Three Critical Mistakes in Real Estate Investment in Portugal — and How to Avoid Them
- Karolline Dutra
- