Luxury Homes in Portugal - where, who buys and what?

As in Portugal we don't have the tradition of grape varieties, we use a substitute called "luxury" to segment people and tastes. The difficulty is in measuring the limits of its application. What is luxurious for some is trivial for others. What for some is reproachable for others is a reason for admiration and envy. This is a territory where consensus and common sense do not prevail and preconceived ideas prevail. And what about luxury real estate?

How much does a Luxury home cost?

The concept of a luxury home does not have a very well defined border in terms of price, in Portugal it was usual to consider 500,000 Euros as the minimum bar to catalog a luxury home. But, in recent years, with the rise in prices in cities such as Lisbon, Cascais and Porto, this minimum value is rapidly moving towards the usual value in other richer countries in Europe: 1 Million Euros.

Of course, this value is not consensual, a simple T4 apartment, even without the usual features for the luxury segment, can reach 1 million euros in the city of Lisbon! The inflation that has hit Portugal since 2021, after the pandemic and the war in Ukraine, has driven sales prices up even further, both in the new construction market and in the used home market, by drag.

As for the upper limit, the sky is the limit! If in the richest countries a house can reach stratospheric values, up to 200 Million, here this limit is more difficult to determine, not least because in this segment secrecy and "prices on request" are common. Despite this, it is known that in 2022, Cristiano Ronaldo bought the most expensive house in Portugal, located in the luxurious neighborhood of Quinta da Marinha, on the Portuguese Riviera. The villa has more than 2,000 square meters and was purchased for 21 million euros. It is currently undergoing refurbishment works, and it is known that the famous football player intends to settle in this residence shortly, with his family and has even enrolled his 4 children in the most famous school in the area, St. Julian's School, in Carcavelos.

In 2018, a penthouse-type apartment was sold in Lisbon - on Rua Castilho - with 3 floors and an area of over 500 square meters - to a British investor, for an amount of around 12.5 million euros (22 thousand euros / m²).

Price is undoubtedly an important factor for considering a home as luxurious, but in addition to price there are other features that can attract a buyer in this segment. In order of importance: the view, the location, the architecture of the property, the area of the house and the land, security and privacy, the materials used in its construction, and a whole set of equipment and extras said to be luxury: jacuzzi exterior, spa, tennis court, Home Cinema, indoor and outdoor pools with waves and heated, etc.

Who buys luxury homes in Portugal?

In 2021, Portugal ranked 36th in the United Nations Human Development Index (HDI). It is therefore not surprising that the luxury real estate market has lower demand than many countries in terms of the "domestic buyer". However, in recent years, interest in luxury homes and developments has increased thanks to the economic recovery, but above all through demand and foreign investment.

It is no coincidence that Portugal was ranked as the best country in Europe to live as an expatriate in 2022, according to the renowned Expat Insider survey. In world terms, Portugal ranks 4th out of 177 countries. The reasons for this preference range from the climate, security, quality of life, cost of living and even the "warmth" with which the Portuguese welcome visitors.

In our country and in recent years there has been talk of growth rates of 20% per year, just in the luxury segment. Not that this market has been at a standstill during the years of the pandemic crisis that shook our country and the world, not least because in times of crisis investment in luxury goods is always a refuge for investors with capital. But the growth of tourism has put Portugal under the international spotlight and has contributed to accelerating this trend, which is even stronger in the post-pandemic period.

This upward movement in the luxury segment began to gain momentum with the mechanisms of the “Golden Visa” ARIs (Residence Permit for investment activity) and the Non-Habitual Tax Resident Regime, visas for “digital nomads”, etc. But currently, Portugal has been attracting more and more wealthy buyers looking for our country to live and work, or simply to enjoy a "golden retirement" in the "California of Europe", coming from countries such as: United States of America, Brazil, China, Baltic countries, France, Great Britain, Germany, Finland, Belgium, Switzerland, Angola, United Arab Emirates, Turkey, India, etc.

The fact that they have their own capital and their purchasing power is substantially higher than that of the Portuguese middle class allows them to choose houses with higher prices and characteristics associated with the luxury segment.

