Why invest in Lisbon – Numbers and opportunities
Portugal made headlines in December 2025 when The Economist named it “Economy of the Year,” recognising the country’s combination of robust GDP growth, controlled inflation, and strong financial market performance. For those looking to invest in Lisbon, this matters. The accolade reflects the economic stability that has made Lisbon one of Europe’s most compelling real estate markets.
Lisbon now ranks #11 amongst European cities for real estate investment, according to PwC’s 2026 report. The Portuguese capital recorded approximately €2 billion in property transactions over the past year, positioning Portugal as the 17th-largest European market by investment volume.
At GuestReady, we manage around 2,000 properties across Portugal, giving us direct insight into what’s actually working in today’s market. This article breaks down the current data, neighbourhood opportunities, realistic returns, and what’s changed since the Golden Visa modifications, helping you understand whether Lisbon fits your investment strategy.
Considering Portugal’s broader investment landscape? Explore our comprehensive why invest in Portugal guide or our why invest in Porto analysis for alternative market opportunities.
Market performance snapshot
Lisbon in numbers
Lisbon’s property market delivered strong performance in 2025, with median bank appraisal values reaching €2,025 per square metre in October—a 17.66% year-on-year increase, according to INE. This marked the thirteenth consecutive month of double-digit annual growth.
At the municipal level, Lisbon remained Portugal’s most expensive market with median prices of €5,914 per square metre (4.0% growth), followed by Porto at €3,908 per square metre (5.9% growth), according to Idealista data from November 2025.
Transaction volumes demonstrated healthy market activity: 84,247 dwellings sold nationwide in H1 2025, up 20% year-on-year. Domestic buyers now dominate the market at 95% of purchases, whilst foreign acquisitions declined 7.2% to 4,205 units, reflecting recent Golden Visa policy changes.
The prime luxury segment showed particular strength. Savills reported 2.4% growth in H1 2025, ranking Lisbon eighth amongst 30 global cities. Forecasts for 2026 project continued appreciation of 4-6% for prime central properties.
Key drivers:
According to ECB, mortgage rates declined to 2.84%, improving affordability. Supply constraints persist—only 13,244 new dwellings completed versus 84,247 sold in H1 2025 (INE data). Portugal’s economic fundamentals remain solid with 2% GDP growth in 2025 and 2.3% forecast for 2026.
The market has transitioned from the double-digit spikes of 2015-2023 to what Savills describes as “sustainable growth in a mature market.”
Where to invest in Lisbon
Prime investment areas
Lisbon’s property market isn’t uniform. Understanding neighbourhood-level pricing and dynamics is essential for identifying opportunities aligned with your investment strategy.
- Chiado, Príncipe Real and Lapa form Lisbon’s established prime centre, representing the city’s most prestigious addresses. These neighbourhoods attract investors prioritising stability and long-term capital preservation over maximum yield. Properties here command premium valuations reflecting location, historical significance, and consistent demand from both international and domestic buyers.
- Avenida da Liberdade stands as one of Europe’s most distinguished boulevards, with tree-lined elegance connecting Baixa to Parque Eduardo VII. The avenue draws particularly strong international interest, with foreign buyers demonstrating willingness to pay substantial premiums for properties along this iconic address. Investment here suits those seeking prestige positioning and exposure to cross-border buyer demand.
- Avenidas Novas and Saldanha cater to corporate and professional tenants, with modern developments and proximity to business districts. These neighbourhoods offer balanced investment propositions—newer building stock reduces maintenance complexity, whilst established infrastructure and transport connectivity support stable occupancy from working professionals and relocated executives.
- Baixa and Alfama represent Lisbon’s historic core, where centuries-old architecture and authentic character create distinct appeal. Investors here often pursue renovation-to-rental strategies, capitalising on tourist demand for characterful accommodation whilst navigating the complexities of historic building restoration and regulatory compliance in central zones.
- Marvila presents Lisbon’s emerging opportunity. This former industrial district is experiencing significant transformation, with cultural venues, creative spaces, and residential development reshaping the area. Entry costs remain notably lower than established central neighbourhoods, though investors accept higher execution risk and longer value realisation timelines in exchange for growth potential.
For detailed analysis of rental performance by neighbourhood, see our best rental yields in Lisbon guide. Our buying property in Lisbon article covers the complete acquisition process.
Property investment opportunities
Lisbon has become a prime destination for property investment, enticing foreign investors with its growing economy, real estate and tourism market. The city is becoming increasingly popular amongst international tech start-ups and multinational companies, bringing with them top talent from all over the world.
Understanding realistic returns is essential for any Lisbon property investment. The market offers multiple pathways—short-term rentals, long-term leases, and renovation projects—each with distinct risk-return profiles.
