Published on and written by Cyril Jarnias
The Portuguese Real Estate Market: New vs. Old
In Portugal, the real estate market is attracting growing interest, particularly due to the unique dynamics between new and old properties. With its enchanting landscapes and rich culture, this country draws in a large number of investors.
Good to Know:
Portugal offers attractive tax benefits for foreign investors, such as the special tax regime for non-habitual residents.
New Properties: Modernity and Efficiency
New properties, often seen as a symbol of modernity and energy efficiency, offer significant advantages:
- Recent construction standards and environmental compliance
- Modern amenities and integrated technologies
- Lower maintenance costs in the short term
Old Properties: Charm and Location
Old properties appeal with their historic charm and prime location:
- Authentic character and traditional architecture
- Often located in city centers or established neighborhoods
- Potential for value appreciation through renovation
Comparative Analysis: Price, Profitability, and Demand
In this article, we delve into the heart of this data-driven match between new and old, analyzing prices, profitability, and demand to clarify the smart choices for future homeowners and investors.
Cost/Benefit Analysis of New vs. Old Real Estate in Portugal
| Region | Average Price per m² New (2025) | Average Price per m² Old (2025) | Examples/Comments |
|---|---|---|---|
| Lisbon | €5,922 | €3,000–€5,000 | Central neighborhoods: new is very rare and expensive, old is more accessible if renovated |
| Porto | €3,628 | €2,500–€4,000 | Strong disparity depending on the neighborhood, dynamic rental market |
| Algarve (Tavira) | €3,500 | €2,500–€3,300 | High foreign demand, continuous appreciation |
| Other Regions | €2,000–€2,500 | €1,200–€2,000 | Opportunities in the Center and Alentejo |
Purchase Cost Comparison:
- New Properties: Higher price per square meter, especially in major cities (e.g., Lisbon: €5,922/m², Porto: €3,628/m², Algarve: €3,500/m²). Limited supply in the city center, which accentuates the premium on new builds.
- Old Properties: Lower price, but highly variable depending on the property’s condition and location. Possibility of finding properties to renovate starting from €3,000/m² in Lisbon, and under €2,000/m² in rural or less pressured regions.
Costs Associated with Renovation, Maintenance, Construction, and Warranties:
- Old:
- Renovation costs can range from €500 to €1,500/m² depending on the property’s condition.
- Higher maintenance costs (roofs, electrical systems, plumbing).
- Lack of builder warranties, need to verify compliance.
- New:
- Low maintenance costs in the first few years.
- Ten-year builder warranty on structure and compliance.
- Recent energy standards, modern equipment, efficient insulation.
Potential Benefits:
- Long-Term Appreciation:
- Growing market: +16.3% year-over-year in March 2025 in Portugal.
- New: potential for appreciation in developing or highly sought-after neighborhoods.
- Old: strong potential with successful renovation, especially in city centers.
- Tax Advantages:
- Non-Habitual Residence (NHR): reduced taxation for new residents on certain income.
- Temporary property tax exemptions on new builds in some cases.
- Reduced VAT for renovation in certain historic centers.
- Rental Income:
- High demand for short and long-term rentals, especially in Lisbon, Porto, and the Algarve.
- Net rental yield generally between 4% and 7% depending on the city, property type, and management.
- New builds attract an international clientele and higher rents, but renovated old properties in city centers can offer excellent returns.
Economic Factors Influencing Costs and Benefits in Portugal:
- Interest Rates: Gradual increase since 2023, impacting the cost of credit and thus purchasing power.
- Government Policies:
- End of the Golden Visa regime for residential real estate in Lisbon, Porto, and the Algarve, but maintenance of other tax incentives.
- Growing restrictions on short-term rentals in certain neighborhoods to regulate the market.
- Market Demand:
- Stable local demand, very dynamic foreign demand (French, British, North Americans).
- Scarcity of new builds in the center of major cities, upward pressure on prices.
- New construction limited by land availability and slow permitting.
Recent Statistics and Expert Analysis:
“The Portuguese real estate market is experiencing sustained growth, with a 16.29% increase in residential prices between March 2024 and March 2025.”
