Real Estate in Portugal… A Hedge Against Inflation
Real estate continues to be seen as a safe haven in times of uncertainty, and Portugal is an attractive country for those looking to invest. Despite the pressure felt on the sector, due to the increase in interest rates, construction costs and inflation, a window opened for private capital, looking for opportunities in a scenario particularly attractive given the shortage of prime properties in the residential and commercial markets. Real estate is seen as a protection against inflation and an advantage due to the portfolio diversification benefits it offers. The most recent data on investment trends across luxury sectors reveals that four in ten ultra-high net worth individuals (UHNWI) increased their portfolio value in 2022 despite a year of 'Permacrise'. And real estate was one of the 'drivers' of this performance, as well as high liquidity. For 2023, I expect that the sector will once again assume a leadership position, being at the top of the list of investment opportunities. And Portugal will remain on the radar of investors. Our country - due, in particular, to the tranquility and security it offers - will once again be on the Top 5 destinations for buying a home. There is high liquidity in the high and very high segments, and that the price per square meter in Portugal is still quite competitive for international investors, most of whom have equity. In addition, the price is not a determining factor, since what this type of buyer is looking for is an opportunity or property that is scarce in the market. From the challenges to the opportunities, passing through the preferred and attractive areas of Portugal for foreign investors, to the typology of the most sought after assets or projects, I anticipate the following behavior for the real estate sector in 2023… The pressure felt on the real estate sector, due to the increase in interest rates, created a window for private capital looking for opportunities in a particularly attractive scenario given the shortage of prime properties in the residential and commercial markets. Liquidity is back and real estate, either because it is considered as a hedge or protection against inflation - 'inflation hedge', or because of the portfolio diversification benefits it offers. Portugal will be one of the top 5 Countries to invest in 2023 and Americans will continue to be the ones who seek our country the most, but also Europeans. The investor is a well-qualified buyer who knows our country. They know exactly what they are looking for and the areas they wants to live or invest in. I am talking about buyers with a high financial involvement and who seek Portugal for the security and tranquility that our country offers. Price is not the determining factor as what these buyers are looking for is an opportunity or a property that is scarce on the market.
Lisbon continues to be a destination of choice, especially in the more central areas and for those looking to live in the capital, as well as all the way to Cascais and even Sintra, which are always very sought after by families or clients who favor a less urban lifestyle and more sport-oriented. The Alentejo area south of Lisbon that goes from Troia to Melides is also very popular for those who want to renovate a home in ruins on a hill or rehabilitate an old farm or simply have a summer house. While Porto has been more attractive to investors looking for a higher return, and in recent data more sought after than Lisbon, in due part to being considered the Best City Destination in the World for 2022, ahead of cities such as Cancún; Bogotá; Cape Town; Dubai; Las Vegas; Miami and New York; London and even Lisbon!!! The Northern Minho and Douro Regions are still one of Portugal’s best kept secrets and sought after by many investors from the Northwestern United States due to it’s similar weather and investment opportunities in the wine sector. Our country has unique and diverse characteristics. It is a small country, but it offers landscapes for all tastes. It is safe and the cost of living remains attractive. In summary I feel the real estate sector is a resilient sector and one where there are solid investment opportunities. Rising interest rates will continue to hit some more indebted homeowners. However, there is liquidity in the high and very high segments, on the one hand, and on the other hand, the price/m2 in Portugal is still quite competitive for international investors, most of whom have equity.
Market specialists and financial analysts are following the trend of investors towards a 'back to basics', that is, a return to fundamentals… Tangible, direct and real investments. Real estate, especially in mature markets with high demand, is a safe investment. Our market has completely changed in recent years and is now a diversified market that does not depend solely on the banking system. For Infinite Solutions, the challenge will remain the same as always… To support our buyers in all their life cycles, presenting the best opportunities and solutions, whether they are owners, buyers or investors. If you would like more information about investing or moving to Portugal, feel free to schedule a call on our calendar through Calendly, and let’s see where our team and I can add value to your property search. Link to schedule call on Calendly
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