Property Investment in Portugal: Foreigner’s Guide (2025)

Over the past decade, Portugal has transformed from a quiet destination spot into one of Europe’s most sought-after real estate investment hubs. With its beautiful coastlines, modern infrastructure, stable economy, and investor-friendly laws, Portugal provides a straightforward path for foreign investors looking for long-term potential.

This newly updated 2025 edition guide will take you through the basic steps and important things to consider when buying property in Portugal as a foreign first-time buyer.

12 Things to Know Before Buying a Property in Portugal

1. Can Foreigners Buy Property in Portugal
2. Best Cities and Regions to Invest
3. Square Meter / Square Foot Prices
4. Median Asking Prices
5. Rental Yields and Rents
6. Market Performance (Past and Present)
7. Landlord and Tenant Laws
8. Property Related Taxes
9. Buying (and Selling) Costs
10. Short-Term Rental Regulations
11. Mortgage and Financing Options
12. How to buy property in Portugal: step-by-step

1) Can Foreigners Buy Property in Portugal?

Yes, foreign investors can purchase property in Portugal. In fact, foreigners currently have the same property-ownership rights as Portuguese citizens.

2) Best Regions and Cities to Invest

Portugal offers a rich variety of real estate opportunities, spanning dynamic urban centers, upscale coastal enclaves, tech-driven innovation hubs, and historic cities with strong cultural appeal. Each region provides unique advantages depending on investor goals, lifestyle preferences, and the type of rental or long-term strategy being pursued.

Lisbon

As the capital and economic powerhouse of Portugal, Lisbon remains one of the most sought-after markets for both residential and commercial investment. Central districts such as Chiado, Príncipe Real, and Avenidas Novas are especially prized for their elegant architecture, vibrant cultural life, and excellent public transport connections. Strong demand from international professionals, a thriving tourism sector, and a historically limited supply of centrally located properties create solid long-term appreciation and robust rental returns.

Porto

Portugal’s second-largest city has become an increasingly attractive destination thanks to its mix of historic charm, riverside beauty, and expanding entrepreneurial ecosystem. Areas like Baixa, Foz do Douro, and Boavista offer diverse investment profiles, ranging from traditional townhouses to modern luxury apartments. Porto’s growing appeal to young professionals, digital nomads, and international students supports stable occupancy rates and steady market growth.

Cascais

Located just outside Lisbon, Cascais is one of Portugal’s most prestigious coastal destinations. Known for its scenic beaches, marina lifestyle, and high quality of life, it attracts affluent residents, expats, and retirees seeking luxury living near the capital. The neighborhoods around the historic center, Guincho, and Monte Estoril offer prime real estate options with strong long-term value and consistent rental demand, especially in the premium market.

Algarve

The Algarve region stands out for its world-renowned beaches, exceptional golf resorts, and cosmopolitan yet relaxed lifestyle. Cities and towns such as Lagos, Albufeira, and Vilamoura provide a wide selection of properties, from beachfront apartments to high-end villas. With year-round tourism, international appeal, and steady demand for both holiday rentals and full-time residency, the Algarve remains one of Portugal’s most reliable investment zones.

Braga

One of Portugal’s fastest-growing cities, Braga offers a blend of youthful energy, historic architecture, and expanding business opportunities. The city’s affordability compared to Lisbon and Porto, combined with strong demand from students and young families, makes neighborhoods near the city center and the university area particularly attractive for rental investments. As infrastructure and urban development continue to evolve, Braga’s long-term potential strengthens.

Coimbra

Home to one of Europe’s oldest universities, Coimbra offers a distinctive real estate market shaped by its academic community and historic character. The Baixa district, Santo António dos Olivais, and areas near the university are especially appealing to investors seeking reliable, long-term rental demand. Coimbra’s stable local economy, cultural significance, and steady flow of students contribute to its resilience and investment appeal across market cycles.

3) Square Meter / Square Foot Prices

Portugal’s square meter prices are considered moderate compared to other parts of Europe. Rates vary by city and neighborhood, with the nation’s capital of Lisbon doubling or almost tripling the costs of some less-populated communities.

