Summer sizzles with a groundbreaking surge in foreign investment in Portuguese real estate!
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We are dedicated primarily to the sale of luxury real estate in the Algarve and in Portugal the international market.
The latest data from the Bank of Portugal (BdP) reveals a staggering record of over €1.1 billion flowing into the sector between July and September, propelling the total transfers from international investors to an impressive three billion euros by September's end.
The cumulative figure for the first nine months of this year, a jaw-dropping €3.018 billion, not only represents a historic high in the BdP series since 2008 but also marks a remarkable 26% increase compared to the same period last year.
What makes this achievement even more remarkable is the backdrop of a global financial squeeze and a cooling real estate market in the Eurozone, making Portugal's resilience all the more noteworthy. This surge in foreign direct investment (FDI) persists even as other European real estate markets face challenges.
Surprisingly, this surge comes amidst the backdrop of the February announcement signaling the end of residence permits through real estate investment, known as "golden visas." Despite the uncertainty caused by the impending policy change, the "More Housing" package, which took effect in October, did not deter investors in September. While industry insiders had speculated that potential investors might shy away, the data tells a different story.
Notably, foreign direct investment in real estate not only breaks records but also constitutes a substantial portion of the overall FDI inflow to Portugal, accounting for almost two-thirds of the total for the year up to September.
However, amidst the real estate boom, the bigger picture shows a dip in overall FDI. Portugal attracted €4.6 billion in new foreign investment until September, marking a 12% decrease compared to the same period last year. This decline is a departure from the trend since the onset of the pandemic in 2020.
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As of September, the total stock of FDI in Portugal reached an impressive €175.9 billion, with a significant chunk, about 90%, coming from the top 20 investing countries, totaling €157.2 billion. Interestingly, the BdP series considers the end investor rather than the subsidiary's location through which the investment is made.
In the third quarter, Spain, France, the United Kingdom, and China retained their positions as the top foreign final investors in Portugal. Notably, Portugal itself made an appearance on this list with €25.5 billion invested, thanks to the phenomenon of "round tripping," wherein investment circulates to and from Portugal through intermediary entities residing in other territories.
Among the top 20 end investors in Portugal, seven countries set new FDI records in this series that commenced in 2019. Noteworthy increases were seen from the US, UK, Germany, Brazil, Angola, Switzerland, and Belgium. Angola led the pack with a remarkable 23% increase in FDI in Portugal, reaching €5.7 billion, followed by Belgium (6.7%) and Switzerland (5.3%).
In the face of global economic challenges and policy shifts, Portugal's real estate sector emerges as a beacon of resilience and a magnet for international investors, setting new benchmarks and defying expectations.
Source: Article in the Jornal de Negócios of 20th of November 2023