The Portuguese real estate market has always had a large presence of international investors. For many years, the English and French led the acquisitions of properties in the region, but with the country's promotion measures and successful strategies with Golden Visa, they ended up attracting new players in this market such as Brazilians, Chinese and Germans who together in 2018 totaled almost 20% of purchases made by foreigners in the country.
Above even the capital that represented 21% of purchases that year. And it was not just the number of transactions that increased, their value also increased, the year registered a record in sales above 500 thousand euros, there were 1400 houses, 400 more than the last record recorded in 2014, representing 7.2% those purchased according to INE (National Statistics Institute).
In the midst of this scenario, banks ended up getting used to daily transactions involving foreigners and the supply of credit followed this trend. The analysis process is quite simple and proof of income from any country is accepted.
So we have a market where real estate generates an average return of 6% per year and banks lend with average spreads of 2%, it is easy to understand the growing demand for financing acquisitions. Investors are increasingly opting for home loans to optimize their profits. Below is a very simple example of what we are talking about:
Considering an investor who has 200 thousand euros to invest:
Scene 1
Acquisition of a property for 200 thousand euros - average remuneration - 6% pa = 12 thousand euros per year.
Scenario 2
Acquisition of TWO properties for a total of 400 thousand euros, of which 200 thousand euros are financed - the average remuneration of 6% pa = 12 thousand euros per year per Property, totaling 24 thousand euros per year.
Cost of monthly financing over 30 years = 365 euros (€ 365 x 2 properties x 12 months = 8,760 euros)
Return after financing payment = € 24,000 - € 8,760 = € 15,240
In the second scenario, we optimized the return on investment by 3,240 euros, that is, 27% more than in the first. Nevertheless, we are realizing a net worth of 400 thousand euros in 30 years.
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