As of October 2025, square meter prices were as follows in Portugal:

• Lisbon – €5,701
• Algarve – €3,771
• Porto – €3,767
• Funchal – €3,604
• Faro – €3,250
• Aveiro – €2,538
• Coimbra – €2,068
• Braga – €2,027

4) Median Asking Prices

Average asking prices in Portugal are higher than in many European countries, particularly in Lisbon, where prices rival European cities like Paris and Amsterdam. However, Portugal’s asking prices in other cities are more moderate.

One-bedroom prices as of November 2025 were as follows:

• Lisbon – €415,000
• Faro – €296,000
• Porto – €295,000
• Aveiro – €230,000
• Braga – €190,000

5) Rental Yields and Rents

Portugal’s rental yields are considered poor, ranging between 3.5% to 5.25%, with Lisbon having the poorest average yields and the highest asking prices. Average yields dropped from 4.57% in Q3 to 4.32% in Q4.

As of November 2025, average yields for one-bedroom apartments across Portugal were as follows:

• Lisbon – 4.34%
• Porto – 4.07%
• Faro – 4.02%
• Aveiro – 4.70%
• Braga – 5.24%
• Setubal – 5.08 (All rentals)

Portugal's rent price index:

Data Source: ECB.

6) Market Performance (Past and Present)

Portugal’s real estate market was booming prior to 2008 – especially in the vacation rental market – attracting foreign investors across Europe. The 2008 global financial crisis hit Portugal hard though, and property prices plummeted. The market has slowly recovered since 2013, due in part to increased tourism, an influx of digital nomads, and Portugal’s Golden Visa program, which offered non-EU foreign investors residency for spending a large specified amount on Portuguese real estate.

New legislation is being passed to slow foreign investment due to high prices impacting Portuguese citizens. Some communities have slowed down or stopped allowing new short-term rentals. Additionally, Portugal’s Golden Visa program no longer includes real estate investments. Despite rising prices and lower yields, however, many long-term foreign investors are still drawn to Portugal due to its beauty, lifestyle, and foreigner-friendly policies.

Portugal's house price annual change:

Data Source: ECB.

7) Landlord and Tenant Laws

Portugal’s landlord and tenant laws are deemed Pro-Tenant by the Global Property Guide. Portugal’s rental laws are designed to protect tenants and promote a balanced housing market. Regulations include safeguards that limit sudden rent increases and outline specific conditions for eviction, helping ensure renters can remain securely in their homes.

8) Property Related Taxes

Non-resident investors are taxed annually on both property and revenue. An annual municipality property tax (IMI) is paid each year based on the tax-assessed property value (Valor Patrimonial Tributário or VPT). The percentage due varies by location, but ranges between 0.3% to 0.8% for most properties. Additionally, foreign investors are taxed at a flat 25% rate on net income. 

An Additional Municipal Property Tax (AIMI), which is a wealth tax, applies to urban properties with an assessed value over €600,000 or €1.2 million for married couples. The tax starts at 0.7% and increases based on the property value. 

9) Buying (and Selling) Costs

Foreign property investors in Portugal must pay a one-time Property Transfer Tax (IMT), which currently is at a rate of 0% to 8% depending on specific details. In September 2025, the Portuguese government announced that the IMT will increase for foreign investors buying second homes, but the new rates have not yet been announced. 

A 0.8% stamp duty (Imposto de Selo) is due at closing.

For independent sellers, 50% of the gain they receive from selling their property is added to their worldwide taxes, then taxed anywhere from 13.25% to 48% based on Portugal’s sliding income tax scale. Foreign companies are taxed at 25% for capital gains.

Here's a full breakdown:

10) Short-Term Rental Regulations

Most short-term rental laws in Portugal are determined and regulated by the local municipalities. However, all short-term rentals, or Alojamento Local (AL), must be registered to receive an RNAL number, which must be included in all listings and advertising.

