Portugal Residency by Investment in Real Estate in 2022: Loopholes, Prices, Solutions

In the run-up to 2022, the real estate prices in Portugal are rising. They follow the growing demand from desperate foreigners who seek to close the deal before the current Golden Visa rules expire. Let us analyze trends and consider several alternative solutions to help you legally obtain residence permits by investing in real estate in Portugal in the new year.

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Real estate prices in Portugal are rising ahead of 2022, driven by changes in Portugal Residency by Investment (Golden Visa) rules and current trends 

Real estate prices in Portugal keep growing, albeit slower than in previous years. According to Instituto Nacional de Estatistica (INE), they escalated in the third quarter of 2021 by 5.46% YoY and by 2.85% QoQ. In April-June 2021, the growth over one year was 10.6%.

At the beginning of the last decade, real estate prices in Portugal kept shrinking. After a steady decline for 13 quarters in a row, their recovery started in Q4, 2014, and have taken a prominently upward trajectory since then. 

In October 2020, after a short-term decline caused by the COVID-19 pandemic-driven economic crisis, the market revival resumed. 

The climbing trend is particularly prominent in the cities, where prices are notably higher than in other destinations nationwide. 

Let us take, for example, Lisbon – the domestic market trend-setter in house prices. According to the ‘Imovirtual’ portal, Lisbon’s average residential property price in October 2021 was €583,636, i.e., up 5.9% on the previous year. That was €70,000 more expensive than in Faro  – the second most expensive region in Portugal. 


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The construction output in Portugal is on the rise, while the demand outpaces supply

After a sharp slowdown in 2020 due to pandemic-related constraints, the housing sector is picking up again. As reported by INE, 21,230 permits were issued in the first three quarters of 2021 to construct individual residential properties in Portugal, including apartments, high-rise buildings, villas, cottages, and other units. The increase featured 15.3% on an annual basis, while it was only 2.6% in 2020, 8.4% in 2019, and 43.5% in 2018.

Expectations of the economic recovery in Portugal spur the activity of buyers of real estate 

All in all, the Portuguese economy shrank by 8.4% over 2020 because of the negative impact of the Covid-19 pandemic and its ripple effects. The GDP kept declining for five consecutive quarters from Q1 2020 to Q1 2021. It was the worst situation experienced since 1936. 

However, as stated by INE, the Portuguese economy grew by 4.2% YoY in Q3 2021 after a record 16.1% YoY growth in Q2 2021. 

According to the European Commission’s forecast, the national economy is expected to show a 4.5% growth in 2021 and 5.3% in 2022, as exports of goods and services (including tourism services) are rolling out, and private consumption keeps growing after the easing of the national coronavirus-related restrictions.

Investors gain confidence in Portugal’s commercial real estate market 

The Portuguese commercial real estate market is regaining its momentum, returning to the ascending path that had characterized the period before the COVID-19 pandemic. This uptrend is largely due to the restoration of investor confidence.

The recent annual report published by Savills plc on the situation in the commercial real estate market in Portugal predicts the continued steady growth of the sector in 2022. Savills experts have estimated that some €1.1 billion were invested in commercial real estate in Portugal from January to early October 2021, plus €534 million in Q3. They envisage that the €2 billion mark may be hit by the end of 2021.

In the first 3 quarters of 2021, the office property segment saw the highest growth rate in terms of attracted capital, having received a share of 36% of the total volume of investments in real estate. The hotel sector features a 20% share of the market. In contrast, the retail sector, which was severely affected by the pandemic, received only 8% of all investments.

The topical Savills report highlights another critical fact: the deals involving foreign investments accounted for more than 80% of all investment agreements signed from January to late September in 2021. Meanwhile, the domestic investment in commercial real estate is also on the rise, thanks to investment management funds and private investors interested in purchasing products in the office segment and showing particular interest in areas attracting high foot traffic.

Before the current Golden Visa rules expire, more property buyers are seeking residence permits in Portugal

The Portuguese real estate market continues to offer investors a stable and secure portfolio, growing prices, and a variety of opportunities. The market’s ability to recover from the pandemic-related short-term downturns has attracted, among other things, many foreigners seeking a Golden Visa, i.e., an economic residency program in Portugal promoting tempting real estate and other capital assets for investors.

From its launch in 2013 to early December 2021, this Residency by Investment program has involved over 10,000 international investors. They contributed a total of €6 billion in direct foreign investments in Portugal.

