looking ahead to 2025, the economy is projected to grow by 2.3%, indicating a positive trajectory for the real estate 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%.

Property Market-Index also 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.

This economic stability provides a solid foundation for property investments, particularly in high-growth areas.

Regional Hotspots and Emerging Markets

While Lisbon and Porto have long been favoured by international investors, new hotspots are emerging across the country. Cities like Braga, Aveiro, and Évora are gaining traction, offering lower entry prices and excellent growth potential.

The Algarve region, particularly areas like Ferragudo, Carvoeiro, Silves, and the outskirts of the Golden Triangle near Faro Airport, has seen extraordinary increases in capital values.

That is being reflected in demand for some of the latest developments in the country.

Philip Button is managing director of Brookes Property Group which has seen the strength of the luxury real estate market in Portugal continue to grow – driven by increased demand from wealthy expats.

He explains: “We are just launching our new Quinta Heights development in Ferragudo, in the central Algarve. We have already sold 25% off-plan before the official launch.

“This particular area offers so much potential for capital growth and remains very authentic in what it offers as a location. Having worked internationally for 20 years in luxury real estate in Florida, the Bahamas, Antigua, and the UK, we identified Portugal as the country with the most to offer. It’s the whole package.”

Portugal Pathways chairman Paul Stannard has seen this reinforced investor confidence and property market in Portugal first-hand:

"Portugal continues to see a steady stream of high-net-worth individuals relocating, drawn by its unmatched safety, vibrant cultural heritage, favourable tax policies, the Golden Visa residency-by-investment program, and a booming luxury real estate sector, particularly in Lisbon and the Algarve."

"The revised Golden Visa residency-by-investment program remains a major attraction, offering dual residency in Portugal and EU Schengen freedom of movement for a €500,000 investment in regulated Portuguese funds. While property investments are no longer eligible as part of the Golden Visa program, funds are still channelled into dynamic sectors like renewables, healthcare, technology, tourism, and hospitality."

"The new framework potentially benefits Portugal more, broadening investment options and opening doors to more impactful sectors. While investing in Portuguese luxury property and developments is now separate from the Golden Visa residency-by-investment, it still has strong appeal due to the strength of the market."

Luxury Real Estate Trends

The luxury property market in Portugal has been particularly robust. In 2024, key locations such as Lisbon, Porto, Braga, and parts of the Algarve saw property values grow by an average of 5.8%, outperforming many international real estate markets.

This trend is expected to continue into 2025 and beyond, making luxury properties an attractive option for affluent expats.

Rental Yields and Investment Opportunities

Rental yields in Portugal remain competitive, especially in tourist-heavy areas. In popular destinations like the Algarve, rental profitability ranges from 5% to 7%, particularly for properties near beaches or golf courses. As demand for both long-term and short-term rentals continues to grow, this trend is likely to persist into 2025 and beyond.

Changing Visa and Tax Landscape

Recent changes to Portugal's visa and tax policies have impacted the investment landscape. The Golden Visa program has shifted focus from real estate to other forms of investment, such as regulated Portuguese funds or start-ups.

While the Non-Habitual Residency (NHR) tax scheme ended for new entrants in 2023, the upcoming NHR 2.0 (officially titled the Fiscal Incentive for Scientific Research and Innovation (IFICI) Program) promises a flat 20% tax rate for professionals in high-tech and R&D sectors.

Sustainability and Eco-Friendly Developments

Environmental considerations are increasingly influencing the Portuguese property market. Eco-friendly developments and sustainable properties are gaining popularity among investors and residents alike. This trend is expected to accelerate in 2025 and beyond, with a focus on energy-efficient buildings and green spaces.

Digital Nomad and Remote Work Impact

The influx of digital nomads and remote workers is reshaping Portugal's real estate market. Cities with strong digital infrastructure and co-working spaces are seeing increased demand for both residential and commercial properties.

This trend is expected to continue, creating new investment opportunities in urban centres and coastal areas.

Supply and Demand Dynamics

While demand for properties in Portugal remains high, supply has been a challenge. In the year 2000, Portugal built 200,000 properties, compared to just 20,000 in recent years. The government’s efforts to increase housing availability are ongoing, but it may take several years to achieve balance. This supply-demand gap could lead to continued price appreciation in desirable areas.

Investment Strategies for 2025 and Beyond

Understanding the market is one thing, but what steps should those considering investing in Portugal’s property market from 2025 take?

Diversifying investments across emerging hotspots and established markets allows you to take advantage of both sides. Emerging destinations typically have lower prices with the chance of higher returns.

If you’re looking for more stable returns, consider long-term investments in residential properties and commercial real estate.

Savvy investors should keep an eye on infrastructure projects that may unlock new value in areas. It is also worth keeping track of luxury new home developments in areas you’re interested in, as these can represent a high value for money in emerging luxury hotspots.

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To schedule a call with our real estate experts and partners, contact Portugal Pathways.

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