The Real Estate Market in Lisbon

Lisbon has emerged as one of the most attractive real estate markets in Europe, offering a mix of historical charm, modern infrastructure, and a high quality of life. With increasing demand from foreign investors, digital nomads, and retirees, the property market in Lisbon continues to evolve. But what makes Lisbon so desirable? What are the current trends, risks, and opportunities? This article provides an in-depth look at the Lisbon real estate market, answering key investor questions and offering data-backed insights.

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Why Invest in Lisbon Real Estate?

Lisbon’s property market remains one of Europe’s top investment hotspots, offering a strong combination of capital appreciation, rental yields, and lifestyle benefits. Here’s why:

• Consistent Market Growth: Property values in Lisbon have seen steady increases over the past decade, with prices in prime locations appreciating by 6-10% annually. Despite rising costs, demand remains high, particularly in areas with limited supply. (Source: Idealista)
• Attractive Rental Yields: With tourism and expatriate communities growing, mid- to long-term rental demand is soaring. Investors can expect gross yields of 5-7% in central districts like Príncipe Real, Graça, and Alcântara, with even higher returns in emerging neighborhoods. Mid-term rentals (3–12 months) are particularly lucrative, given recent restrictions on short-term Airbnb-style stays. (Source: Confidencial Imobiliário)
• Favorable Tax Incentives: Portugal’s Non-Habitual Resident (NHR) tax regime has historically been a major draw for foreign investors, offering reduced tax rates for up to 10 years. While the NHR program is being phased out, alternative incentives—such as Golden Visa investment options for commercial properties and urban rehabilitation projects**—still provide significant tax advantages. (Source: Portugal Tax Authority)
• Political and Economic Stability: Portugal is known for its investor-friendly climate, ranking among Europe’s most stable economies. Government policies continue to support real estate growth, and Lisbon remains a top destination for international businesses, startups, and digital nomads. The city’s strong tourism sector also fuels housing demand, particularly in rental markets.
• High Quality of Life & Strong Tenant Demand: Lisbon offers a mild climate, excellent public transport, and a dynamic cultural scene, making it highly attractive for remote workers, retirees, and expats. Many professionals relocating to Lisbon prefer long-term rentals in well-located properties, ensuring a steady tenant base for investors.

With continued urban development, rising rental demand, and strong appreciation potential, Lisbon real estate remains a highly rewarding investment opportunity—especially for those who understand the market’s nuances and partner with local experts.

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Current Market Trends

Property Prices and Growth

Lisbon’s property market continues to experience steady appreciation, driven by strong demand, limited housing supply, and international investment. As of January 2025, the average property price in Lisbon stands at €5,650 per square meter, reflecting a 6.2% year-over-year increase. Despite rising costs, Lisbon remains a highly attractive destination for both investors and lifestyle buyers. (Source: Bloomberg)

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Historical Property Price Trends (2014-2025)

Over the past decade, Lisbon’s property prices have more than doubled, with some prime areas like Príncipe Real, Chiado, and Avenida da Liberdade surpassing €10,000 per square meter. This rapid growth has been fueled by:

• Strong foreign demand, particularly from European and North American buyers.
• Limited housing stock, with restrictive zoning laws and slow permitting processes.
• Tourism and digital nomad trends, increasing demand for both long-term and short-term rentals.

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Price Comparison Across Portugal

Lisbon remains Portugal’s most expensive real estate market, with Cascais and Porto following closely behind.

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Price Comparison Across Other Capitals

Lisbon remains one of Europe’s most affordable capitals for real estate investment, especially compared to other major cities offering similar lifestyle and economic opportunities. While prices have risen significantly, Lisbon still provides better value per square meter than cities like Paris, London, or Berlin, making it an attractive destination for investors seeking strong returns and quality of life.

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Compared to its European counterparts, Lisbon offers a balance of affordability, investment potential, and high rental demand, making it a prime choice for buyers looking to maximize their real estate returns.

