Athena Advisers: Investing in Portugal and Spain

Investing in a second home abroad can be both exhilarating and nerve-racking, and, if done right, it can result in not just a lifestyle enhancement, but also financial returns. We take a look at Portugal and Spain, two popular holiday destinations, each with huge appeal for lifestyle buyers and investors.

Purchasing a second home abroad is a big dream for many, and, for most, the draw is not just the obvious lifestyle advantages, but also the financial potentials. Lloyd Hughes, from the property investment expert Athena Advisers, explains: “It’s almost always a bit of both. 80 per cent of our clients want their property to generate some sort of income when they’re not using it; at least, most people want the property to generate enough income to cover the cost of the mortgage payments and maintenance.”

However, while lifestyle buyers will be naturally guided by their relationship to a specific location, those more concerned with the investment potentials might benefit from taking a broader view of things.

Investing in the future in Lisbon

With its charming narrow streets, buzzing plazas, and stunning sea views, it is no wonder that Lisbon has experienced a significant rise in tourism in recent years. Named the coolest city in the world by Conde Nast Traveller, in 2016, the Portuguese capital has also become one of the world’s most attractive capitals in which to both live and invest. “I think, broadly speaking, investing in Lisbon, at the moment, is like if you had the ability to invest in central London or Paris, 20 years ago. Now, in those cities, prices can go up to almost anything, whereas the most expensive thing you will find in Lisbon will cost 10,000 euros per square metre, and that’d be right in the city centre overlooking the sea,” says Hughes. “Of course, the prices have already risen, but there’s still a lot of growth to be expected, and another incentive is Portugal’s tax and visa schemes.”
One of the programmes particularly attractive for non-EU-citizens is the Portuguese Golden Visa. The programme gives investors (investing in property of €500,000 or more) a residency permit for a family, and, provided that the applicant spends two weeks in the country every two years, he or she will be eligible for a Portuguese passport after five years.

For those planning on spending longer periods of time in their second home, Portugal’s Non-Habitual Resident Tax Programme provides another alluring prospect. The programme allows those who become fiscal residents in Portugal to benefit from special, reduced rates, or even no taxation at all, on income generated outside the country.

Finding a second home in Spain

Like Portugal, Spain has a Golden Visa Programme for investors. However, while Portugal, and Lisbon in particular, offers exciting new potentials for investors, Spain typically attracts more traditional lifestyle buyers. Familiar with the region and attracted to the relaxed lifestyle, many look to invest in a second home as a way of “turning around their life”, says Hughes. “Spain is a more traditional market and those who target it tend to have visited and gone on holidays to coastal cities like Barcelona and Valencia. Madrid and Barcelona have always been popular with property buyers, and now, the next tier is Valencia.”

With properties typically starting at 500-600,000 euros in Barcelona and Madrid and 400,000 euros in Valencia, the Spanish cities still present a tempting prospect for many international buyers. However, with regulations prohibiting short-term lets in Barcelona and similar regulations underway in Valencia and Madrid, the market requires a bit more consideration for investors.

Matching expectation and exploring new locations

Another thing that should be taken into careful consideration, no matter the location of the property, is the expected maintenance costs. “In the cities, you have lot of old period buildings with old pipes and so on, so newer properties come with a premium and what that means is peace of mind. But it also makes it easier if you’re looking to rent the property out,” stresses Hughes.

In this respect, renovated period buildings with modern interiors and amenities generally offer a sound investment inside the cities. But newly developed locations might provide investors with even more exciting potential. One such area is Comporta, a previously undeveloped area an hour outside Lisbon. “The local authority has been very careful not to do overdevelop; they want to keep it low density and rural,” says Hughes. “We launched a project down there, the first of its kind for 15-20 years, and 80 per cent sold in the first four weeks.”

With the great interest in renovations and new-builds, having a constant presence or adviser in the area is key to successful investments. In short, stresses Hughes, it is essential to be able to factor in all possibilities and potentials to ensure that dreams are matched to reality.

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