Real Estate in Portugal

Selected the Best European Destination of 2021, Braga has a lot of history and a bright future. The city is situated in the Minho province and is filled with beautiful sights, culture, and a passion for innovation that fuels this ever-growing metropole. Young, dynamic, and full of different cultures, the city of Braga has on multiple occasions served as the host to all kinds of events, attracting people of many different backgrounds. Exhibitions, concerts, and events have recently given the city the status of the Youth Capital, moving it forward and showing the world how it can keep renewing, reformulating and developing itself, making the tomorrow they envisioned a reality. All said, it is no wonder why the city has been a magnet for tourists and investors alike over the past years, and if you’re still not convinced of its potential, we are here to give you 3 reasons why you should invest in one of the oldest cities in Portugal.

The future is here

Braga is focused on bringing the latest technologies to improve their sustainable and innovative infrastructures. Since 2013, when a new investment plan was put in motion, the dynamic of the city improved and is now one of the leading cities in technology and entrepreneurship in the country and a hub for numerous start-ups and many renowned companies from many different industries. That combined with amazing professionals coming from the Minho University, the second-best university in Portugal has given Braga the title of 7th European City of the Future. These innovations and forward-thinking have brought about much more than just investors, which brings us to our next point.

Life is good

Braga, Portugal’s third biggest city, is considered the happiest city in the country and the 5th best European city in Quality of life satisfaction and there is no shortage of reasons why. With the increasing investments in Braga and the numerous companies moving their bases to the city, the creation of new companies and jobs exploded, meaning the unemployment rate was cut in half in just four years. Innovation is also the basis for the quality of life in the city. Braga is part of the network of cities with zero CO2 emissions and is committed to a sustainable way of living, that is evident when you look at the infrastructures offered by the city, like the immense amount of transportation options and solar panels spread across the city center. The efficiency of public services and the presence of several green spaces in this metropolis help boost a fuller and healthier lifestyle for those who chose to stay in Braga.

The city also offers wide range of galleries, museums, theatres and auditoriums, where residents and visitors can find the most varied events and exhibitions. With a wide variety of entertainment and an agenda that is always full of activities, this city has become fun and dynamic.

A Real Estate Dream

Having an immense real estate market and with increasing demand (72% from 2020) and a property price rise of 12.7% in 2019, the city is a center of demand for those who want to guarantee access to the best services, the best activities offer and the best quality of life. On top of that, its price-quality ratio. The welcoming of tourists and immigrants, as well as the extraordinary infrastructures and health services, are some of the reasons that have the city under the watchful eye of those who seek the best living conditions, even being voted the number one Best Places For Americans To Live, Invest, Work In Europe.

Braga is distinguished by a number of competitive advantages, enhanced by the efforts made by the municipality, which makes Braga 3rd place in the national rank for real estate investment. With the government initiatives about attracting new companies and prestigious education mentioned before, more and more people are registering start-ups and tech businesses in Braga. It plays a great role both in the amount of taxes paid and activity in the real estate market. More people need accommodation (smaller flats are of course more popular among nomads).

All these characteristics of Braga attract new residents and boost the residential market, making it a city worth investing in. And to help you find the best deal possible I would recommend having someone working for you. The team at Pearls of Portugal can help you with that.

Offering an all-around service, Pearls of Portugal provides you with everything you need to complete real estate purchases in Portugal. From finding the best real estate, at the best price to viewing and negotiating the price on your behalf and dealing with legal processes. They work on a fixed fee schedule (meaning they work for you, and not the seller), and you only pay if you actually decide to continue with a purchase.

When buying real estate there are always a number of criteria that should be considered. Personal preferences are particularly important when investing in a property for your own use. Choosing a preferred region in Portugal is particularly important. The logic “region before object” always applies in order to make a good selection.

If you are not quite sure about the region or see the purchase as a financial investment, you should consider trends and developments on the market for 2021 in your selection. We have summarized the most important experiences from our work in a small overview for you. We look forward to your comments and suggestions!

Rural retreats wanted

Many tourists and buyers are no longer looking for the classic “all-inclusive / all-entertainment” stay, but prefer regions and accommodations with a strong  tranquil character. Terms such as “life deceleration” or “digital detoxing” give this development additional names. Due to the stressful everyday life and constant digital availability, people are increasingly looking for an opportunity to switch off in remote places. This trend was significantly reinforced by Corona, as protection of one's own health can be better guaranteed in the more rural remote places.

The north is in fashion

Due to the mild weather in winter and hot summers, the south of Portugal and the Algarve have long been the top destinations for buyers from abroad. But you don't have to leave Northern Europe anymore to enjoy a hot summer. The south of Portugal has become even hotter and drier at the same time. The trend is clearly moving away from hot regions towards more balanced climate zones like Northern Portugal. Therefore, more and more buyers are looking for properties in the north, especially the region between Porto and the Spanish border. The climate there is also very mild. However, there is significantly more water, precipitation and varied vegetation. Property prices are also lower in the north than in the south. Here you pay approx. 100-200 thousand EUR less than for comparable properties in the south. Clients that want to emigrate to Portugal recently buy more in the North because of the good infrastructure. 

