Why Portugal is the best country to buy a second home

Buying a second home in Portugal is an option for many foreigners, either to live, to spend the holidays, or even to do business such as renting out an apartment and using it as Local Accommodation. And when it comes to choosing a destination to make this type of investment, the quality of life, safety and peace that a country offers are factors that weigh, in addition to the quality-price ratio of the houses and the cost of living. With this in mind, let's find out why Portugal is the best country to buy a second home.

Buying a second home in Portugal: advantages

The aforementioned reasons are precisely why Portugal is considered the best country to buy a second home, among 34 countries of the Organisation for Economic Cooperation and Development (OECD). And market agents confirm that more and more foreigners are heading to Portugal to buy a second home. These are families arriving, above all, from territories where political, economic and social instability is rife, such as the USA, Brazil and the United Kingdom. Or also from countries bordering Russia or Ukraine, where there is currently an armed conflict.

After combing through the cost of living, leisure activities and the increase in the value of houses to buy and rent in 34 OECD countries, Compare the Market Australia concluded that Portugal is the best country to buy a second home in 2022. Contacted by idealista/news, several real estate experts analyse these results and explain why Portugal is in the sights of foreign families to buy a second home and is better positioned compared to other destinations.

"The purchase of a second home in Portugal is today a major trend for foreign clients", says Patrícia Barão, Head of Residential at JLL, speaking to idealista/news. And there are several reasons behind this trend, which are not only related to the quality of life, gastronomy, beaches and mild climate that Portugal offers. Many foreigners also seek to live in a peaceful environment - as a refuge from the political, social and economic instability that has taken hold in various countries throughout the world.

This is exactly what Rafael Ascenso, CEO of Porta da Frente Christie's, confirms: "The residential market in Portugal has had very strong dynamism and growth in recent years, much due to foreign investment. Portugal is a stable and non-violent country, where there are no racial tensions or any type of religious, political conflict or extremism, which are problems that affect a large part of the countries that have sought us out, such as the North Americans, the French and the Swedes", he stresses.

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How international context influences second home purchases in Portugal

The international conjuncture has "definitely influenced" the transaction of houses as second homes in our country, admits Miguel Poisson, CEO of Portugal Sotheby's Realty. This means that a number of foreigners living in parts of the world with geopolitical tensions are looking to buy a second home in Portugal. And these international investors come from countries such as:

• The USA: "North Americans, especially Californians, are looking for a lifestyle very similar to the one they had in California, close to the sea, the beach and surfing, but in a safe environment. For American investors, there is now an added reason to buy a house in Portugal, which is the current appreciation of the dollar against the euro, because it makes the price of Portuguese real estate even more accessible," says David Moura-George, director of Athena Advisers Portugal.
• Brazil: "The new wave of Brazilian investment in national real estate began shortly before the elections and intensified with the second round. These are buyers who, due to the devaluation of the Brazilian Real, were not focused on Portugal and are now strongly looking at our country", clarifies the managing director of Athena Advisers Portugal.
• Europe: in a context of war between Russia and Ukraine, "Portugal benefits from its geographical position in Europe, being the European country furthest from the conflict" and also takes advantage of its "stable political and social structure, which is highly valued on a European level at the moment", admits the CEO of Portugal Sotheby's Realty. This is why some families living in countries close to the conflict are implementing a plan B and looking to Portugal as their final destination, in order to live far from the centre of instability, as is the case with the Danes and Swedes. In addition, "the current war scenario has brought several Russian clients, who have fled the regime, and also Ukrainians, who see Portugal as a safe haven for their families," says Rafael Ascenso.
• The United Kingdom: "The British, who have always invested in Portugal, are also increasingly active in looking for a house in Portugal, as a result of Brexit and the governmental instability that the exit from the European Union brought, and will continue to bring to the country in the coming years," David Moura-George also recognises in a statements to idealista/news.

The truth is that the financial crisis - which ravaged Europe between 2007 and 2015 - "opened the doors of Portugal to many other nationalities besides the British and Germans, who have always been active as second-home buyers in Portugal," recalls the Head of Residential at JLL. The "strong dynamic" of foreign families buying a second home can be felt from Brazilian, British, French, German, Chinese, Turkish, Italian and, more recently, American buyers.

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What other factors make Portugal the best country to buy a second home?

