How high-net-worth individuals and a new wave of digital nomads is strengthening Portugal’s property market
The idea of working at your convenience from anywhere on the planet has always been an ideal and exciting proposition. The internet has enabled such a seemingly offbeat concept to become real and even take a life of its own. Enter the “digital nomads”, a class of highly skilled, well-paid and well-travelled individuals who have redefined the entrepreneurship game. They are not bound by the conventions of office cubicles and fixed work schedules. Instead, they thrive on work that relies on the power of the internet and their ubiquitous laptop. As a result, they can work from anywhere in the world. By having the freedom to work anywhere, digital nomads have enabled their income to take on limitless possibilities.
Portugal is one of the countries that fully understand the unconventional work-life nature of digital nomads. They have created an environment that elegantly accommodates the new wave of entrepreneurs. Portugal has long been a well-loved travel destination with its exceptional beaches, matched by a great climate, vibrant culture and delicious cuisine. It has always had a geographical vantage point, being located on the South Atlantic while still at an easy distance from the Mediterranean. The new trend of attracting digital nomads will only further strengthen the vibrant economy and, as a result, the properties located in this paradise.
Why digital nomads are flocking to Lisbon
The capital city of Lisbon is now ranked as 4th for digital nomads and for expats alike. Climate is the main driver for the influx of expats to this country. The country gets almost 300 days of sunshine, a sure-fire attraction for many who are looking to escape the cold. According to survey done in 2021, 84% foreigners who have moved to Portugal are contented with their lives here. Locals are known to be very welcoming to foreign guests. For those who have business interests in mind, Portugal’s tax incentives for expats have proven to be a great attraction, too.
A favourable and inviting government
Favourable government incentives related to visas further continuously attract both digital nomads and high-net-worth individuals to set up bases in the country.
Investors who choose to do business in Portugal can also apply for the NHR or Non-habitual Resident status for 10 years. They will not be taxed for their foreign income and can even avail of a 20% tax rate on income earned in Portugal. This is a huge advantage as taxes can go as high as 48% for those who do not have the NHR status.
A more attractive and permanent option particularly for high-net-worth individuals, is citizenship by investment following the Golden Visa scheme launched in 2012. Applicants can buy new property or choose restoration projects at a minimum investment of EUR 280,000 to gain the visa. In return, they can travel visa-free to any Schengen country. Visa holders don’t need to live in Portugal to enjoy the benefits of their residency permit and Portuguese visa holders can live anywhere in the EU and can travel visa-free to as many as 187 countries.
For those who purchase real estate, the return on their investments can be enjoyed in 5 years at the sale of their properties.
Growing tourist numbers
Now that the world has started to open up post-pandemic, it will not be surprising to see a significant increase in the number of tourists who flock to this favoured destination. For property owners, this spells a great opportunity for income by renting their homes or vacation villas to travellers. The seaside properties of Lisbon are a major destination for sunshine-hungry tourists. Porto and the Algarve are also popular destinations that promise picture-perfect vacation spots. Turning one’s real estate property into a vacation hideaway is guaranteed to bring great returns.
On the business front, expats who are looking to relocate their families to Portugal are always on the lookout for great rentals. The main parts of Lisbon offer a perfect business-home location for expats.
Burgeoning property prices
Prices of homes in Portugal have seen a dramatic increase since the start of 2022. At a rise of 17.2% compared to the same period the previous year, as reported by the National Statistics Institute in Portugal or the INE. With rising inflation and interest rates, prices will continue to increase. So, if you’re thinking of investing in Portugal, now is the best time.
Yet there seems to be no abating the foreigners who continue to purchase high-end properties in Portugal. Lisbon and Porto continue to top the list as prime choices among investors. Whether it’s to take advantage of current prices that will most likely increase in the coming months or whether it’s to turn these investments into income-generating rental properties, no time is as good as the present when it comes to Portugal.
Positive economic projections
With the support of the EU framework as a member state, the value of the properties are expected to increase in the coming years. Under the EU Cohesion Plan, a EUR 30 billion budget has been allotted for Portugal to boost its economic and social development from 2021 to 2027. This will enable the country to move forward with its plans with a strong focus on green and digital initiatives. Among the priorities are strengthening research and innovation, digitalization of small and medium enterprises and further boosting broadband connections all over.
Property Legacy can help guide you to invest in the best property that meets your portfolio and lifestyle needs to get optimal benefits and the best returns on investment.
If you want to know more about opportunities in Portugal, reach out to us at [email protected]
