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Foreign investments in Portuguese real estate have...

Foreign investments in Portuguese real estate have tripled over the last 10 years

Foreign investment triples in 10 years


According to recent data from the Bank of Portugal, foreign investment in Portugal’s property sector has tripled in value in the last decade

In the first half of 2014 through the first half of 2024, Foreign Direct Investment (FDI) in Portugal increased by over 55%, with the property sector contributing more than any other sector.

As a result of the end of the ‘Troika’ adjustment programme in 2014, Portugal became more attractive to foreign investors, making it more competitive internationally, as Diário de Notícias explains.

Foreign investors now hold assets (capital or debt, as they became creditors) in the form of investment with a net worth of €183.9 billion, 55% more than in 2014.

The real estate sector has experienced a massive influx of foreign investment, being the standout performer.

Taking a closer look at the numbers, by the end of the first half of 2014, the value of foreign investments in Portuguese real estate stood at €4.9 billion, skyrocketing to an impressive €15 billion by mid-2024 led by purchases made by a wide range of foreign investors, from companies, funds and banks to individual investors.

This way, real estate has now become the fourth most significant sector in Portugal in terms of foreign investment, up from sixth place in 2014. When combined with the construction sector, real estate becomes the third-largest sector of the economy, with total foreign investment valued at €18.5 billion – more than 10% of all FDI in the country.

As for the source of foreign investment, Spain stands out as currently the largest foreign investor in Portugal, with investments totalling almost €37 billion, representing 20% of the total FDI in the country. Following Spain are also two other key players – the Netherlands and Luxembourg, which are major financial centres that offer substantial tax advantages, attracting investors from around the world who use them as hubs for their investments, according to Diário de Notícias.

The Netherlands is the second-largest source of FDI in Portugal, with investments valued at €35.7 billion, whilst Luxembourg ranks third, contributing €33 billion, according to data from the Bank of Portugal. Together, these two countries account for nearly 40% of all foreign investment in Portugal.

However, Bank of Portugal notes that the actual investors behind these funds may come from different parts of the world, as some countries use financial hubs like the Netherlands and Luxembourg to channel their investments. For instance, China is a significant player in this dynamic. Although Chinese investments directly entering Portugal totalled €3.8 billion in 2023, the Bank of Portugal estimates that the true figure is much higher. When considering the origin of the money and the final beneficiaries, Chinese investments in Portugal is estimated to amount to €12.4 billion – more than three times the official figure.

Article originally published by Michael Bruxo on Portugal Resident.

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