And the Portuguese buyer? Well, from the lucky person who won the Euro million (seriously!), successful businessmen, top managers of multinational companies, property owners who with the recent appreciation of real estate obtained substantial gains, Portuguese expatriates who returned to Portugal to invest, Global Economy pivots (they reside in Portugal but either work remotely from our country or use it as a transitory resting platform, while traveling the world for business purposes), investors who see in this market an opportunity to increase their capital, as an alternative to classic financial investments, etc. etc.

What are your favorite features in a luxury home?

The concept of luxury home does not have a very well defined border but the price is without a doubt an obvious marking factor. But in addition to the price, there are other characteristics that motivate the buyer of a luxury home, in order of importance:

Location - this is the most important filter for a buyer in the luxury segment. For this type of buyer, the strong purchasing power allows you to choose the best locations: places with river/sea views, close to golf courses, unobstructed views, luxury condominiums, charming villas, historic centers of large cities, etc.

Security - this is another priority: the condominiums that offer it are very popular, with the American and Brazilian community standing out in the search for and purchase of homes.

The Architecture - this is an equally appreciated feature. Properties designed by renowned architects are highly regarded and value the construction of a luxury property. Modern and contemporary lines are preferred.

Exclusivity - For the buyer of a luxury home, the price has to justify the difference. A property with unique architectural characteristics, with spacious environments, double ceiling height, and creative projects in the distribution of space and use of different environments, is more likely to be sold.

Services and Equipment - being able to enjoy leisure options, services and security are an added value valued by those looking for a luxury home. Luxury developments that have this type of characteristics are highly sought after.

Technology - home automation has been invading homes for some years now and luxury homes are no exception. Nowadays, it is common to find properties with automation systems in which it is possible to control almost everything through a mobile phone. From remote surveillance through cameras, to remote control of lights, curtains, heating, biometric access, household appliances connected via the "Internet of Things", etc. These are some of the comforts of Smart Homes and what technology can offer this type of buyer.

Privacy - this is a common requirement in the luxury segment. Some buyers are looking for properties located in a calm and silent neighborhood, or in a closed condominium, protected from prying eyes and neighbors, and whose security is taken seriously: 24-hour surveillance, high walls, surveillance cameras, etc.

If we analyze in detail, the buyer looking for an independent house, villa or farm, values some specific characteristics of this segment, among which I would highlight:

River/sea view, close to golf, equestrian center or beaches, contemporary architecture or with the charm of traditional Portuguese style, garden and outdoor pool, infinity pool, indoor garden, heated pools, ecological features such as solar panels, garage or parking, spacious social spaces preferably in connection with the garden / pool, master suite with walk-in closet, underfloor heating, kitchen with quality materials, American kitchen, wine cellar, safe, gym or sauna, security, alarms and remote surveillance, etc.

In addition to the aforementioned preferences, buyers looking for a luxury apartment value specific features, including:

New or renovated apartment, with high quality materials, river/sea view or unobstructed view, duplex or triplex typologies preferably on the top floors (penthouse), garden terraces with swimming pool/jacuzzi, modern architectural design and designer decoration, concierge, doorman or gated community, larger social areas to the detriment of utilitarian spaces (such as the kitchen which is often replaced by a kitchenette), suites, garage / private parking with electric charging, etc.

In my article 'Luxury Homes - Trends for 2023' you will find an exhaustive list of the most desired features when buying a luxury home in Portugal.

What are the favorite places to buy a luxury home?

Certain neighborhoods in Lisbon, the Cascais line and the Algarve have always been the privileged stage for the luxury segment, although cities like Porto and Braga and others have seen an increase in demand in recent years.

In the city of Lisbon, the luxury segment has a preference for certain streets and neighborhoods such as Avenida da Liberdade and adjacent streets, Avenidas Novas, neighborhoods such as Chiado, Príncipe Real, Bica and Sé, Lapa, Estrela, Campo de Ourique and Restelo and more recent luxury developments such as Prata Riverside Village in Marvila, Parque das Nações, Belém, etc.