“In Lisbon, the average price for new builds exceeds €5,900/m², but it is possible to find old properties to renovate starting from €3,000/m². Well-executed renovations can achieve rapid appreciation, especially in changing neighborhoods.”
“New builds offer major advantages for investors seeking peace of mind, but renovated old properties can generate significant capital gains, provided the cost of work and local taxation are well managed.”
Key Takeaways:
- New Properties: high purchase price, little work needed, warranties, strong rental appeal, stable appreciation.
- Old Properties: lower purchase price, renovation and maintenance costs to anticipate, potential for capital gains in city centers, sometimes advantageous taxation.
- The Portuguese context in 2025: dynamic market, pressure on new builds, attractive taxation for foreigners, but vigilance needed on credit costs and local regulations.
Real estate investment in Portugal in 2025 requires a detailed analysis of the property type, region, and tax and rental strategies suited to the investor’s profile.
Good to Know:
In Portugal, buying a new property is generally more expensive than buying an old one, with significant price differences, especially in sought-after regions like Lisbon and the Algarve. New properties often come with construction warranties that reduce maintenance costs, while old properties frequently require costly renovations but may benefit from public subsidies. For the investor, new properties ensure better energy efficiency, allowing for long-term savings, whereas old properties, often better located, can generate higher rental income. In the long term, both types can appreciate, but new properties have an advantage with tax benefits, such as reductions in transfer taxes. Local policies and low interest rates also influence profitability; for example, an expert recently noted that despite rising prices, demand for real estate, whether new or old, remains strong. A recent study showed that renovated homes in Porto saw their value increase by 15% in five years, highlighting the impact of location and renovation on appreciation.
The Advantages of Choosing a New Property in Portugal
The advantages of choosing a new property in Portugal:
- Superior Energy Efficiency
New constructions in Portugal must obtain an energy classification of at least A, according to recent national and European regulations. This classification guarantees reduced energy consumption for heating, cooling, and hot water, while limiting CO₂ emissions. As an indication, a new home classified A consumes up to 50% less energy compared to an unrenovated old home.
| Property Type | Average Energy Class | Estimated Annual Consumption (kWh/m²) |
| New | A/A+ | 30 – 60 |
| Old, Unrenovated | C to F | 100 – 250 |
- Attractive Tax Incentives
Buying a new property provides access to several tax incentives:
- Reductions or temporary exemptions on the municipal tax on property transfers (IMT).
- Reduced rate or temporary exemption on the municipal property tax (IMI), sometimes for three years.
- Reduced VAT in some cases for projects meeting strict environmental standards.
- Modern and Customizable Layout
A new home benefits from the latest architectural trends: open spaces, optimization of natural light, enhanced soundproofing. Developers often offer customization of interior finishes (flooring, fitted kitchen, bathrooms). This allows the home to be tailored to the owner’s specific needs upon delivery.
- Substantial Savings on Maintenance and Repairs
Thanks to the full depreciation of new installations (modern heating/cooling, high-performance double-glazed windows), annual costs related to unexpected repairs are greatly reduced in the first few years following acquisition. Equipment under warranty also limits the financial risk associated with potential technical defects.
- Mandatory Builder’s Warranty
Every new build purchase comes with a ten-year warranty covering hidden defects affecting the building’s solidity, as well as a two-year warranty for separable elements like joinery or faucets. This legal protection provides peace of mind against any major defect discovered after taking possession of the property.
Key Takeaway:
A recent apartment in Portugal offers not only modern comfort but also sustainable savings thanks to its low energy consumption and low future costs; it also benefits from immediate tax advantages as well as increased legal security.
Good to Know:
Opting for a new property in Portugal offers several significant advantages, particularly in terms of energy efficiency, thanks to recent and strict environmental standards, which can often translate into savings on energy bills. Buyers can also benefit from attractive tax incentives, such as tax reductions or property tax relief, thus promoting increased profitability. New constructions also offer a modern layout adapted to the latest trends, allowing for customization that matches current preferences. Furthermore, maintenance and renovation costs are reduced due to the depreciation of new installations, and a construction warranty ensures peace of mind against potential defects. Finally, according to a study conducted by Deloitte in 2022, new properties in Portugal show an average annual increase of 7% in value, highlighting an attractive investment potential.
