Foreign Investment in Portugal Triples Over the Last Decade

Portugal’s property market has skyrocketed over the past ten years, with foreign investment tripling in this sector over the past ten years, according to the Bank of Portugal.

In the ten-year period between the first half of 2012 and the first half of 2024, Foreign Direct Investment increased by over 55 percent, with the property sector identified as the one that contributed most to the growth.

An Uptick in Foreign Investment After 2014

Portugal’s increased popularity on the global stage as an attractive investment filled the end of the “Troika” adjustment program in 2014 when lower wages and prices caught investors’ attention and made the economy more competitive internationally.

Foreign investors hold assets (capital or debt, as they became creditors) in Portugal in 2024 in the form of investments with a net worth of €183.9 billion. This is 55 percent more than in 2014.

Portugal’s Property Market the Highest Contributing Sector

Taking a look at the sectors that have contributed most to FDI, the Portuguese real estate sector stands out, having contributed to this foreign investment boom in the last ten years.

At the end of the first half of 2014, the value of foreign investment in Portuguese property stood at €4.9 billion, which reached €15 billion after the first half of 2024.

This was the result of purchases that were made by a wide range of foreign investor profiles, including individual investors, companies, banks, and funds.

In terms of foreign investment, real estate is now the fourth most significant sector in Portugal in 2024, moving up two positions from sixth in 2014. When combined with the construction sector, the FDI is valued at €18.5 billion, making real estate the third largest contributing sector to the Portuguese economy, which is more than 10 percent of all FDI in Portugal.

Where does Foreign Direct Investment in Portugal come from?

According to the Bank of Portugal, the country’s neighbor, Spain is currently the largest foreign investor in Portugal, representing 20 percent of the total FDI in Portugal and totaling almost €37 billion. Two other European countries, the Netherlands and Luxembourg, are also key contributors, due to their major financial centers and tax advantages, which attract international investors to use them as hubs for their investments.

The Netherlands and Luxembourg are the second and third largest contributors to FDI in Portugal, with investments valued at €35.7 billion and €33 billion, respectively, and together, accounting for almost 40 percent of foreign investment in Portugal.

However, the Bank of Portugal mentions that the actual investors behind FDI into Portugal may be from other countries. Many investors use financial hubs in the Netherlands and Luxembourg to channel their investments.

FDI from China, for example, only totaled €3.8 billion in 2023, but the Bank of Portugal estimates that the true amount is much higher when taking into account the origin of the money and the final beneficiaries – in this case, Chinese investments are estimated to amount to €12,4 billion, three times more than the official figure.