With 2016 almost at an end, real estate specialists are looking back on what they consider to be “a great year” for Portugal’s property market. In fact, they say it could even become “record-breaking” if investors are not scared away by property tax hikes proposed in the country’s new State Budget.
“There is still no definitive data for 2016, but the whole real estate sector is expecting it to be another year of great numbers,” Hugo Santos Ferreira, head of the Portuguese association of real estate promoters and investors (APPII), told online news portal Idealista last week.
He said that while investors are mainly buying residential properties, there has been an increase in the demand for commercial spaces, including offices.
Also optimistic is ERA Portugal, one of the country’s real estate giants which said last month that 2016 is shaping up to be its “best year ever” in Portugal. In the first eight months, the company’s business was up 35% on 2015.
But whether 2016 will indeed mark a new record for the property sector depends on how investors react to the bottom-line tax hikes in the 2017 State Budget.
As APPII’s Hugo Ferreira told Idealista, investors fear the “instability” that these proposed measures could create in the country’s property market.
Among controversial measures worrying investors are tax increases in the holiday rentals (Alojamento Local) sector – with owners asked to pay tax on 35% of their income, as opposed to the previous 15% – and a new rates tax on high-end properties over €600,000.
But in spite of these concerns, the silver lining in 2016’s news is that the property market in Portugal, at least for now, is continuing its recovery.