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Migration, legislation and the impact on real estate demand in Portugal

Migration, legislation and the impact on real estate demand in Portugal

Migration, legislation and the impact on real estate demand in Portugal


In this article we will not talk about internal migrations (population displacements within the country), nor in particular emigration (the departure of residents, in particular Portuguese to other countries), but we will look at legislative changes in recent years that have had an impact on immigration (entry of foreigners who pass through to residents).

A good part of these movements originate in economic and fiscal issues, while some, more residual, will have to do with the specific conditions of the country, such as security, stability (pointed out by Brazilian immigration and pensioners from European countries) and a good climate, with a reasonable cost of living.

It is important to look at the impact that legislative changes have had over the years on the attractiveness of the country for certain groups and nationalities.

So we have:

The so-called " Golden Visa" (ARI – Residence Permit for Investment Activity), launched in October 2012, where the residence visa (and eventual citizenship) depended on investment, with a focus on real estate, which attracted many investors from outside Europe, in particular Chinese (with an emphasis from a certain point on Hong Kong citizens), South Africans, Brazilians, Russians, Turks, and most recently Americans. The fact that Portugal until recently did not tax crypto-assets has also contributed to add some investors from these areas an emigration, albeit temporary. As is explained later, this legislation represented about 1000-1200 visas per year, which would not have a particular impact on the housing market (not least because we are talking about housing above 500,000 euros in many cases, in developments where the average Portuguese would not have access) and represented about 5 to 6 thousand millions of annual foreign investment, not counting what these people would spend in the country. This mechanism, in real estate terms, was practically extinguished in 2023 with the "More Housing" package.

The package called "Golden Reforms" (Non-Habitual Resident Status) that applied, among others, to retirees and professionals with a profile considered interesting, and to countries with which Portugal has double taxation agreements, aimed to attract retirees and professionals with good incomes, and that they would come to spend them in the country. Zero taxation initially applied for 10 years, increased to 10% after the protests of some countries. This legislation has attracted many pensioners as can be seen from the numbers, in particular from France, the United Kingdom and Italy, but also from the Nordic countries. In about 20 years there has been an influx (particularly in the last decade) of more than 100,000 new residents of EU countries (not counting Romania, which has a significant emigration and which would be essentially economic emigration).

The Sephardic law, passed in 2006 (amended in 2013), allows the legalization of Jews who prove to be descendants of Jews with Portuguese origin, who had been expelled in the purges of the sixteenth century and earlier, led to more than 57,000 descendants obtaining Portuguese nationality (and soon no longer included in the immigrant statistics). This law is in force until the end of 2023.

An amendment to the Foreigners Law in 2017 in the Assembly of the Republic, which simplifies obtaining a resident visa, led to the legalization of many illegal immigrants who were working and deducting for social security in Portugal, and the creation of mechanisms, not always transparent, to bring migrants from countries, namely the Indian subcontinent (India, Bangladesh, Nepal, etc.), as can be seen in the sudden increase in immigration from these regions from that year.

The law of obtaining citizenship, in particular through the proof of ascendants of Portuguese origin, has led many citizens, in particular from Brazil, to apply for Portuguese citizenship, failing to integrate immigration statistics from a certain moment.

Contrary to what happens with the Portuguese population that has a negative natural balance (Births-Deaths) since practically 2007, in the case of the migratory balance (Emigration-Immigration), it is clearly positive (with the exception of the crisis years 2011-2016).


Considering the balance between the two, we find that the population increased by about 130,000 people in the years 2019-2022. However, it is important to remember that the balance of inflows-outs of emigrants (2017-2022) was about 323 thousand, whose distribution in the country was not uniform (unlike births-deaths, proportional to the existing population in each place), which necessarily has an impact on real estate demand, particularly in the areas where these emigrants are concentrated.

In addition to this phenomenon, in 2022 we had the beginning of the Russian-Ukrainian war, which led to about 56,000 refugees arriving in Portugal under refugee status by June 2023. This represents enormous pressure, particularly in the rental market, particularly in large cities, where they are mostly concentrated. In addition to Ukrainian refugees, there was also the arrival of a wave of Russian immigrants fleeing the war (about 12,000 entries in 2022, and rising at the end of the year with the declaration of mobilization). Many young professionals working remotely. A good part of these immigrants have the financial capacity to pay higher rents and end up "drying up" the supply market, which was no longer very abundant.

Naturally, these figures presuppose a pressure on demand in areas such as Lisbon and the Tagus Valley, Setúbal, Algarve, Alentejo Coast, Porto, among others.

We will analyze in more detail some of the origin of this pressure on the demand for real estate, in future articles, with some more numbers, and discuss in particular, internal migrations.


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