Understanding Builder’s Warranties in Portugal
Definition of the Builder’s Warranty in Portugal
The builder’s warranty in Portugal is a legal obligation imposed on builders of new properties, aimed at protecting the buyer against construction defects, hidden defects, or non-compliance with contractual conditions. This warranty applies automatically upon the sale of a new home, without needing to be explicitly mentioned in the contract.
Legal Warranty Periods by Type of New Construction
| Type of Defect | Legal Warranty Period |
| Structural defects (foundations, load-bearing walls, roofing, etc.) | 10 years |
| Non-structural defects (joinery, finishes, equipment, etc.) | 5 years |
Structural elements notably include foundations, load-bearing walls, beams, slabs, and roof structures. Non-structural elements cover doors, windows, electrical installations, plumbing, paintwork, and various equipment.
Legal Obligations of Builders Towards Buyers
- Provide a property that complies with construction standards and the sales contract.
- Guarantee the absence of hidden defects or major faults for the entire legal period.
- Carry out repair, replacement, price reduction, or, in serious cases, contract termination in the event of a proven defect.
- Take out civil liability insurance covering their activity.
Types of Defects Covered by the Warranty
- Structural defects: cracks in load-bearing walls, foundation settlement, major roof failures.
- Non-structural defects: water infiltration, insulation problems, defects in equipment (heating, plumbing, electricity), joinery defects, defective paintwork.
Procedure for Enforcing Your Rights
- Report the defect in writing to the builder or developer within the prescribed deadlines.
- If necessary, obtain an expert report (civil engineer or architect) to document the defects.
- The builder must then intervene within a reasonable time to repair or replace the affected element.
- If the builder does not respond or refuses to intervene, the buyer can take the matter to the competent courts to enforce their rights.
Differences from Warranties on Renovations of Old Buildings
| Criterion | New Properties | Renovations of Old Buildings |
| Legal Warranty | 5 to 10 years depending on the nature of the defect | 1 year generally for minor defects, up to 5 years for major structural defects if the work is significant |
| Scope of Coverage | Structural and non-structural | Often limited to the work carried out, according to the contract signed with the renovation company |
| Insurance Obligations | Mandatory for builders | Mandatory for renovation companies working on the structure |
Recent Statistics and Case Studies
- According to industry reports, approximately 15 to 20% of buyers of new properties in Portugal report defects within the first two years after delivery, mainly issues with humidity, insulation, or finishes.
- Recent studies show that the majority of disputes concern non-structural defects (60%), but structural defects, although rarer (about 10% of cases), generate significantly higher repair costs.
- Portuguese courts generally rule in favor of buyers when the defect is proven by an independent expert, but the process can be lengthy and burdensome.
- Renovations of old buildings lead to a higher rate of disputes (up to 30%), often due to the difficulty of distinguishing between pre-existing defects and defects related to recent work.
Key Takeaway:
The builder’s warranty in Portugal offers significant protection to buyers of new properties, with clear coverage periods and a structured procedure for enforcing rights. Renovated properties generally benefit from more limited protection, highlighting the importance of contractual vigilance and the use of qualified professionals.
Good to Know:
In Portugal, the builder’s warranty is insurance that protects buyers of new properties against potential construction defects. This warranty generally extends for ten years for structural defects and two years for finishes and equipment. Builders are legally required to correct these defects at no cost to the buyer, who must report any problems within the prescribed deadlines. To enforce their rights, buyers must inform the builder in writing and may resort to legal proceedings if necessary. In the case of renovations of old buildings, warranties may be more limited and vary depending on the scope of the work carried out. According to a recent study, about 25% of buyers use warranties to resolve minor defects, highlighting the importance of these protections. However, some buyers have reported difficulties in obtaining quick and effective repairs, especially for renovated properties where warranties are sometimes more restrictive.
