Why second-homers are buying in Portugal

In recent years Portugal’s been pulling away from its image as a place for golf-playing retirees. Now it’s a fashionable and increasingly upmarket destination for home buyers who are drawn by its tax benefits coupled with its unspoilt coastlines and low-octane lifestyle.

As of December 2021, there were 42,071 Britons resident in Portugal, according to the SEF, the Immigration and Border Service, the second largest group of foreigners behind the Brazilians. It is extraordinary that although the figure has fallen a little since 2020 – the pandemic has played its part – prior to Brexit, Britons made up only the sixth largest group of foreign residents in Portugal.

But the Portuguese Chamber of Commerce estimates that up to 60,000 Britons own a first or second home there, and there’s an unusually high level of pre-registrations for a Moving to Portugal Event they are holding in London on 31 March. According to the Chamber's General Manager Christina Hippisley, 'It’s a mix of early retirees, families and entrepreneurs moving to a better climate, or just people keen to change their lifestyle.'

Such is the increasingly wide appeal of the once low-key Iberian nation that many Americans are moving there too, taking up the ‘golden visa’ that provides a residency permit for non-EU buyers who buy property or invest in Portugal, although other visa options don’t require home purchase. The affordable cost of living, low crime rates, superb healthcare and widely spoken English are all attractions they mention.

But where are people buying? According to online searches on aplaceinthesun.com during 2021, the average person is looking to spend £339,639 on a Portuguese home, with the three most popular locations coastal holiday spots in the Algarve: Lagos, Praia da Luz and Cabanas de Tavira. You’ll need more than that budget to buy a villa near the coast; on the five-star resorts second-hand villas tend to start at last €2.5m.

A couple of the newest Algarve developments break the mould. Inland is Ombria Resort, built on sustainable principles with a focus on wellness. Yes, it’s got a golf course but you can also hike or bike in the hills, harvest honey and star-gaze (not the Premiership footballer type – they’ll be down in their £10m mini mansions in Quinta del Lago). One-bedroom Viceroy branded apartments at Ombria start from €595,350.

Proof that the Algarve has begun to attract a hip and affluent crowd is that the branded W Residences in Albufeira - offering W Hotel facilities (DJs, gym/spa; 24-hour concierge) – has nearly sold its 83 serviced apartments after launching three years ago. Prices are now from €995,000 through Quinta Properties/Savills.

For something ideal for spending longer periods, this four-bedroom estate with office, gym and cinema room overlooking the fishing village of Fuzeta is ideal, priced at €2,690,000. You should budget for around 8 per cent of the purchase price for buying costs on a resale home.

The SEF points out the importance of Portugal’s non-habitual resident tax scheme, which allows many foreigners to move to Portugal to benefit from tempting reductions in their income tax bills – in some cases a flat rate of 20 per cent; and 10 per cent on pensions. You’ll need to spend at least 183 days in Portugal, and the Lisbon area has become popular.

Properties in Lisbon cost more than three times the average median, according to the National Statistics Institute (INE) – at €3,427 per sq metre – after over a decade of soaring prices that have now cooled a little. Expect to pay €500,000 for a fixer-upper two-bedroom apartment in the elegant Principe Real district; or €570,000 for a studio apartment – buying off-plan – in the hip Chiado neighbourhood (engelvoelkers.com).

The affluent seaside suburb of Cascais remains popular with wealthy expats and second-home owners, offering international schools and high-class gated developments half an hour from the city centre. You can find a one-bedroom apartment for €380,000; but this spacious two-bedroom villa with a private pool and home office is ideal for a spot of remote working - €1,650,000 through Knight Frank.

Over an hour south of Lisbon, the rustic beach village of Comporta has become the most talked about place since Madonna rode a horse along the beach there four years ago, although French cognoscenti got their much earlier, including designers Christian Louboutin and Jacques Grange.

Prices of hotel and villa stays have rocketed in peak summer (it’s pretty quiet outside of that) in this rural stretch of cork oaks, pine trees and paddy fields behind pristine beaches. A raft of new resorts is on the drawing board (and some might well remain there as planners clamp down) and a few more are being built. Don’t expect to find anything much for less than €1m. This typical style property of three thatched roof ‘cabanas’ is €3,950,000 through Cluttons. And there’s even a couple of golf courses being revived after the area’s economic woes a decade ago. Different but the same – that’s Portugal.