Despite the uncertain context, Portugal should remain on the radar when it comes to foreign real estate investment in 2023, namely in the sights of European and US investors. This is one of the conclusions of Knight Frank's Wealth Report: Outlook for 2023.
According to the results of the most recent study on investment trends for 2023 carried out by Knight Frank, the USA, United Kingdom and Spain are the three main destinations for the purchase of homes. Australia, France and Portugal follow in the ranking.
In addition, real estate has been identified as a "resilient opportunity" for both direct and indirect investment. One in five ultra-high net worth individuals (UHNWIs) plan to invest directly in 2023, in line with 20% last year, confirming that the "real estate sector continues to be a safe haven in times of uncertainty", as per the statement sent to newsrooms.
Liam Bailey, Global Head of Research at Knight Frank, anticipates "a substantial shift in portfolio strategy, with real estate playing a very important role", with 68% of UHNWIs expecting to see their investments increase in 2023.
"The pressure felt on the property sector due to rising interest rates has created a window for private capital - especially as we enter this new market phase with historic lows in terms of luxury property stock in the residential and commercial markets," he adds.
Other findings and trends for 2023 in Portugal and beyond:
- The pandemic continued to affect overseas investment decisions, however, and globally, the appetite for mobility remained. Some 13% of UHNWIs plan to apply for a second passport or a new citizenship in 2023.
- When thinking about investment, highly financially involved individuals allocate a third of their total wealth to permanent or secondary housing. More than a quarter is kept outside their country of residence, on average. The Middle East has the largest overall footprint (41%).
- UHNWIs are increasingly diversified by both geography and asset class. According to respondents, more than a fifth of wealth is invested directly in commercial property and a similar proportion is held overseas
- Overall, the average UHNWI owns 4.2 properties, with Asia standing out, where each high financial involvement individual owns an average of five properties, demonstrating that the residential sector remains resilient.
- Rising interest rates could affect demand for property in 2023. Around 15% of UHNWIs intend to buy a property this year, down from 21% last year. Demand is strongest among UHNWIs in the Middle East.