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Thinking about buying a property in Portugal or Spain? 

Thinking about buying a property in Portugal or Spain? 

 Buying Property in Portugal 

Although Portugal and Spain share many things, there are some differences that have a huge impact when deciding where to buy a property… 

Although Portugal and Spain share many things, such as their sunny Mediterranean climate, delicious food, and world-famous monuments, both countries have very distinct cultures and traditions that are deeply rooted in history and landscape.

If you're deciding where to travel, these differences aren’t that relevant, as both countries will give you a wonderful experience of the Iberian Peninsula. It's just a matter of choosing between the warm melancholy of Fado music or the intensely rhythmic Flamenco dancing, the saltiness of codfish or the intensity of “patatas bravas” and “jamon”, the unmistakable sunlight of Lisbon or the vibrant colours of Gaudi's Barcelona:

Portugal Realty Portugal Fado LisbonPortugal Realty Portugueses food Bacalhau CodfishPortugal Realty Lisbon elétrico tramPortugal Realty Spain flamenco dancingPortugal Realty tapas bar SpainPortugal Realty Spain Barcelona Gaudi

 

However, if you're thinking about buying a property in Portugal or Spain, then you should consider more than just cultural differences. Aspects such as what kind of property you want, where you want to invest, how much you want to spend, and what lifestyle you’re looking for are questions you should be asking in order to make the best decision for you and your family. 

Here are some helpful insights that will help you choose which is the best place to buy a property in Western Europe: Portugal or Spain? 

Borders and national identity

Despite Portugal having a very friendly relationship with “nuestros hermanos” for centuries, it was not always so. In 1128, Portugal’s first King D. Afonso Henriques infamously fought against his own mother to make Portugal an independent country from the Kingdom of León (Spain). In 1580 Portugal returned to Spanish rule after King D. Sebastiao died without an heir to inherit the throne, but 60 years later the country would again proclaim its independence from Spain.

The fact that Portugal has its modern-day borders defined since 1297 allows the country to benefit from internal peace and pride itself for being one of the oldest nation-states in the world. Governed by Prime-Minister Antonio Costa, a socialist moderate recently re-elected for a second term, Portugal offers a calm political environment and a booming economy that has been praised by the EU, the IMF as well as other international agencies. This climate of financial growth and optimism has attracted investors and foreign residents from all over the world. 

Spain, on the other hand, is made up of autonomous communities with their own regional governments, some with movements claiming independence. The most recent example is the region of Catalonia, that held in 2017 a referendum in which 90% of the population voted in favour of separation from Spain. The political conflict and popular protests since then have created a climate of internal turmoil where the Catalan's fierce sense of regionalism is yet to show any sign of wanting to end the conflict.

Lower cost of living 

Although both Portugal and Spain are relatively inexpensive as far as Western European countries go, Portugal offers a lower cost of living which is very attractive to many expats, especially retirees. 

According to Numbeo, the world’s largest database of user-contributed data about cities and countries worldwide, the average cost of living in Spain is 8.57% higher than in Portugal (aggregate data for all cities, November 2019):
 

Monthly utilities PORTUGAL SPAIN
Basic (electricity, heating, cooling, water, ...) for 85 m2 apartment €94.57 €114.00
Internet (60 Mbps or more, unlimited data, Cable/ADSL) €31.66 €41.02
Meal for 2 people, mid-range restaurant, three-course €30.00  €35.00

 

Property costs and quality

Average property costs are also higher in Spain:

Buy Apartment Price PORTUGAL SPAIN
Price per square meter to buy an apartment in a city centre €2,727.84 €2,962.45
Price per square meter to buy an apartment outside a city centre €1,565.46 €1,974.48


In addition to lower property costs, Portugal also stands out for having created specific investment programmes that have made it possible to renovate buildings in historic areas. Today, foreign investors can choose from a wide range of rehabilitated properties as well as new builds available throughout the country, with the highest standards of quality and energy-efficient modern construction. 

›› New build construction in Portugal


Growing rental yields

If you’re looking for an investment property, average gross rental yields in Portuguese properties are currently higher in comparison to properties in Spain: 

Gross Rental Yield  PORTUGAL SPAIN
City centre 4.83 4.38
Outside the city centre 6.04 5.13


Gross rental yields in Portugal should continue to increase, especially in the holiday home rental market where the demand is still growing. In the first half of 2019 alone, the Portuguese hospitality industry received 12.1 million guests, 7.6% more than in the same period of the previous year (data from INE, the National Institute of Statistics), which represented 1.78 billion euros in revenue.