Calculating Profitability: New vs. Old in Portugal
Comparison of Economic Indicators for Real Estate Investment Profitability in Portugal: New vs. Old
| Indicator | New Properties | Old Properties |
|---|---|---|
| Average Purchase Price (Lisbon) | ~€5,922/m² (2025) | ~€5,922/m² (2025) |
| Average Purchase Price (Porto) | ~€3,628/m² (2025) | ~€3,628/m² (2025) |
| Gross Rental Yield | Approximately 5% | Approximately 5% |
| Net Yield (Prime Areas) | ~2% | ~2% |
| Annual Price Growth | +4.3% (2024-2025, overall) | +4.3% (2024-2025, overall) |
| Potential Rents | High rents, especially for luxury | High rents, especially for luxury |
| Vacancy Rate | Low in major cities | Low in major cities |
| Maintenance Costs | Lower, less work needed | Higher, frequent need for energy renovations |
| Tax Advantages | Reduced VAT on new purchase, possible IMT exemption for first purchase, ten-year warranties | No specific tax advantage, renovation costs deductible in some cases |
| Asset Appreciation | High capital gains potential, recent energy standards, appeal to expats | Appreciation dependent on location and condition, renovation cost needed for energy upgrade |
Specific Tax Advantages
- New Properties:
- Possible reduced VAT on certain programs.
- Partial or total exemption from IMT (municipal transfer tax) for a first purchase under conditions.
- Ten-year warranty on construction.
- Old Properties:
- No direct tax advantage on purchase.
- Possibility to deduct certain renovation costs in the context of renting out.
- For certain listed properties (heritage), subsidies or renovation aid.
Concrete Examples of Cities/Regions and Profitability Differences
- Lisbon:
- Very high purchase prices, gross yield around 5% (net: 2% in central neighborhoods).
- High rental demand, especially for well-located new builds or high-end renovated properties.
- Limitations on short-term rentals, pushing towards long-term rentals.
- Porto:
- More affordable purchase prices than Lisbon, similar yield (5% gross).
- Dynamic rental market, especially in the city center and near universities.
- Algarve (Faro, Lagos, Albufeira):
- High seasonal demand, attractive yields on high-end new builds, but volatility outside the season.
- Old: need for energy renovation to maintain profitability.
- Secondary Cities (Braga, Coimbra):
- Moderate purchase prices (€2,000 to €2,500/m²).
- Potentially higher gross yields than Lisbon/Porto, but slower asset appreciation.
Market Trends and Impact on Profitability
- Continuous price increase (+4.3% year-over-year), driven by foreign demand, tourism, and the return of expats.
- Annual rent revaluation around 3.26%.
- Strengthening of energy standards: new builds are advantaged, old properties require renovation work to remain competitive.
- Restrictions on short-term rentals in Lisbon, favoring long-term rentals.
- Low vacancy rate in major urban areas, but watch out for market saturation in certain high-end segments.
Summary of Key Points for Profitability
New builds offer reduced maintenance costs, better rental appeal thanks to modern standards, and specific tax advantages, but require a higher initial investment.
Old properties sometimes allow for a lower purchase price per m², but involve renovation costs, especially to meet new energy standards, and benefit less from direct tax advantages.
Profitability differences are marked in Lisbon, Porto, and the Algarve, where rental pressure and asset appreciation are strongest.
Key Takeaway:
New real estate appeals for its ease of management and tax advantages, while old real estate requires active management and renovations but can offer medium-term appreciation opportunities, depending on the location and strategy adopted.
Good to Know:
Calculating profitability between new and old real estate in Portugal requires examining several key indicators. New properties, often more expensive to purchase, benefit from tax advantages such as exemption from the stamp duty tax for primary residences, reducing acquisition costs. In contrast, old properties generally offer lower initial purchase prices but can incur higher maintenance costs. Rents are often higher for new builds due to superior energy standards, which also reduces vacancy rates. For example, in Lisbon, new properties can offer superior returns thanks to high rental demand, whereas in Porto, rising prices for old properties still offer opportunities for asset appreciation. Current market trends, marked by growing demand and limited stock, also influence profitability, making new builds particularly attractive for investors seeking better long-term returns.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
