As real estate in the capital becomes increasingly expensive, homebuyers are turning their attention to places near Lisbon—such as Setúbal and the Silver Coast of Portugal.
Lisbon naturally boasts the highest number and value of property transactions in Portugal. In the second quarter of the year, home sales in the capital totalled a whopping 2.9 billion euros.
The city attracts scores of international buyers, who tend to spend twice as much on a home as locals. This has driven real estate values to new heights, with prices increasing 15.2% in the year to November 2022.
Subsequently, towns and cities within easy reach of Lisbon are emerging as attractive destinations for investment. These areas not only offer more affordable entry prices, but also strong investment potential and various lifestyle benefits.
Here’s why you should be casting your net over property markets close to Lisbon.
Quality of Life
Many of the towns and cities around Lisbon offer a high quality of life which is attractive to permanent residents, second-home owners, and investors alike.
Residents can enjoy a slower and more relaxed way of life compared to the bustling capital—alongside great beaches, excellent amenities, and well-developed transport links. This creates a more residential feel which appeals to a range of buyers, from young families and digital nomads to retired expats.
While well-developed towns close to Lisbon might have everything you need, their proximity to the capital is a major draw.
Lisbon is a flourishing hub for businesses from around the world. Renters and homeowners on the edge of Lisbon can easily commute to the capital, where they can access many employment and networking opportunities.
With world-class restaurants, lively nightlife, and an array of arts and cultural venues, it goes without saying that Lisbon offers endless leisure opportunities.
On top of this, some of Portugal’s leading international schools are located in or around Lisbon.
Affordability
Over the years, the growing demand for Lisbon real estate has caused significant price surges, with the cost per square metre now averaging at €5,301 according to Idealista.
Meanwhile, rising inflation around the world has made buying a home much more expensive. And, as the country’s most costly market, many would-be buyers are being priced out of the capital.
In light of this, places near Lisbon are becoming an increasingly attractive option for homebuyers in Portugal. Property is more affordable and the cost of living is less steep. To illustrate, let’s look at Algés, a peaceful residential neighbourhood just 11km west of central Lisbon. Despite being just a 20-minute drive from the capital, property in Algés is almost 40% cheaper according to recent data from Numbeo.
These markets also hold significant investment potential. Low entry costs create plenty of room for growth, and as these locales become more popular with homebuyers and investors, prices are set for strong appreciation.
Rental Potential
In Portugal, you need a local accommodation licence (“Licença de Alojamento Local”) to rent your property out to short-term tenants. Recently, the Portuguese government suspended the release of AL licences and handed over control to local towns and municipalities. This means that there is likely to be a 6-12 month delay in the issuing of new licences—and because of this, many prospective investors are eyeing up Portuguese properties with long-term rental potential instead.
Many professionals who work in Lisbon choose to settle outside of the capital. In towns like Algés, Ericeira and Sesimbra, renters—like homeowners—can easily commute to work while enjoying a quieter lifestyle and more affordable prices.
In the first half of 2023, prime rents in Lisbon rose 13.9% according to Savills Prime Residential Index, outpacing all other global cities. Before this, values surged by more than 40% over 18 months. As the capital leads the way in terms of rental growth, and tenants search for more affordable markets, places near Lisbon are set to reap the rewards.
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