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Transaction Volume and Market Activity

In Q4 2024, Portugal recorded a 21.1% increase in property transactions, reaching an all-time high of €9.8 billion in sales. This growth is largely driven by:

• Cash buyers, who continue to dominate the market due to rising interest rates.
• Strong demand from expats and remote workers, seeking residency and investment opportunities.
• New-build projects, particularly in emerging districts like Marvila and Beato, attracting international buyers. (Source: Reuters)

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Types of Property in Lisbon

Lisbon offers a diverse range of property types, catering to different investment goals and lifestyles:

• Apartamento (Apartment): The most common type of property, ranging from compact studios (T0) to spacious multi-bedroom apartments (T1, T2, T3, etc.). The "T" stands for "Typologia," referring to the number of bedrooms. For a deeper dive, check out our guide on apartment classifications in Portugal.
• Moradia (House/Villa): A standalone home, typically with private outdoor space. Moradias are more common in suburban or coastal areas and are ideal for families or those seeking larger living spaces.
• Terreno (Land): Investors looking to develop property from scratch can purchase land, though zoning laws and building permissions must be carefully reviewed.
• Prédio (Building): Some investors opt to buy entire buildings, either for renovation and resale or to rent out multiple units.
• Quinta (Estate/Farmhouse): Found on the outskirts of Lisbon or in the countryside, quintas offer large plots of land, often with traditional Portuguese architecture.

Understanding these property types can help investors make informed decisions based on their budget, rental strategy, and long-term goals.

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Rental Market Overview

Lisbon’s rental market remains highly competitive, offering strong returns for landlords. However, regulations on short-term rentals (e.g., Airbnb) have tightened, making mid- and long-term rentals increasingly popular among investors.

Understanding Rental Market Dynamics in Lisbon

• Short-term rentals (under 30 days): Highly regulated, mostly restricted to licensed properties in designated tourist areas. Many investors now shift towards mid-term rentals to comply with new laws.
• Mid-term rentals (1–12 months): The most profitable option in Lisbon’s expat and digital nomad-friendly market, often securing yields of 5-7% annually. Demand is particularly high for furnished apartments in central areas.
• Long-term rentals (12+ months): Offer stable rental income and attract families, professionals, and students. Many landlords opt for standard Portuguese lease agreements for security and legal protection.

Lisbon remains a landlord’s market, with demand outpacing supply, particularly for modern, energy-efficient, and well-located properties. Investors should carefully consider rental regulations and target audience before purchasing a buy-to-let property. (Source: Confidencial Imobiliário)

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Best Neighborhoods for Investment in Lisbon

Baixa and Chiado

The historic and commercial core of Lisbon, Baixa and Chiado, remain among the city's most prestigious and in-demand areas. With their grand Pombaline architecture, luxury boutiques, and cultural attractions, they attract affluent buyers and investors looking for prime real estate. The average price per square meter in these districts hovers around €6,636/m² (Idealista, 2024), reflecting their desirability. However, the local government has introduced strict short-term rental regulations, limiting the availability of new AL (Alojamento Local) licenses, making long-term rentals a safer investment strategy here. The appreciation potential remains strong, given the scarcity of available properties and continued demand from international buyers.

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Príncipe Real

Príncipe Real has transformed into one of Lisbon’s trendiest districts, known for its elegant 19th-century townhouses, independent boutiques, and a vibrant nightlife scene. This area is particularly popular with expats, digital nomads, and well-off professionals, ensuring steady rental demand. With prices averaging €6,636/m², it is one of Lisbon’s more expensive neighborhoods, yet rental yields remain attractive, especially in the mid-term rental market, which caters to professionals and remote workers (Confidencial Imobiliário, 2024). The city has also promoted energy-efficient renovations here, making eco-friendly properties particularly appealing. Investors should consider high-end refurbishments, as tenants in this market segment are willing to pay premium rents.

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Avenida da Liberdade

Lisbon’s version of the Champs-Élysées, Avenida da Liberdade is home to designer boutiques, luxury hotels, and some of the city’s most exclusive apartments. Prices in this area are among the highest in Lisbon, with luxury units often exceeding €8,000/m² (Savills, 2024). While demand remains strong, supply is limited due to the dominance of commercial properties. However, ultra-high-net-worth individuals seeking exclusive, high-security residences continue to drive interest. Investors in this area should focus on high-end, serviced apartments, as corporate rentals and diplomatic housing are particularly lucrative segments.