Some more densely populated areas across Portugal have been deemed “containment zones,” indicating that the AL density is too high. To help protect long-term housing residents, many of these areas, including Lisbon, Porto, and the Algarve, are strictly restricting or completely suspending new short-term rentals. More changes are expected to occur in 2026.

11) Mortgage and Financing Options

Getting a Portuguese mortgage loan as a foreign investor is easier than in many countries, but there are still some key differences. While Portuguese residents can often obtain loans for up to 50 years, non-residents generally are limited to a 30-year loan. Residents can usually borrow 90% of the property’s value, but non-residents generally can only borrow between 70% and 80% depending on various factors.

Portugal's mortgage loan interest rates:

Data Source: ECB.

12) How to Buy Property in Portugal: Step-by-Step

1. Research and Find Property: Portugal’s regions vary by landscape, supply and demand, price, and regulations. Popular websites like Idealista.pt, imovirtual.com, and casa.sapo.pt are good places to begin searching for available properties. It is important to work with a licensed bilingual real estate agent who understands the regions, neighborhoods, and local regulations. 
2. Research Pricing, Yields, and Legal Restrictions: Property prices vary significantly across Portugal, with Lisbon’s one-bedroom averages doubling those in Braga. As of May 2025, rental yields were less diverse, ranging from approximately 3.85% to 5.1%. While foreign investors have the same buying rights as citizens, short-term rental rules are changing and vary by municipality. 
3. Research Long-Term Market Changes: Portugal is tightening some incentive programs for people wanting to move to Portugal, including Golden Visa rules that require real estate purchases. Laws are also changing to help balance the housing supply, especially for short-term rentals. 
4. Research Local Taxation and Landlord Laws: Foreign investors must pay a one-time property transfer tax that ranges from 1% to 8% depending on the price, as well as a 0.8% stamp duty. Annual property taxes range between 0.3% and 0.8%, and income tax on rental property is taxed at a flat 25%.
   Portuguese laws tend to favor tenants over landlords, especially when it comes to rent increases and eviction regulations.
5. Hire a Bilingual Portuguese Real Estate Attorney: An attorney will be necessary for making an offer on property and conducting due diligence. Additionally, an attorney can serve as the buyer’s representative when applying for a Portuguese tax ID number, applying for a mortgage loan, and signing final paperwork.
6. Apply for a Portuguese Tax ID Number (NIF): An NIF is required for all financial and legal transactions in Portugal, including opening a bank account, applying for a mortgage, or buying property. Applications can be completed in Portugal – either by the buyer or the buyer’s legal representative – and are generally approved the same day. Applications can also be done remotely from other countries, but typically take 3 to 10 business days to be finalized.
7. Negotiate an Offer: Once a property is found and an offer is accepted, both parties will sign the promissory contract (Contrato-Promessa de Compra e Venda). Buyers typically put down a 5% to 10% good-faith deposit to hold the property. If the buyer backs out without legal cause, the seller keeps the money. If the seller backs out without legal cause, they must pay back double the amount of the deposit. 
8. Apply for a Mortgage: It is smart to open a Portuguese bank account prior to applying for a mortgage. Foreign buyers should expect to pay 20% to 30% down.
9. Conduct Due Diligence: Your attorney is responsible for checking registries to ensure there are no hidden liens or other ownership issues.
10. Sign Final Paperwork and Pay Fees: A notary is responsible for overseeing that all final paperwork and fees are paid. The sale is considered finalized once the notary registers the transactions with the Land Registry and Portuguese tax authorities. 

Timeline: Expect 1 to 3 months from accepted offer to closing.

Need Help?

Buying property in a foreign country can feel overwhelming, but we're here to help.

At Global Property Guide, we offer:

• Data-backed insights on property prices, rental yields, and taxes
• Country-specific legal and tax guidance through our partner network
• Pre-screened investment properties, including income-generating Airbnb units
• 1-on-1 consultations with real estate experts focused on international buyers
• Step-by-step buyer support, from due diligence to closing

Whether you're looking for your first investment in Portugal or expanding your international portfolio, we can help you make smart, secure decisions.

Contact our team or book a free consultation to get started.