Real estate in Portugal is among the lowest-cost in Europe. In popular coastal areas, such as the Algarve, many buy property as an investment, either to rent out all the time or to rent out when the owner is not using it. If you plan to buy a property for personal use—especially if you plan to live in it full-time—it’s advisable to go in person to view a property before purchase.

The Algarve

Although on the Atlantic, the Algarve’s climate feels Mediterranean, and it has long been a favorite spot for European vacationers and second-home buyers. The region’s numerous golf courses mean there’s also good potential for year-round rental income.

Prices in the Algarve have fallen since the height of the second-home buying boom, but it’s not the cheapest area of Portugal. Compared to other parts of the country, the Algarve is relatively expensive, certainly in central coastal locations around Albufeira and Vilamoura. Some resorts have also lost much of their Portuguese character, so do plenty of investigation.

You’ll find better value—as well as less unsightly development—along the Algarve’s east coast around Tavira. Also look to the west around Lagos, which feels a lot more like a proper working town than a resort that depends solely on tourism.

Property Sample:

  • A two-bedroom apartment in Tavira with 958 square feet of living space and a balcony with sea view is for sale for €80,000 ($88,782).

The Alentejo

If beaches, olive groves, vineyards, castles, and gorgeous little frontier towns perched on wooded hilltops appeal, the Alentejo has a lot to offer. Covering more than 10,000 square miles of lower Portugal, the Alentejo spreads east from Lisbon and the Atlantic to the Spanish border.

Despite its glorious beaches, mass tourism has barely had an impact on the Alentejo. You’ll find good food (delicious roast suckling pig) and earthy red wines—often less than $10 a bottle in local restaurants. At chestnut fairs and country markets there’s an extravaganza of flowers, veggies, cheeses, olive oils, honey, live poultry, and bric-a-brac—the “marble town” of Estremoz has a great market.

The Alentejo’s two cities are Beja, in the south, and Evora, in the north. A UNESCO World Heritage site as well as a university city, Evora’s roots go deep. Preserving a Roman aqueduct, baths, and temple ruins, its overall feel is medieval and Moorish. Handsome houses with faded coats-of-arms. A leafy park with gazebos adorned with azulejos, Portugal’s iconic painted tiles.

Property Samples:

  • A recently renovated one-bedroom home in Evora’s historic center, with 538 square feet of space, was recently for sale for €69,000 ($76,568).
  • In Estremoz, two-bedroom houses start at just €55,000 ($61,024).

The Silver Coast

Hemming central Portugal’s rugged coastline of cliffs, coves, and whitewashed windmills, the Atlantic beaches of Beira and Estramadura provinces are known as “the Silver Coast.” Slumbering inland are abbeys, pilgrim shrines, and ancient castle towns such as Tomar. Small villages come surrounded by terraced olive groves, citrus orchards, and vineyards.

Attractive seaside towns include Nazare and Sao Martinho. Nazare is both a summer resort of apartments, and a proper fishing town of narrow alleys and old houses. Fishwives in thick woolen skirts and socks gut small fish like sardines and horse mackerel right on the beach before hanging them out to dry on racks. Sao Martinho, a few miles south of Nazare, is almost enclosed in a cove. It has a shell-shaped beach and the promenade is lined with traditional cafés, bars, and seafood restaurants.

Property Samples:

  • In Sao Martinho, one-bedroom apartments start at €90,000 ($99,862).
  • In Nazare, 967-square-foot apartments are currently on the market for €90,000 ($99,862).

Buying Property in Portugal

Real estate in Portugal is among the lowest-cost in Europe, making Portugal a low-cost option if you seek a European base. And as a foreigner, you can legally own property here.

Many Portuguese prefer to live in apartments or condos. This is especially true in cities, and in beach areas where real estate is relatively expensive. You’ll find houses in the countryside, in exclusive neighborhoods in city suburbs, and slightly inland from the coast in some areas.

A Portuguese real estate agency is usually called an agenzia inmobiliaria. You’ll find well-known global real estate firms like RE/MAX in Portugal, as well as local firms. Many have websites where you can view properties to get a general idea of what’s on offer, prices, and neighborhoods that may interest you. However, it’s a good idea to go in person to select and buy a property, especially if you’re buying it for personal use rather than as an investment.

After you’ve found a property and the agent has forwarded your offer, the first part of the process is usually a verbal agreement between the seller and you, the buyer. It’s advisable to have a lawyer check the title and other documentation related to the property. As a general rule, you should find a lawyer who works for you, rather than using one supplied by the real estate agency. If you don’t speak Portuguese, be sure to get a reliable lawyer who speaks English and can translate documents for you.

A preliminary contract (called a contrato de promessa de compra e venda) lays out the terms of the sale. These include the owner’s name, details of the property (including property boundaries), the purchase price, and the closing date. At this time a deposit is paid, usually 10% (and details of this payment are listed in the preliminary contract, too). You will lose your deposit if you later withdraw from the purchase. However, should the seller back out, he/she must pay you twice the value of your deposit.

A notary will be needed to close the contract and finalize the sale. In Portugal, a notary is a special legal official under the authority of the Ministry of Justice. He/she holds a degree in law and has received additional training before being appointed as a notary. A notary represents the Portuguese government in the sales transaction, rather than either the buyer or the seller.

On completion of the sale, and the transfer of ownership, both parties sign the escritura (the title deeds) before the notary. The balance of the purchase price, plus all fees and taxes, is paid at this time.

For purchase-related fees, the ballpark figure is 10%. Depending on declared value of the property, transfer tax goes from 0% to 8%. Legal fees are 1% to 2%; notary and land registry fees around 2.5%; and annual local taxes can be up to 0.8%. Agents’ fees mostly range from 3% to 5%, though the vendor pays these.

You will need a fiscal number (número de contribuinte) from the local tax office. This is a tax number, in the form of a card, and is required to open a bank account and pay the rates and utilities on the property.