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Alcântara & Marvila

Once dominated by warehouses and factories, Alcântara and Marvila are now at the forefront of Lisbon’s urban transformation. These areas are attracting tech startups, creative industries, and young professionals, leading to increasing demand for modern housing. With average prices around €4,800/m² in Marvila and slightly higher in Alcântara, they remain relatively affordable compared to central Lisbon, offering strong appreciation potential (Idealista, 2024). Large-scale investments, such as the redevelopment of the Matinha riverside area and the ongoing expansion of Lisbon’s tech hub, are further boosting property values. Investors looking for long-term capital gains should consider loft-style apartments, co-living spaces, or properties with potential for refurbishment.

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Campo de Ourique

A charming, family-oriented neighborhood, Campo de Ourique is favored by Portuguese families and long-term expatriates seeking a quieter, more residential setting. Unlike many central Lisbon districts, this area is not reliant on tourism, making it a stable option for investors. With prices averaging €5,426/m², properties here offer solid rental yields, especially for well-renovated apartments with outdoor space (Confidencial Imobiliário, 2024). Future developments include planned improvements to public transport links, further increasing accessibility. Given the area's limited short-term rental activity, investors should focus on long-term leasing to professionals or families, ensuring steady cash flow.

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Areeiro & Alvalade

Areeiro and Alvalade are two well-established residential districts offering a balance between urban convenience and a local, community-driven atmosphere. With excellent public transport connections and a range of schools and parks, they are particularly attractive to professionals and families. The property prices in these neighborhoods hover around €5,426/m², with steady appreciation over the past five years (Idealista, 2024). While they lack the tourist appeal of central Lisbon, this makes them less exposed to regulatory risks, ensuring stability in rental income. Investors should target mid-sized apartments with modern amenities, as these cater to the strong demand from young families and remote workers.

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Graça & São Vicente

Perched on Lisbon’s highest hills, Graça and São Vicente offer stunning views over the city and the Tagus River. These districts have traditionally been home to a mix of older locals and a growing number of younger professionals and artists, attracted by the area's authentic charm and affordability. Prices currently average €5,426/m², with significant upside potential due to ongoing gentrification (Savills, 2024). Many buildings still require renovation, making them ideal for investors interested in property refurbishment and value appreciation. However, investors should be mindful of steep streets and limited parking, which can be a drawback for certain tenants.

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Parque das Nações

Lisbon’s most modern district, Parque das Nações, was developed for Expo 98 and has since become a hub for business professionals, corporate tenants, and international families. Characterized by contemporary architecture, waterfront promenades, and excellent infrastructure, this area commands premium rents. Prices average €6,000/m², but demand remains strong due to Lisbon’s growing status as a business hub (Confidencial Imobiliário, 2024). Investors here should consider high-quality, fully furnished apartments, particularly those offering river views and access to premium amenities. Corporate leases are especially lucrative in this neighborhood.

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Estrela & Lapa

Known for their aristocratic past, Estrela and Lapa remain two of Lisbon’s most elegant residential areas, home to embassies, luxury villas, and well-preserved historic buildings. While not the most affordable option, with prices exceeding €6,500/m², the clientele in this area consists of diplomats, executives, and retirees looking for spacious, high-end apartments (Savills, 2024). Rental yields are lower but highly stable, making this an ideal location for investors focused on wealth preservation rather than high cash flow.

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Benfica & Carnide

For investors seeking affordable entry points into Lisbon’s real estate market, Benfica and Carnide offer excellent opportunities. These neighborhoods provide solid infrastructure, metro access, and proximity to major shopping centers, yet remain significantly cheaper than more central locations, with prices averaging €4,200–4,500/m²(Idealista, 2024). Rental demand is fueled by local professionals, university students, and young families. Investors should focus on smaller apartments near public transport hubs, as these tend to have the highest occupancy rates.

Each of the neighborhoods mentioned above has distinct advantages, and choosing the right one depends on the investor’s strategy—whether prioritizing high yields, long-term appreciation, or stable local demand.