The rules of this Golden Visa Portugal program will become a little less attractive from January 1, 2022. In particular, the following two aspects should be taken into account:

  • International investors will no longer be allowed to buy new residential property in Portugal nor invest in renovation projects in popular cities and areas, including Lisbon, Porto, Setubal, and the Silver Coast.
  • • International investors retain the right to buy homes in Madeira and the Azores.

The required minimum investment amount will remain the same: €500,000 in the new construction or €350,000 in an old building refurbishment. Please note that buyers of property in low density / underdeveloped economy areas in Portugal can qualify for a discount of 20% in both cases.


Painted in blue are the areas where it will be forbidden to buy a home under the new Golden Visa rules. The areas marked in red are free from such a ban. Light gray indicates areas with low population density / underdeveloped economy.

The minimum required investment amount will grow after January 1, 2022 for the following investment options. 

  • Fixed-term bank deposits in Portugal: from €1 million (in 2021) to €1.5 million (in 2022).
  • Investment funds in Portugal: from €350,000 (in 2021) to €500,000 (in 2022).
  • Research projects: from €350,000 (in 2021) to €500,000 (in 2022).
  • Businesses registered in Portugal:  from €350,000 (in 2021) to €500,000 (in 2022).

The change in the Golden Visa rules has triggered a significant growth of investment in residential real estate in Portugal in 2021. 

According to official statistics, from the beginning of January to late October 2021, participants of the RBI program invested about €611 million in housing properties in Portugal. Most of them invested in real estate on the coast. The total value of investments made during these 10 months was more than the full-year total in 2020 by over €588 million. 

Investors seek alternative ways to apply for Portugal Residency by Investment in real estate

With the Golden Visa rules change, many foreign investors will face difficulties while trying to get a residence permit by investing in residential real estate in Portugal. However, local realtors and developers have already discovered several alternative ‘loopholes’:    investment funds, apartment hotels, and land for development projects.

  • Funds: When applying for the Golden Visa by investment in a fund, applicants have the opportunity to invest wherever and in whatever they want. Real estate promoters and developers are now actively creating such investment funds with portfolios featuring attractive real estate projects in Portugal. A foreign investor in such a fund can receive a share in the property plus the right to use it. This option will allow you to legally obtain a Golden Visa while investing a minimum of €500,000 in a qualifying residence in the city of Lisbon, for example. The obvious disadvantage is the inability to obtain absolute private ownership of the asset. However, the investor gets the legal opportunity to use it as they wish.
  • Apartments: The second alternative option is to convert real estate properties classified as housing into tourist apartments/apart-hotels. The investor can receive a de facto residential property in Portugal and access to a Golden Visa. Besides, tourist apartments can quickly become a source of passive income. The owner may wish to spend there only two or three weeks a year and rent out the apartment(s) during the rest of the time to tourists via an operator.
  • Land: By acquiring a land plot for a construction project, the investor has to meet the program requirements and can build a residential property in Portugal. However, one has to be ready to incur extra costs in terms of time and money necessary to prepare and negotiate the design of the new building, obtain a permit for the development, hire a local construction team for the actual implementation of the project, and so on.

Experts monitor the risk of a new bubble in the real estate market in Portugal

When preparing to purchase some real estate in Portugal for whatever reason, including the Golden Visa, you should consider the risk of a new housing bubble in the local market. We can suppose the likelihood of such a threat because the residential property prices in Portugal keep growing much faster than wages. But, according to experts, it is too early to panic or give up hopes to make safe transactions.

The main prerequisite for the formation of a “bubble” is the extraordinary growth of prices, which often stimulates mortgage lending and, therefore – the spike of ‘bad debts’. 

Portugal (on par with Luxembourg) featured the widest adverse gap between the growth rate of housing prices and incomes, according to a recent study of housing markets in the OECD member-states, conducted in the 4th quarter of 2020 by the International Monetary Fund (IMF).

In the reporting period, the housing prices grew faster than wages in most member states of the OECD. But the biggest Price to Income Ratio (133) was in Portugal and Luxembourg, followed by PIR in Austria, Hungary, the Netherlands, and Germany (where it made/exceeded 125). On the other hand, such a discrepancy is less noticeable in Lithuania, Finland, and Estonia.

The real estate prices have rocketed in the advanced economies

When examining the housing market across 60 countries in Q4, 2020, the IMF reports a significant property price increase in the majority (3/4) of them. This trend continued almost everywhere in 2021. According to the IMF Global House Prime Index for 2020, the house prices grew by over 5% in 23 countries out of 60 monitored by the study.

