After decades and even centuries without rehabilitation, buildings reached a shockingly advanced state of decay. Twenty years ago, it there began a huge effort to renovate the old historic center of the city. However, it has been in over the past ten years that the rehabilitation has been massively developed. When compared with to few years ago, areas such as Estrela, Alfama, Chiado, and Central avenues are today now totally different, but there is still with a lot of work to be done.
INVESTING IN PORTUGAL
The Portuguese economy has been recovering consistently since 2013. More recently, GDP growth picked up and activity is expanding faster than in the Euro Zone.
The housing market has been boosted by special tax programs for foreign investors interested in recovering or buying real estate assets in Portugal (Golden Visa, Tax Regime).
Construction of new houses has almost stalled over the past ten years. To meet the increasing demand, investors are choosing to rehabilitate existing properties either for Short-Term Lease or Re-Sale.
House prices have been increasing faster in Portugal when compared to other southern European countries but are still substantially cheaper than the major European Capitals.
Portugal also has other possibilities for investment and is securing its place as an attractive destination for European and non-European Investors.
The “Golden Visa” program launched by the Portuguese Authorities is a fast track for investors to obtain a fully valid residency permit in Portugal, and including free access to the vast majority of European countries (Schengen area).
The “Golden Visa” is an attractive residence program for investors from around the world.
- Buy properties with a value of €500 000 or more;
- To purchase properties to rehabilitate – €350 000 – as long as they are over 30 years old or located in urban rehabilitation areas
- Is possible for all types of properties
- Co-investment or co-ownership is allowed
- Freedom to use, rent or lease
Capital gains on the sale of property located in urban regeneration areas by a taxpayer resident in Portugal are taxed at 5% for personal income tax (‘IRS’) purposes (unless an option is made to aggregate all types of income, in which case the general IRS rates apply to the whole amount).
To apply this special (reduced) tax rate, the following must be complied with:
- Property has been subject to urban rehabilitation (as defined in specific urban regeneration legislation) and must be attested by the city council
- Prior to the rehabilitation – a certification shall be requested to the city council to confirm the level of repair / conservation of the property and certify the type of construction needed to comply with the urban regeneration legislation
- After rehabilitation– the city council shall attest that construction done meets the requirements, namely that the repair /conservation level of the property increased at least 2 levels due to works
Foreign investors have discovered Lisbon and bought entire buildings in old neighborhoods. The warm Portuguese weather, the historical atmosphere and country safety level also attracts tourists so the current trend is the renovation of buildings and lease of apartments for short stays. The rigid tenancy rules have been changed, opening a new opportunity in the real estate market for short- and long-term rentals. Now is a great time to invest in Lisbon, as in the coming decades there will be, without question, fewer opportunities and inevitably higher prices.