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What to Consider When Buying Property in Lisbon

Investing in Lisbon’s real estate market can be highly rewarding, but it requires careful planning due to strict regulations, varying property conditions, and fluctuating demand across different neighborhoods. Here are key factors to consider before making a purchase:

• Legal and Regulatory Framework: Lisbon has strict short-term rental (AL) restrictions in many central areas, including Baixa, Alfama, and Príncipe Real. New AL licenses are rarely granted in these zones, making mid-term or long-term rentals the safer investment strategy. Check local regulations and explore options like corporate rentals or furnished leases, which remain in high demand.
• Property Condition & Renovation Costs: Many older buildings in Lisbon, particularly those in historic districts like Graça and São Vicente, require renovations due to outdated electrical, plumbing, and insulation systems. Renovations in protected heritage zones often need approval from the Municipal Urbanism Department, adding time and complexity. If you’re buying a pre-1950s building, budget for possible structural reinforcements and seismic upgrades, as Lisbon sits in an earthquake-prone area.
• Financing & Mortgage Terms: Portuguese banks offer mortgages to non-residents, but typical loan-to-value (LTV) ratios range from 70–80%, meaning buyers must cover 20–30% upfront. Interest rates fluctuate, so compare offers from major banks like Millennium BCP, Novo Banco, and Santander Totta. If you're financing through a Portuguese lender, be prepared for a lengthy approval process—it can take 6–8 weeks to secure a mortgage.
• Taxes, Fees & Hidden Costs: Buying property in Portugal involves several taxes and fees, which typically total 6–8% of the purchase price. These include:
  • IMT (Property Transfer Tax): Progressive tax, reaching up to 7.5% for high-value properties.
  • Stamp Duty (Imposto de Selo): Fixed at 0.8% of the purchase price.
  • Notary & Registration Fees: Generally €1,000–€2,500, depending on the property value.
  • Annual Property Tax (IMI): Ranges from 0.3–0.45% of the property’s taxable value (VPT).
  Additionally, if you’re planning renovations, VAT on construction work is 23% unless the property qualifies for a reduced 6% VAT rate under historic preservation incentives.
• Resale Value & Market Liquidity: Some areas, like Avenida da Liberdade and Parque das Nações, attract stable high-end buyers, ensuring liquidity, while emerging districts like Marvila or Alcântara offer higher appreciation potential but may take longer to sell. If you’re planning to exit in 5–10 years, choose a location with strong resale demand, such as Príncipe Real, Estrela, or Campo de Ourique, where well-renovated apartments sell quickly.

Navigating the Lisbon property market requires understanding local laws, securing favorable financing, and choosing areas with strong long-term potential. Partnering with a knowledgeable real estate lawyer and property management company can make the investment process smoother and more profitable.

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Government Policies & Regulations

Lisbon’s property market is heavily influenced by government policies aimed at balancing affordability, investment, and tourism. Understanding these regulations is crucial for investors, as they impact rental strategies, property values, and long-term profitability.

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Affordable Housing Initiatives & Market Impact

With property prices surging in recent years, the Portuguese government has introduced policies to increase housing supply and curb speculative investment. Measures include:

• Rezoning land for residential development, particularly in Lisbon’s outskirts and commuter areas, to create more affordable housing. This is expected to increase supply over the next 5–10 years, which could slow price growth in certain districts. (Source: Reuters)
• Stricter rules on “Golden Visas”, which previously drove foreign investment in city-center properties. Since 2023, Golden Visa applications have been restricted to investments in commercial real estate or lower-density areas, reducing competition for Lisbon apartments.
• Incentives for affordable rentals, including tax breaks for landlords who offer long-term leases at below-market rates. While these incentives do not apply to high-end properties, they may impact rental pricing strategies in mid-range segments.

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Short-Term Rental (AL) Regulations & Investor Considerations

The Local Accommodation (Alojamento Local – AL) market has been a focal point of government intervention. In an effort to free up housing for local residents, authorities have implemented strict short-term rental rules in key districts:

• New AL licenses are heavily restricted in most of central Lisbon, including Baixa, Alfama, and Príncipe Real. Investors purchasing in these areas must focus on mid- to long-term rental models. (Source: The Guardian)
• Existing AL licenses are subject to renewal conditions. The government has the right to review and potentially revoke AL licenses if properties remain vacant or do not meet local housing needs.
• Higher taxation on short-term rentals has made Airbnb-style investments less profitable compared to long-term leasing. Mid-term rentals (3–12 months) remain a strong alternative for investors looking to maximize yields while staying within legal boundaries.

For investors, these regulations highlight the importance of choosing the right rental strategy from the start. Those considering short-term rentals should seek properties in areas where new AL licenses are still available (e.g., parts of Parque das Nações or outskirts of Lisbon) or focus on furnished long-term rentals, which remain in high demand.