Short-term rental performance
Short-term rentals remain a compelling option in Lisbon, particularly in tourist-favoured neighbourhoods. According to data from September 2024 to August 2025, Lisbon’s short-term rental market comprises approximately 13,000 active listings, with an average occupancy rate of 82% and an average daily rate (ADR) of €115, resulting in estimated monthly revenues of around €2,900 for properties with stable performance.
Performance varies significantly by location and property quality. Prime central locations with professional management achieve higher occupancy and rates, whilst properties in peripheral areas or those lacking optimised operations typically underperform market averages. Peak season performance drives annual returns, with summer months typically delivering the highest earnings.
However, the market faces regulatory complexity. Lisbon maintains strict STR regulation—AL (Alojamento Local) licensing is mandatory, with neighbourhood-specific restrictions in designated Lisbon containment areas.
Professional management becomes essential in this environment. Compliance, dynamic pricing, guest services, and operational excellence separate top performers from struggling properties. For detailed AL licensing requirements and restrictions by neighbourhood, see our short-term rentals licence in Lisbon guide.
Long-term rental alternative
Long-term rentals offer a lower-maintenance pathway with stable returns. Median rent per square metre in new lease agreements reached €8.22 in Q1 2025 (10% YoY growth). Lisbon city centre commands €16.00 per square metre (Source: INE).
According to the Global Property Guide, gross rental yields averaged 4.32% nationally in November 2025—down from 4.96% the previous year as capital appreciation outpaced rent growth. Lisbon city centre yields sit at 3.79%, whilst peripheral areas like Setúbal Peninsula achieve 5.09%.
The government caps annual rent increases for existing contracts—set at 2.24% for 2026—providing predictable income but limiting upside potential compared to short-term strategies.
Which strategy fits your goals?
Choose short-term rentals if:
- You can achieve strong occupancy in tourist-favoured locations
- You partner with professional management to handle operations and compliance
- You’re comfortable with revenue seasonality and regulatory evolution
- Higher potential returns justify increased complexity
Choose long-term rentals if:
- You prioritize simplicity and predictable income
- You’re investing in residential neighbourhoods outside prime tourist zones
- You prefer minimal ongoing management involvement
- Stable but lower yields meet your return requirements
How to invest in Lisbon?
- Dive deep with data: Begin with a comprehensive look into Lisbon’s vibrant real estate market. As a hotspot, the city continually evolves, and knowing current trends is key.
- Financial blueprinting: Lay out a clear financial plan. From purchase prices to unexpected fees, having a blueprint will navigate you smoothly through your Lisbon investment journey.
- Location, location, location: Our top neighborhoods? Baixa, Alfama, and Avenidas Novas. Proximity to landmarks, connectivity, and amenity access can elevate your investment.
- Team up with experts: We always recommend partnering with seasoned local professionals. A well-versed real estate agent and a sharp legal eye can make all the difference.
Key considerations when investing in Lisbon
Beyond property metrics and neighbourhood selection, investors should understand the broader residency, taxation, and lifestyle context that shapes investment decisions in Lisbon.
1. Golden Visa and residency pathways
Portugal Golden Visa programme continues operating, though residential property investment no longer qualifies following 2023 reforms. Current pathways include investment funds, business ventures creating employment, and scientific research or cultural heritage projects. The programme still offers minimal physical presence requirements, family inclusion, and Schengen Area access.
Alternative residency routes remain available for property investors, including D7 visas for passive income holders and D8 visas for digital nomads. Whilst Golden Visa investors previously accessed citizenship after five years, recent legislative changes may extend this timeline, requiring deeper integration demonstrations including language proficiency.
2. Tax framework and investor incentives
Property investors face Municipal Property Transfer Tax (IMT) at purchase, alongside Stamp Duty. Annual Municipal Property Tax (IMI) applies based on property value, with Additional Municipal Property Tax (AIMI) levied on higher-value portfolios. Rental income faces progressive taxation, with deductions available for property-related expenses.
Portugal’s non-habitual resident programme offers favourable tax treatment for qualifying investors. The StartUp Visa supports entrepreneurs through incubator integration and additional benefits. Urban Rehabilitation Areas provide reduced VAT rates (6%) on renovation works.
European Union funding supports projects involving urban rehabilitation, technology, and innovation through Portugal 2030 initiatives, whilst banking sector financing options complement government incentives. Given the complexity of cross-border taxation, professional tax advice remains essential for optimising investment structures.
3. Lifestyle and location benefits
Lisbon combines European capital sophistication with Mediterranean quality of life. Portugal consistently ranks amongst the world’s safest countries (seventh globally in 2025 Global Peace Index), offering political stability and low crime rates. Ranked as one of Europe’s sunniest capital cities with over 300 days of annual sunshine, Lisbon offers mild winters and warm summers that drive consistent visitor appeal throughout the year.
The established international community supports seamless integration. English proficiency runs high across service sectors, international schools serve expatriate families, and modern healthcare infrastructure meets European standards. Living costs remain notably lower than comparable Western European capitals.
