As the government continues its charm offensive to woo international investors, purchasing Portugal real estate has never been easier. In terms of the actual purchase process at least, buying into Portugal’s thriving property market has been simplified significantly over recent years.
Of course, it’s not quite as easy as simply choosing a random property in a random location and hoping for a healthy return. Just as is the case across the rest of Europe, buying the right property in Portugal takes due care and forethought.
So for those interested in buying into the Portuguese property market in the near future, here’s a quick rundown of the most important guidelines to follow from the country’s leading experts:
1. Establish your objectives
First and foremost, you need to consider exactly why it is you’re looking to buy a property in the first place. The reason being that your primary objectives will have a significant impact on what makes the ideal property and where. If you are looking to buy a relaxing holiday home purely for personal use, you’ll be looking at a very different set of requirements than an investor looking to profit through long-term letting. Of course, it’s perfectly possible that you will have multiple objectives for your Portuguese real estate. Nevertheless, you’ll still need to consider your main priority and base your decisions on it accordingly.
2. Consider property prices carefully
In order to determine whether or not any given property is priced appropriately, you’ll need to take into account a few important factors. Its location, average property prices in the region, demand, planned developments in the area and so on. It takes a fair amount of research to determine if and to what extent any given property price is fair and/or attractive. It’s not simply a case of seeing a pretty property at an affordable price and diving in.
3. Location, location, location
Just as with all other property markets worldwide, location really is everything. Particularly if looking to turn a profit through your investment, you need to think extremely carefully about the local market you buy into. There are certain property hotspots across Portugal right now that guarantee the healthiest possible returns. While it’s impossible to know what’s to come decades down the line, some of Portugal’s most desirable and exclusive resorts are proving highly profitable for investors right now. Once again, your intentions for the property (holiday lets, long-term rentals etc.) will dictate the most appropriate location accordingly.
4. Evaluate additional costs
It’s also worth bearing in mind if and to what extent your chosen property will require immediate and/or on-going maintenance. Don’t fall into the trap of being blindsided by what seems like a bargain, if in doing so you cripple yourself with additional costs. Even when a property appears to be pristine, it may require any number of urgent (and expensive) repairs to get it into shape. Newer properties may be more expensive, but could also prove more cost effective long-term.
5. Establish demand
If your investment is primarily about turning a profit, you need to carefully evaluate demand. There are certain regions in Portugal where from an investment perspective, looks can be deceiving. The reason being that while there may be enormous demand for properties of all shapes and sizes, there’s already far too much inventory for their respective owners to turn heavy profits. In regions where development has crossed the line into overdevelopment, it can be difficult to turn even a modest profit. It’s therefore a case of carefully considering supply and demand, before going ahead and choosing a property.
6. Choose your market carefully
You also need to think very carefully about the specific demographic you intend to appeal to. For example, you could decide to target affluent holiday makers with an enormous and luxurious property in one of Portugal’s most desirable districts. Nevertheless, you have to accept that in doing so, you’ll be the proud owner of Portuguese real estate that has no appeal whatsoever to anyone who isn’t relatively wealthy. The same also applies at the opposite end of the scale – appealing to less affluent demographics means largely eliminating the prospect of attracting wealthier tenants and/or buyers. On paper at least, therefore, it could be advisable to target something in the middle.
7. Hire help
Last but not least, it’s worth remembering that if you yourself aren’t a bona-fide Portuguese property expert, you could probably do with speaking to someone who is. It’s always beneficial to speak to someone who has at least some experience in Portuguese real estate investment – particularly if looking to buy in as a foreign investor. There are various incentives and government initiatives in place right now that could maximise the value of your investment. Hence, even if it means paying a premium to hire help, it’s an investment well worth considering.