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Future Outlook

Experts anticipate Lisbon’s real estate market will continue its upward trajectory, driven by strong demand in luxury properties, sustainable housing, and mid- to long-term rentals. Developers are increasingly focusing on energy-efficient buildings, appealing to an eco-conscious buyer demographic and aligning with EU green building initiatives. This shift not only future-proofs investments but also enhances resale value. (Source: Idealista)

Lisbon remains one of Europe’s most attractive property markets, benefiting from:

• Sustained rental demand from expats, remote workers, and corporate tenants.
• Limited supply in central districts, maintaining upward price pressure.
• Ongoing infrastructure projects, including metro expansions and Lisbon’s new airport, which will enhance accessibility and boost property values in key areas.
• Government incentives for urban renewal, with certain neighborhoods offering tax benefits for renovations.

However, investors should stay informed about regulatory changes, particularly regarding short-term rental restrictions and taxation policies. While Airbnb-style rentals face increasing limitations, mid-term rentals (3–12 months) remain a lucrative and stable alternative. (Source: Câmara Municipal de Lisboa)

Whether you're looking for rental income, capital appreciation, or a second home, Lisbon continues to offer compelling opportunities—especially for those who work with local experts to identify the best investment strategies.

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Frequently Asked Questions

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1. Can foreigners buy property in Lisbon?

Yes! Portugal welcomes foreign property buyers with no restrictions on ownership. The process is straightforward, though working with a local lawyer is recommended to navigate legal checks, taxes, and bureaucracy. Unlike some EU countries, Portugal does not impose extra taxes on non-resident buyers, making it an attractive market for international investors.

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2. How much can I borrow as a foreigner in Portugal?

Portuguese banks offer mortgages to non-residents, typically financing 60–70% of the purchase price. Interest rates for foreigners are generally higher than for residents and depend on factors such as income, credit history, and country of residence. Having a Portuguese fiscal number (NIF) and opening a local bank account is required to secure financing. (Source: Banco de Portugal)

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3. Is Lisbon real estate still a good investment in 2025 and beyond?

Despite rising prices, Lisbon remains one of Europe’s most attractive real estate markets due to:

• Strong rental demand for mid- to long-term leases, driven by expats, remote workers, and international students.
• Limited housing supply, especially in prime locations, sustaining price growth.
• Ongoing infrastructure projects (e.g., metro expansion, new airport) boosting property values in key areas.

However, investors must consider government policies on rental regulations and taxation when planning their strategy. (Source: Idealista)

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4. What are the main taxes and costs when buying property in Lisbon?

Buyers should budget for:

• IMT (Property Transfer Tax) – ranges from 0–8% based on property price and type.
• Stamp Duty – a flat 0.8% of the purchase price.
• Notary and legal fees – typically 1–2% of the property value.
• Annual Property Tax (IMI) – varies between 0.3–0.45%, depending on location and valuation.

(Source: Autoridade Tributária e Aduaneira)

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5. What are the best areas to invest in Lisbon?

The best neighborhood depends on your investment goal:

• For high-end rentals → Baixa, Príncipe Real, Avenida da Liberdade.
• For capital appreciation → Alcântara, Marvila, Graça.
• For long-term stability → Campo de Ourique, Alvalade, Benfica.

Read our full guide on Best Neighborhoods for Investment.

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6. Can I get residency in Portugal by buying property?

As of 2023, Portugal has ended the Golden Visa program for residential properties in Lisbon. However, investors can still qualify for a visa through:

• Investing in commercial or touristic real estate.
• Purchasing property in designated low-density areas.

Alternative residency options include the D7 Visa (for passive income earners) and the Digital Nomad Visa. (Source: SEF Portugal)

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7. Is short-term rental (Airbnb) still a good strategy in Lisbon?

Lisbon has strict regulations on short-term rentals (Alojamento Local – AL) in many central districts. Investors should:

• Check if new AL licenses are allowed in their target area.
• Consider mid-term rentals (3–12 months) for higher yields without regulatory risks.
• Explore alternative locations like Parque das Nações or emerging districts where short-term rental restrictions are looser. (Source: Câmara Municipal de Lisboa)

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