Real estate strengthens foreign investment in Portugal

25 May 2021 min de leitura

Foreign direct investment (FDI) in property purchases and equity participation in companies increased almost eight times in the first quarter of this year.

The entry into the capital of companies and real estate purchases boosted foreign direct investment (FDI) in the country at the end of 2020 and the beginning of this year, according to data from Banco de Portugal (BdP).

According to calculations by Dinheiro Vivo, based on data from the regulator, FDI in property purchases and equity participation in companies increased almost eight times in the first quarter of this year compared to the same period in 2020. This means that, only in this first quarter, foreign investors injected 1.7 billion in capital into the Portuguese economy.

According to BdP, the strong impulse of FDI is also linked to real estate. According to the central bank, cited by the publication, the external financing of the Portuguese private sector "continued to be channelled, to a large extent, through the net flow of foreign direct investment", equivalent to 1.8% of GDP (gross domestic product), and the "real estate investment component remained relevant, corresponding to 26% of the inflow of funds through foreign direct investment".

The regulator states that "investment [gross fixed capital formation] in construction increased 4.7% (7.2% in 2019)" and that "in addition to the containment measures not having imposed the suspension of works, the dynamism of construction is explained by the flow of new projects, particularly in residential real estate and major infrastructure works. "

Additionally, "national and international demand in the residential component remained sustained", and "new loans for house purchase increased and foreign direct investment in real estate maintained a high growth (8.2% compared to 10% in 2019)".

Source: Idealista