Looking at 34 OECD countries - an organisation which has a total of 38 states - 'Compare the Market Australia' concluded that Portugal is the best country to buy a second home, having achieved a score of 7.27 points out of a total of 10. Thus, Portugal was ahead of countries such as Hungary, Turkey, the Czech Republic and Estonia, which make up the top 5 of the best destinations to buy a second home. At the bottom of the list were Israel (2.03 points), Switzerland (2.77) and Norway (2.77), classified as the worst countries to buy a second home.

But what are the other factors that make Portugal an ideal country to buy a second home, apart from political and social stability? According to the same study, Portugal scores "particularly high" for the proportion of restaurants, with 349 per 100,000 inhabitants. Furthermore, Portugal also scores well for its average cost of living, being 549.28 dollars per month per person (around 532 euros/month, taking into account the current exchange rate), according to the document published in September this year. 

Asked by idealista/news about the reasons that make Portugal special when it comes to buying a second or holiday home, the real estate market players point out the following factors make Portugal an ideal country to live in, as well as to visit:

• Safety: Portugal is currently considered the sixth safest country in the world by the Global Peace Index, from the Institute for Economics and Peace. And this is a "determining factor for those looking to spend holidays in Portugal, invest in a second home or decide to live in our country", believes David Moura-George;
• Quality of life: Portugal is said to have a good quality-cost ratio in comparison with other European countries and the world. "With the implementation of remote working, a citizen with a salary from a richer country, such as an American, for example, lives incomparably better here than in his country of origin," highlights Rafael Ascenso. This is also why Portugal is very much in the sights of digital nomads;
• Homes to buy with "great" value for money, despite the price rises in recent years. Compared with the great international capitals, Lisbon continues to offer a high quality of architecture and construction at lower prices per square metre than neighbouring Madrid or Barcelona;
• Tax regimes for foreigners: with the non-habitual resident regime, visas for digital nomads and the golden visa programme (even though the Government is studying an end to these residence permits for investment), Portugal shows how open it is to welcoming foreign buyers;
• Ideal climate: Portugal has "a warm temperature during most of the year", stresses Constanza Maya, director of operations and expansion of Engel & Völkers for Spain, Portugal and Andorra;
• Quality and accessibility of the beaches: "Lisbon, for example, is the only European capital that has a beach 15 minutes away from the city centre", as underlined by David Moura-George;
• Diversity of the natural, historical, architectural and cultural heritage;
• Hospitality: "Portugal has a welcoming capacity known throughout the world", says Rafael Ascenso, from Porta da Frente Christie's;
• Quality gastronomy;
• Quality education and healthcare;

As there are "more motivations" to buy a second home in Portugal, the Portuguese residential market now has "more buyers and more purchase locations", summarises Patrícia Barão. "We are no longer just a holiday destination: we are also a solid investment destination, a destination for work and for large multinational companies, an education destination. And that brings people and families, national and international, at the most diverse stages of life, to buy a second home," the Head of Residential at JLL also stresses.

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Portugal's new immigration law boosting foreign investment

On the other hand, since the beginning of October, Portugal has a new immigration law for foreigners, which, among other measures, foresees several points that may continue to animate the real estate market:

• the issuance of visas for Community of Portuguese Language Country citizens;
• a visa for job seekers
• an end to the quota regime for immigration
• making it easier for foreign students attending higher education in Portugal to obtain residence visas;
• residence or temporary stay visas for digital nomads

Where are foreigners buying the most second homes in Portugal?

According to a study by idealista, Lisbon, Loulé, Albufeira, Cascais and Porto were the 5 most sought-after municipalities for non-residents to purchase a home in the country in the second quarter of 2022

And of the various regions that make up the national territory, it is in the Algarve where there is greater demand for second homes by foreigners. "The Algarve, which has always been the most popular tourist destination in Portugal, is the region where there is a greater preponderance of this type of housing, and which represents almost 39% of the existing homes in the region. But in the Alentejo region, there is also an important presence of the second residence (22%), as well as in the Centre (24%)", explains Patrícia Barão, from JLL.

Within the Algarve region, people are more inclined to buy houses in certain areas according to their nationality, as pointed out by Engel & Völkers' director of operations and expansion for Spain, Portugal and Andorra: "In Portimão, property purchases were mainly made by Germans, the British and Swedes. In Vilamoura and Quarteira, foreign buyers were mainly French and Swedish. The Carvoeiro and Porches area attracts mainly French and Swiss buyers, while in Tavira foreign investors are mainly Dutch, Swiss, American, Irish and French," says Constanza Maya.