Lisbon’s international connectivity, anchored by a major European hub airport, facilitates both business travel and leisure access across Europe and beyond.
4. Economic and political stability
As an established EU member with eurozone participation, Portugal offers institutional stability and property rights protection for foreign investors. The Lisboa Metropolitan Area generates 36% of national GDP, driven by tourism, technology sector growth, and foreign investment inflows.
Recent government transitions have maintained pro-investment policies, with current administration explicitly supporting refined Golden Visa structures rather than programme elimination. This contrasts sharply with Ireland, Spain, Netherlands, and the UK, which have closed their respective residency-by-investment programmes entirely.
Expert perspective
Rui Silva, Country Manager, GuestReady Portugal
“What we’re seeing in Lisbon right now is a market that’s come of age. The frenetic growth of 2015-2023 has given way to something more sustainable and, frankly, more investable. Portugal’s recognition as Economy of the Year isn’t just a trophy, it’s validation of structural strengths that support long-term property investment.
Managing over 2,000 properties across Portugal—from multi-unit developments to individual investments—gives us a unique vantage point on what’s actually working. This is no longer a speculative market; it’s a professional one. The neighbourhood you choose matters more than ever, and professional management is no longer optional.
The key is approaching Lisbon with realistic expectations, local expertise, and a long-term perspective.”
Investment sentiment
Deloitte’s Portugal Real Estate Survey 2025 reveals sustained confidence amongst institutional investors, with 69% prioritising investment activity over the coming semester. Investment appetite remains strong—56% of surveyed players completed acquisitions during late 2024, with 56% now targeting opportunistic deals and 50% pursuing value-added strategies.
Lisbon dominates geographic focus, with 80% of respondents concentrating investment strategies on the capital. Residential leads sector preferences (50%), followed by hospitality (44%), segments where professional management proves increasingly critical to performance.
Sentiment toward Portugal’s economic climate remains notably positive: 40% of investors expect improvement, whilst none anticipate deterioration. Construction costs (80%) and permitting processes (53%) represent primary operational challenges, though these reflect market activity levels rather than fundamental concerns.
For property investors operating in this environment, the emphasis on portfolio management (cited by 50% of institutional players) underscores the shift toward professional, actively managed assets rather than passive holdings, a transition GuestReady has observed firsthand across its property portfolio.
Frequently asked questions
Is Lisbon property still a good investment after the Golden Visa changes?
- Yes. Whilst the Golden Visa residential property route ended in 2023, Lisbon’s investment fundamentals remain strong. Portugal’s recognition as Economy of the Year, combined with property value growth of 7-10% forecast through 2026, demonstrates continued market strength. The shift toward domestic and sophisticated international buyers (rather than visa-driven demand) indicates healthy, sustainable market dynamics independent of residency schemes.
What are the main investment risks when buying property in Lisbon?
- Primary risks include regulatory changes affecting short-term rentals (AL licensing restrictions in central containment zones, condominium veto powers), tax policy adjustments, market maturation leading to slower appreciation rates, construction cost inflation, permitting delays, and supply constraints in prime locations. Professional due diligence and local expertise help mitigate these challenges.
What is the current investor sentiment toward Lisbon’s property market?
- Deloitte’s 2025 Real Estate Survey shows strong confidence: 69% of industry players prioritise investment activity, 80% target Lisbon specifically, and 40% expect economic conditions to improve (with none expecting deterioration). Residential remains the preferred sector (50%), whilst 60% anticipate stable profitability. This professional optimism reflects Lisbon’s maturation into a transparent, fundamentals-driven market.
How can professional property management services like GuestReady maximise returns on Lisbon investment properties?
- GuestReady manages around 2,000 properties across Portugal, providing regulatory compliance navigation (AL licensing, local regulations), revenue optimisation through dynamic pricing strategies, complete operational management (guest communication, maintenance, cleaning), and financial transparency via integrated platform technology. Whether managing a single apartment or overseeing multi-unit developments across Lisbon, GuestReady’s local expertise and scalable operations help investors navigate Lisbon’s increasingly professional market whilst maintaining competitive yields.
How GuestReady Maximises Your Investment
Successfully navigating Lisbon’s property investment landscape requires operational excellence alongside market knowledge. GuestReady’s comprehensive Airbnb management services transform investments into consistently performing assets across Portugal’s key markets.
Managing over 2,000 properties nationwide, GuestReady delivers complete property management—from regulatory compliance and revenue optimisation to guest communication and maintenance coordination. Our partnership models aligns performance with investor returns, whilst integrated platform technology provides complete financial transparency and eliminates operational burden.
Ready to maximise your Lisbon property investment? Contact our local team or estimate your property’s income potential to discover how professional management can enhance your returns.
Find your investment opportunity and maximise rental returns
If you are looking for a property investment opportunity and would like to know more about how you can maximise the return on your investment through short-term lettings, speak to one of our experts to find out more.