Knowledge of foreign languages

Despite the Portuguese language not being significantly different from Spanish, some people do consider it harder to learn due to the fact it has more silent letters and phonemes. However, the Portuguese are generally better at speaking foreign languages, especially English, so you’ll have no trouble at all integrating into your community and enjoying the wonderful lifestyle. 

The main reason is that the Portuguese are largely exposed to foreign languages from a very young age, not only at school but through television and film that are generally subtitled while in Spain they are dubbed.


Residency programmes through investment

Both Portugal and Spain have Golden Visa residency programmes that allow investors a series of advantages, namely the possibility to travel within the Schengen Area without a visa or to apply for citizenship after a certain time of permanent residency. 

However, the Portuguese and Spanish Golden Visa programmes have differences regarding investment options:

 

Golden Visa Programmes PORTUGAL* SPAIN
Real estate investment options
  • Investment in real estate of at least €500,000
  • Investment in real estate rehabilitation of at least €350,000 in an eligible property which was constructed more than 30 years ago
  •  Investment in real estate of at least €500,000
Other investment options 
  • Capital transfer of at least €1m to the Portuguese state
  • Creation of at least 10 full-time jobs (8 in a low-density area)
  • Capital transfer of at least €250,000 to national heritage
  • Capital transfer of at least €350,000 into research
  • Investment into an existing Portuguese registered business of at least €350,000, as well as the creation of at least 5 full-time jobs
  • Investment of at least €350,000 into Golden Visa eligible funds
  • A €1m investment in bank deposits in Spanish Financial Entities
  • A €1m investment in shares of Spanish companies
  • A €2m investment in Spanish Public Debts
  • Starting a business project in Spain of general interest, which creates employment, contributes to technological and/or scientific innovation or has a socio-economic impact on the local area

* ARI - Residence Authorization for Investment Activity.


Special tax regimes for non-habitual residents

As for personal income tax for non-habitual residents with income obtained in Portugal and Spain, under certain conditions, both countries also offer special tax regimes. However, Portugal’s Non-Habitual Resident Status allows investors to enjoy a more generous tax reduction and in some cases complete exemptions:

PORTUGAL

_Non-Habitual Resident Status

  • Fixed-rate of 20% for taxation related to IRS (personal income tax) on income in Portugal (for a period of 10 years)
  • No double taxation for pension incomes or for employment and self-employment income obtained abroad (only certain types of income are eligible)


Spain's Non-Resident Income Tax (NRIT) offers a fixed rate of 24% and, contrary to Portugal,  it’s only available to those who spend less than 183 consecutive or non-consecutive days in Spanish territory. 
 

Applying for citizenship

As for applying for citizenship, the main differences between Portugal and Spain reside in the time one must have permanent residency to qualify and the possibility to obtain dual citizenship: 

 

Applying for citizenship PORTUGAL* SPAIN
Residency requirements for naturalization Portuguese citizenship can be obtained after six years of permanent residency  Spanish citizenship can be obtained after 10 years of permanent residency (183 days in each of the 10 years)
 Dual citizenship  Portugal recognizes dual citizenship Foreign nationals who acquire Spanish nationality must renounce their previous nationality, unless they are natural-born citizens of an Ibero-American country, Andorra, the Philippines or Equatorial Guinea

 

›› Portuguese Citizenship: why so many expats are applying


Last, but not least, Portugal has "pasteis de nata"! And to many, that’s more than enough to pack your bags and embrace the legacy of D. Afonso Henriques’ descendants… 

If the advantages of Portugal interest you, don’t hesitate to give us a call and schedule your visit to find out more about buying a property in the Silver Coast or sunny Algarve — two of Portugal’s most sought-after locations in the Portuguese real estate market! 

Our team of property specialists is happy to share their experience of living in Portugal and insider’s knowledge of the wonderful lifestyle that awaits you. 

Portugal Realty™ - Property for sale in Portugal

Silver Coast +351 262 980 576

Algarve +351 915 150 617

Antwerp +32 3 283 70 70

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