Portugal – Offers Excellent Potential for Investment Appreciation

If you are looking to settle in an exciting country in Europe or to invest in property in a country where the standard of living is high, yet the cost of living is reasonably low, Portugal is the best choice on both counts. Portugal’s unique location, in the West Coast of Europe, is close to the time zones of countries such as Russia and the US. So whether you choose to go East or West, business opportunities awaits you both ways. Portugal is surrounded by Spain from the North and East and by the majestic Atlantic Ocean in the South and West. Democracy took roots in the country after the Carnation Revolution of 1974. In 1996 it became a member of the European Union.

The investment climate is supported by some great logistics with excellent connections to major cities through road, rail, air and sea. The communication infrastructure is highly developed and is comparable to the best in the world. Combined with a highly educated, skilled and resourceful workforce, the future is full of exciting possibilities for potential real estate investors.

Portugal Tourism and Real Estate

Consistent economic growth can be attributed in a large measure to the tourism industry. It contributes about 5 % of the total GDP. The city of Lisbon is the most popular tourist destination among scores of other European cities, second only to Barcelona. Tourism has also been encouraged by the rich cultural tradition of this country. Portuguese vineyards and wines are world famous. The extraction and wine creation process is a must-see for tourists. 

Property prices tend to fluctuate in Portugal. The comparatively higher property prices can be attributed to higher land cost and excellent construction quality. Another reason is the introduction of planning regulations in 1993, which caused new-constructions to decline and prices to zoom up by 15 % to 20%. Older properties are available at reasonably low prices. However, renovation costs may neutralize your apparent gains. Portuguese law deals with planning irregularities with a firm hand, and this has helped the country oversee a planned development process. As the next stage of development has shifted course to the Atlantic coast, real estate markets have got a much-needed impetus.

The British Connection

It is common to find many British people in Portugal - either as permanent residents or visiting the country on holidays - attracted by the pleasant, temperate climate, ease of travel and of course by the cheerful, friendly Portuguese people. While many of them preferre the serene atmosphere of the Algarve to build their homes, the rampant proliferation of people and prices has forced latter day British settlers to move northwards to areas such as the Silver Coast and Costa Verde. These areas are not yet fully developed but are facing a furious pace of infrastructure development, so one can safely infer that it is just a matter of time before they get fully-fledged development facilities.

So what is it about Portugal that attracts expats in droves? The answer is not too far to seek. The relaxed and slow pace of life, the comparatively lower cost of living, the long endless and serene beaches, the enchanting landscapes of the north and, of course, the universal attractor – good food and wine which are all certainly alluring factors.

Some Popular Investment Destinations

For those looking to invest in a second home in Portugal, the Algarve is the automatic choice of location. Huge demands for homes have naturally pushed prices skywards. The authorities must be complimented for not allowing the Algarve skyline to stand out like a sore thumb by strict implementation of development regulations. However, rates are flexible and depending on the amenities available, one can still buy the property of their choice within their limited budget. Central locations are outrageously expensive but the smaller towns in the east and districts surrounding Lagos in the west are insulated from the boom.

It is interesting to note that 48% of the houses in the Algarve are those of tourists. Of these, British people alone make up close to 20%. The more brave and innovative investors who dared to move out of the Algarve by a mere five kilometers or so, have been amply rewarded. They have access to the brilliant sunshine, pristine beaches, a calm lifestyle and a truly blessed landscape. Development of the A22 motorway make the place more easily accessible as the road runs across the entire length of the coast. Investment at the current levels can be expected to appreciate substantially as controlled development is helping the place have the right amenities and easy access to basic facilities.

Another area in the central coast of Portugal which is seeing hectic activity in terms of real estate investment is the Silver Coast. Located between Porto and Lisbon, this area is known for producing plentiful livestock and crops. Improved transport facilities and access through the A1, Portugal’s premier motorway has given a boost to development and real estate activity throughout the area. In fact, capital growth in the Silver Coast is one of the highest in Portugal. Strict construction norms and adherence to environment protection rules has seen development being carried out in a planned, precise manner. 

Costa Verde, or the green coast, is a place which is home to fertile valleys and lush green hills. Agriculture is the main activity here, made possible because of abundant rains and excellent soil conditions. Low property prices make it one of the best places to invest in the current scenario. You will have to invest inlands rather than the coast to get the best deals.

Buying Property in Portugal – The Process

Buying property in Portugal is a multi-stage process. The documents list details about the location, size, boundaries and rates. Compliance with construction regulations are documented in the habitation license which is a part of the agreement. A fiscal number is allotted by the tax office and a provisional contract is entered into by the concerned parties along with a 10% deposit payment.

The final contract is signed in the presence of the Notary and the balance of the payment is paid. Details of the transaction get recorded in the Land Registry. Agents normally charge about three to five percent as commission charges. Other charges include transfer tax (6%), legal fees, mortgage fees (if you need one) and surveyor charges (optional). Under-declaration of property values to save taxes can attract harsh penalties.

If you need to finance the purchased homes, you can approach Portuguese lenders. Re-financing loans and home improvement loans are also easily available.

For those looking to mortgage their homes from outside of Portugal, Euro-mortgage seems to be an attractive option. However, fluctuating currency rates can be a cause for concern for those exercising this option. Once all is place, you can enjoy your slice of Portugal and the good life!