The real estate prices have rocketed in the advanced economies

Luxembourg has topped the list with a house price increase of about 17%. Turkey was second with a rise of 15%, while New Zealand came in third with a 13% growth. The Portuguese Republic was number 8 out of 60 countries analyzed by the IMF. The cost of residential property in Portugal increased by about 9% over the reporting period.

Among the states with the least significant increase in prices was Hong Kong, where prices were already among the highest in the world. 

The United Arab Emirates became the leader in terms of slumping prices: the fall has exceeded 4%. India (-3%), the Philippines (more than -2%), Serbia (-1%), Peru, Indonesia, and Malaysia (with a decline of less than 1% in both cases) are also featured at the bottom of this rating.

What’s behind the price growth?

According to IMF analysis, the pandemic price boom is caused by a combination of several factors. First, mortgage interest rates reached historic lows. 

Second, many governments provided financial aid, unemployment benefits, tax cuts, and other means of support to citizens, thus helping to minimize the devastating economic effects of the Covid-19 pandemic crisis and to maintain the standard of living.

Third, the above-mentioned economic support measures, along with travel bans and restrictions as part of the epidemiological response, have pulled down the public consumption volumes and piled up the savings of many families. Public deposits in Portuguese banks reached an all-time high of €169,910 million in July 2021, according to a recent report by the Central Bank of Portugal.

Fourth, having spent a considerable amount of time indoors during lockdown periods, many families reassessed the value of comfortable living spaces and the importance and real value of outdoor patios, gardens, and balconies. This circumstance has prompted many individuals to invest in new, better housing. According to the IMF, searches for interesting listings on the Internet have surged in several countries and have even reached record levels (for example, in the United States).

Such reasons have progressively advanced the scope of demand in the property markets. But supply was structurally constrained in some jurisdictions, including Portugal. The local construction industry remained resilient during the pandemic, but the building and development business was too heavily hit by disruptions in the supply of construction materials and the skyrocketing prices, as well as the critical labor shortages. This circumstance slowed down construction projects and delayed the commissioning of many cottages, villas, apartments.

The imbalance between supply and demand in the housing market has escalated prices in many other markets during the pandemic. The IMF experts have concluded that politicians and governments are closely monitoring the situation in their real estate sectors, hoping to prevent the formation of a “bubble. But what’s next?

What’s next?

Some people paint a gloomy scenario for the world economy – especially when they forecast the possibility of the landslide of house prices in China as a response to the current real estate crisis. The global crisis will affect the real estate market in Portugal too, like it did in 2008/2009.

But the Chinese crisis was largely due to liquidity shortages faced by the Evergrande and other developers operating across the country. ‘The Economist’ experts offer this opinion in their latest report on the risks posed to global economic growth.

The IMF paints a more plausible scenario, according to which mortgage loan rates will increase, the governments will terminate the financial aid to households as soon as economic recovery takes shape and the steady supply of construction materials resumes. Hopefully, these events can trigger the harmonization of housing prices and mitigation of the bubble risks in the market.

Rely on professional support when buying property in Portugal for obtaining the Golden Visa

Are you planning to buy real estate in Portugal on the most favorable terms along with the registration of the Golden Visa? You should book a private consultation with our experts and follow the InternationalWealth publications.

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How are property prices changing in Portugal?

According to the statistics published by Instituto Nacional de Estatistica (INE), real estate prices in Portugal rose by 5.46% for 12 months and by 2.85% in Q3 2021. The upward trend in the local market has lasted since the fourth quarter of 2014, preceded by 13 consecutive quarters of consecutive price declines caused by the aftermath of the global financial crisis.

How are the applicants’ strategies changing regarding the Portugal residency by investment in real estate in 2022?

While Portugal banned the purchase of housing in several popular destinations by foreigners seeking residence permits in 2022, it is still possible to use alternative options. For example, the developer can create an investment fund with a portfolio including real estate project(s), and the applicant for a Golden Visa will buy the fund shares covering the selected residential property. This will allow the applicant to hit two aims – the right to use the property and the right to apply for a residence permit. Another alternative option is to convert an ordinary apartment into a tourist apart-hotel (commercial property yielding passive income). It is also possible to buy a plot of land and build on it one’s house.

Who can help me choose some real estate property to obtain Portugal residency?

Our experts have many years of experience with real estate properties in Portugal and an extensive portfolio of successful residence by investment projects leading to the Portuguese Golden Visa/residence permit. They will be glad to help you choose and purchase the best assets. Their advice will consider your wishes, preferences, capital, and possible issues. You are welcome to book a consultation and select a turn-key solution, as well as many customized services.

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