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Why South Africans should invest in property in Portugal
If you are thinking about making a long-term investment, real estate in Portugal should be on your list of possibilities. The country is a great place to live, work, retire, or invest.
Property Practitioner’s Act: Image: Adobe stock
Compared to many other wealthy countries in the world, especially in Europe, Portugal is particularly welcoming to foreign investors with the numerous initiatives the country has taken to attract people to live, work or invest in Portugal.
The Portuguese property market offers every buyer a wide range of property options. With an abundance of new developments or traditional Portuguese homes, you can find any type of property from sleek modern lofts to luxury country estates. Lisbon and the Algarve remain among the most appealing areas of the Portuguese property market, whether you are considering emigration, citizenship or simply an investment property.
Why South Africans are considering Portugal for offshore property investment
With its fine wine, exquisite cuisine, sunshine and picturesque beaches, many foreign investors are choosing Portugal as a preferred destination for property investment. Portugal is a stable European country with a favourable tax system. In addition to the high standard of living, the cost of living in Portugal is also relatively low.
Portugal has become an increasingly popular investment destination where expats often buy property to use for tourism, as a second home or even as a place to retire. South Africans looking for secure medium to long-term gains are drawn to Portugal’s stable economic environment. Owning and investing in property in Portugal offers several advantages that make it increasingly competitive and attractive.
Quality of life
The country boasts a Mediterranean climate with an affordable cost of living and high quality of life with good connections to the rest of Europe. It is regularly ranked as one of the safest countries in the world, with strong infrastructure, good transport links, socio-political stability and excellent healthcare.
Economy and foreign investment
Offshore real estate is an attractive investment route because this European real estate market is relatively mature and stable. Portugal, which has no restrictions on international investment, offers a Euro-based asset value. You can build your wealth through capital appreciation in Portuguese real estate while earning an income in a stable currency with well-planned international real estate investments.
Infrastructure
The exceptional quality of its highways and air connectivity, which allows frequent direct flights to key corporate hubs across the world, further contributes toward investment in Portuguese real estate. There are multiple daily flights between Lisbon and Madrid, and Portugal is around two and a half hours by flight from Paris and London. In addition to port infrastructure, especially at the Sines terminal, there is also a railway network connecting the north and south of the country, as well as international connections between Portugal, Spain, France and, in the future, Germany
Skilled workforce and work opportunities
Portugal offers a talented and flexible workforce, the majority of whom are fluent in English, French and Spanish. Doing business in Portugal has become much easier in recent years. This is because tax procedures have been streamlined and steps have been taken to relax some labour law restrictions and increase flexibility in the workplace.
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Types of offshore property investment
The choice of real estate in Portugal is wide and still relatively affordable compared to other major hubs in Europe. The thriving property market offers high rental yields and strong, consistent demand. With a variety of investment options available, your individual circumstances and goals will determine which investment method you choose for Portuguese real estate.
Buy-to-let property
You may decide to buy an investment property with the sole aim of earning rental income in another currency in an area with high growth potential and strong rental demand be that for a long term tenancy or holiday rentals. The Portuguese buy-to-let industry is rapidly growing, which means there are agents that will look after your investment on your behalf so you can take care of things remotely.
As the Portuguese property market is still in its developmental stages, you need to think carefully about where you buy property and your tenant profile – i.e., who your tenants will be. This varies greatly as each location is different, attracts a different type of tenant and has different occupancy rates throughout the year. You need to decide which neighbourhood best suits your budget and the type of tenant you want to attract. Therefore, it is important that you seek advice from an objective third party who has local expertise and oversight on the regeneration and investment in different parts of the country.
Buy a property to live in
If you intend to emigrate permanently to Portugal and want to buy a house rather than rent, you should first visit the country and look around the areas where you intend to live. View any properties that you’re interested in, either alone or with a buyer’s agent.
While it is possible to buy a house in Portugal, you should first do your homework and try to understand the Portuguese property market before making a deal. Consider whether you intend to sell the house or just use it for family. Ideally, you should choose a convenient location close to amenities such as shopping centres and hospitals. It is also important to seek advice from someone with extensive local knowledge who can help you choose a location that suits your family’s needs.
Buying a holiday home
Given the thriving tourism industry in Portugal, investing in and renting out a holiday home in Portugal can earn you extra money while giving you the pleasure of sharing your home with guests. It may be a good idea to choose a location and property that will appeal to visitors or short-term tenants. Short-term rentals usually offer excellent returns and allow you to maintain ownership of your property for most of the year. Investing wisely in a second home requires extensive research.
Real estate fund
In this hands-off investment option, you can invest a certain amount of money in a single- or multi-asset fund, which is then used to purchase or build real estate. Real estate investment funds are another way to invest in commercial property such as hotels or resorts. There are numerous reasons why you may opt to participate in a real estate fund, from diversification to tax advantages. To be effective, a fund must be aligned with your financial goals. With this in mind, you should check whether the expected ROI, potential risk and timeline align with your expectations.
Whichever type of investment you’re looking for, Sable International’s offshore real estate investment team can guide you through the process and take care of all the facets including ownership structure, tax, foreign exchange, and property purchase advice. Their team is based in South Africa and Portugal, which means they have the local knowledge and experience to help you every step of the way.
