Over the past decade, foreign investment has played a significant role in the Portuguese real estate market. Portugal's safety, legal stability, quality of life and growing international profile have attracted foreign buyers and investors, initially concentrated in Lisbon, Porto and the Algarve but now present in other parts of the country.
The real estate market between 2020 and 2026
Between 2020 and 2026, the Portuguese real estate market went through very different periods. The period was marked by the slump caused by the pandemic in 2020, followed by a strong recovery in transactions in 2021 and 2022, a slowdown in 2023 and, finally, a new upturn from 2024. Over this period, and despite successive legislative and tax changes, demand from foreign buyers retained a significant weight in the Portuguese residential market.
Data from Statistics Portugal (INE) help to put this impact in perspective. In 2025, buyers with a tax domicile outside Portugal purchased 8,471 homes, accounting for around 5% of all transactions. Although INE does not record nationality, industry estimates suggest that total foreign demand, combining non-residents and those already living in the country, represents around 28% of purchases in some segments. The distinction matters, as it shows that a significant share of foreign demand now comes from people who already live in Portugal or have established their centre of life here.
The legal framework for this investment has also changed profoundly over this period. Decree-Law No. 14/2021 of 12 February, applicable to applications submitted from 1 January 2022, restricted the properties eligible for residential purposes under Residence Permits for Investment Activity (ARI) to properties located in the Autonomous Regions of the Azores and Madeira or in the legally identified inland territories.
The decisive change came with Law No. 56/2023 of 6 October, under the More Housing (Mais Habitação) programme. Since its entry into force, new Golden Visa applications based on the acquisition of real estate have no longer been accepted, regardless of location, without prejudice to situations covered by the transitional regime set out in the law itself.
The Golden Visa has not disappeared, but it can no longer be based on the direct purchase of real estate. The regime retains other investment routes, including a minimum investment of €500,000 in non-real estate investment funds, as well as options related to scientific research, culture, business investment and job creation.
Despite these changes, foreign interest in Portuguese real estate has remained significant. The trend recorded between 2020 and 2026 shows that foreign demand has remained significant, even after the changes to the Golden Visa. The profile of the foreign buyer has, however, changed. The investor essentially motivated by obtaining a residence permit has been joined by foreigners who genuinely intend to live, work, invest or spend significant periods in Portugal.
More recently, Decree-Law No. 97/2026 of 20 May introduced a specific tax regime for the acquisition by non-residents of properties intended exclusively for housing, with these acquisitions now generally subject to a Municipal Property Transfer Tax (IMT) rate of 7.5%. This increase does not, however, apply to those who are already tax resident in Portugal or who become so within two years of the acquisition. The law also provides for different treatment of properties allocated to residential leasing, provided the legally established requirements are met.
We are therefore facing a paradigm shift. Portugal has moved from a model that directly encouraged real estate acquisition through the granting of residence, to a model that seeks to favour other forms of investment and, in the real estate sector, to encourage placing properties on the rental market. Foreign investment has not disappeared, but it has become more diversified and less dependent on specific residence mechanisms.
Looking ahead, Portugal continues to have what it takes to remain a relevant destination for international real estate investment. But its competitiveness will increasingly depend on its ability to increase supply, speed up licensing and ensure a stable, clear and predictable governmental, legal and tax framework. In a medium- and long-term investment such as real estate, confidence in the applicable rules is as important as the appeal of the asset itself.