Portugal Enters Top 10 for Foreign Investment Attractiveness, EY Report Reveals
A new investment research announcement from Ernst & Young (EY) has positioned Portugal within the top 10 most attractive countries for Foreign Direct Investment (FDI). The 'Attractiveness Survey Portugal 2025', presented this Friday in Porto, provides a significant vote of confidence in the nation's economy, revealing that the number of new FDI projects surged by 21%. This analysis confirms the strengthening of 'brand Portugal' on the international stage, showcasing its growing ability to attract capital and international firms despite a climate of global economic uncertainty. The report serves as a critical piece of market intelligence for those considering deploying capital into the Portuguese market, particularly in real estate.
The investment thesis for Portugal is supported by several key findings in the EY survey. The country registered 196 new FDI projects, earning it 9th place in the European rankings. This performance is particularly noteworthy as it runs counter to a broader European trend of contraction in foreign investment. The report also highlights a positive anomaly in job creation; while much of Europe sees declining employment from FDI, Portugal is experiencing growth. This suggests a robust and dynamic economic environment capable of absorbing and leveraging new investment effectively. However, the survey also notes a decrease in expansion projects from existing investors, attributing this to the prevailing macroeconomic and political uncertainties in Europe, including the ongoing conflict in Ukraine, which tempers long-term confidence.
For real estate investors, the geographic focus of this new wave of investment is of paramount importance. While Lisbon continues to hold its position as the primary magnet for foreign capital, the report identifies a significant shift in investor interest. The Alentejo region has dramatically risen in the rankings, moving from the seventh to the fourth most attractive region for investors. The analysis attributes this to the region's compelling value proposition: a more tranquil lifestyle combined with a “lower price per square meter” than Lisbon and a more competitive labor force. The Centro region of Portugal also solidified its position, holding strong in second place. This diversification of investment demonstrates a maturing market where investors are looking beyond the capital for untapped potential.
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The expected returns from investing in emerging regions like Alentejo are implicitly tied to these market dynamics. The lower entry cost for real estate, both commercial and residential, combined with growing infrastructure and interest, projects a strong potential for capital appreciation. The investment timeline for such projects may be longer-term compared to Lisbon's fast-paced market, but the potential for higher percentage returns is a significant draw. The EY report suggests that investors are increasingly willing to explore these less-saturated markets in search of value and a different quality of life, a trend that directly fuels real estate development and price growth in these areas.
However, the report also outlines risk factors and the need for strategic mitigation. The primary risk identified is the broader European instability, which could dampen investor sentiment. Domestically, while Portugal is attractive, the report advises that the country must “strengthen its competitiveness factors” to secure and improve its top-10 ranking. For investors, this means conducting thorough due diligence on regulatory frameworks, infrastructure development plans, and local economic strategies in their target regions. The market conditions are currently favorable, but sustained attractiveness will depend on Portugal's continued commitment to creating a business-friendly environment.
This analysis of Portugal's FDI attractiveness provides a strong parallel to performance benchmarks in other European markets. While some larger economies may be seeing a contraction, Portugal's growth trajectory makes it a standout performer. Professional investment advisories will likely use this EY report to guide their clients, highlighting the data-driven evidence of Portugal's appeal. The findings underscore the importance of looking at both established hubs like Lisbon and rising stars like Alentejo when formulating a comprehensive Portuguese real estate investment strategy. Explore investment strategies and opportunities at realestate-lisbon.com.