Don’t follow the herd

If you look at the holiday resorts along the Mediterranean coast of Portugal, you quickly notice that the respective nations have gathered here in small communities over the past decades. In Silves you can find e.g. many German property owners while Albufeira has welcomed many British buyers. In the past, people sought to be close to their own compatriots and made purchases accordingly. The development on the market is clearly moving away from this and for many investors it is a purchase argument if the property is located in an authentic Portuguese community. With the new communication and information options, buyers no longer need to rely on “swarm intelligence”. In addition, there has also been a noticeable increase in the willingness to integrate into Portuguese society.

Renovated beats new

In Portugal, especially in rural regions, there are very often older properties or ruins that need to be renovated. Many buyer are finde the style and charm of old buildings more attractive compared to e.g. new energy-saving houses. In the past, the need for renovation was always an exclusion criterion, since costs and especially processes were scary in a foreign country. What was more of a shortcoming in the past is increasingly becoming the preferred option for man buyers. With better access to craftsmen and international construction companies, many more investors are confident enough to take the step towards renovations. Corresponding properties are significantly cheaper than directly habitable properties. Portuguese banks do not grant loans for renovation work, which causes properties in need of renovation to lose value. In addition, the costs for craftsmen are considerably cheaper than in other countries. The step to renovation therefore not only saves costs but also gives the opportunity to "redesign" the property according to its own ideas.

Medium-sized cities are booming

Lisbon in particular has seen very rapid demand and corresponding price increases over the past four years. The real estate market must therefore be treated with great caution due to additional political decisions. Porto has not yet reached this point, but the prices have also increased significantly. Medium-sized cities such as Braga offer very good development opportunities in terms of appreciation and income. The prices are still a long way from being as high as the two big cities. Demand for rental apartments is very high in medium-sized cities, as these, in addition to the general lack of living space, are also experiencing a very large influx of Brazilian immigrants and students. In addition, the medium-sized cities also offer very good living conditions and infrastructures. Many foreign citizens that retire in Portugal choose the medium-sized cities.

As in other countries buying real estate brings along other cost besides the actual  price. Some of these costs are obligatory, other costs are optional. We are happy to help.

Obligatory costs (continental Portugal):

• Notary fees: They are between two and three percent of the purchase price and are incurred during the actual purchase
• Real Estate Transfer Tax (IMT): The tax is staggered and a maximum of eight percent is due. For real estate under 92.407 Euro, there is no transfer tax. You can find a tax simulator on our site. 
• Property tax: This tax differentiates depending on the region and must be paid annually. The rate is between 0.3 and 0.8% of the property value according to the land register entry. One should therefore not be surprised if the registered information on the value and size of the real estate usually deviate strongly from the reality
• Application for a tax number (NIF) approx. 12 EUR
• Land registry entry (about 250 EUR)
• VAT on new real estate
• Stamp duty: This is paid at the tax office and must be presented to the notary when signing the purchase contract. This is 0.8% of the purchase price

Optional costs:

• Legal fees: If you hire a lawyer, the costs are between 2-3% percent of the purchase price. These costs are included in our services.
• Brokerage commission: . If you hire a  Portuguese broker, you pay up to 5% of the purchase price

Even as a non-Portuguese citizen or when you are not a tax resident in Portugal, you can have your property financed by a bank in Portugal. As in the rest of Europe, interest rates are currently quite cheap. The financing can be linked to a fixed or variable interest rate. The variable interest rate is based on the Euribor. The Euribor is an interest rate set daily by a group of European banks. You can see the current rates here.

The interest rate on a Portuguese variable rate loan is linked to either the 3 or 6 month Euribor rate. The banks, in turn, increase this rate by their current margins. At the end of each period, the bank adjusts the interest rate to the average of the previous months. As a rule, non-resident buyers in Portugal can have up to 60-80% of the property value financed. The terms are up to 30 years with an age limit of 70 years. As in other European countries, bank offers differ not only in interest rates, but there are also many differences in repayment options and ancillary costs. The commissions for early repayment are fixed at fixed interest rates (2%) and variable interest rates (0.5%). You should therefore get information either from an independent financial advisor or from the individual banks.

We recommend that you do not only deal with one bank when it comes to financing. Within 2-3 months after the preliminary contract for the purchase of property in Portugal has been signed, the buyer must attend the notary appointment. Banks need about six weeks to make the final decision on a loan. In the course of the process, it is not uncommon for the bank to worsen the conditions that it initially guaranteed. In order not to depend on just one bank, buyers should speak to 2-3 banks at the same time.

Despite the great care, we take over no responsibility for the topicality, correctness, completeness of the information on this site.