On the outskirts of Lisbon, the demand for luxury properties is very high in Cascais (Guia and Quinta da Marinha), Estoril, Sintra (in the center of town, Penha Longa and Várzea), Aroeira, Troia and Comporta. The proximity to the beaches and the sea, the charm of these villages and the existence of premium quality luxury condominiums is an attraction factor. The golf courses are also a good anchor around which luxury developments are born, such as Oeiras Golf & Residence - where I sell the most houses and land for the construction of luxury villas - Belas Clube de Campo, Herdade da Aroeira, Troia Resort, etc.

In Porto, the preferred areas are Foz and close to Parque da Cidade, the parishes of Lordelo do Ouro and Massarelos.On the other hand, the recent renovation of the city and its riverside areas along the Douro are bringing new projects and new luxury developments aimed at the high end.

Braga is one of the cities in the country where prices have grown the most, after years of stagnation. Here, the luxury market has a special dynamic due to the multiplicity of farms and palatial houses that tourism has come to value. Areas such as the slopes of Sameiro and Bom Jesus are worth mentioning.

The Algarve is the Algarve! The climate and beaches are its main asset and luxury real estate lives in its shadow. Places such as the Golden Triangle (Vale do Lobo, Vale do Garrão and Quinta do Lago), Albufeira (Olhos de Água, Baleeira and Galé), Quinta do Lago (Almancil) and Vilamoura (Loulé) are just some of the areas that make the Algarve at the top of international preferences when it comes to luxury investment in Portugal.

But other cities such as Aveiro, Coimbra and Évora are creating new dynamics in the luxury segment and could come to the fore in the very near future.

While in Lisbon the typology chosen is conditioned by the scarcity of supply and the price of the land, with the Luxury Apartment being the most frequent option, in the surroundings, Houses in a gated community, Quintas, Palaces and Mansions represent an important range of this segment.

What are the luxury real estate trends for 2022?

The relationship between the individual and the luxury object has been changing in recent years: for younger buyers, rather than acquiring an object for personal promotion or ostentation, the option is to acquire a home that reflects their identity - who is, what you care about and what your choices are - your taste, creativity and ethics.

This change in focus is reflected in the need to personalize the space where he lives. Millennials are now focused on "quality per square foot" and how the home fits into their lifestyle. This buyer is more attentive to the details of the house, prefers quality equipment and amenities such as state-of-the-art technology. These characteristics, as well as the location of the property, may even be more important than its size and areas.

Although the generation of millennials is not the most representative of the high segment - the usual buyer in the high segment is between 38 and 60 years old - these will be the future buyers that condition the supply of luxury homes.

With construction going through a period of strong recovery (the number of licenses issued has not stopped growing since 2017) it is to be expected that in 2022 and 2023 the supply of luxury homes will grow and a lot, not only through property renovation degraded areas but also through new undertakings. This is good for the high-end market, as the new construction uses more modern architectural lines and the latest quality materials.

On the other hand, there are new features (camouflaged garage with lift for cars, heated indoor pools with waves, camouflaged outdoor pools, ecological and "smart home" features, underfloor heating, new combinations of materials, etc., which are easier to implement when building from scratch.

Final considerations

A luxury home, for those who purchase it, is the realization of a dream, often the fruit of a successful life. The increase in life expectancy means that, for this type of owner over 60, the house plays an increasingly important role, as at this age the relationship with time changes and allows you to enjoy it even more and best. And as its purchasing power is high, the luxury market in Portugal has a path of growth ahead of it in this age group.

On the other hand, it is foreseeable that the exceptional living conditions (climate, cost of living, security, etc.) offered by Portugal, combined with the growth of tourism, will continue to attract international buyers - Lisbon is situated at the top of the priority cities for invest in real estate - and they are looking for a more sophisticated and modern product with luxury requirements.

The buyer of luxury homes is more demanding and attentive to details, supports his decisions with the support of technical audits of the property (especially when he intends to buy a used home), has particular legal support and privileges business partners with proven and experience in this type of segment.

This represents a challenge for the partners involved in this real estate segment: developers, builders, architects, decorators and real estate agents will have to adapt and improve their skills to successfully approach this market segment, which may come to represent a substantial share. of your business in the coming years.

PS: My thanks to João Rodolfo and the company: Traçado Regulador, Lda for the kindly provided photos.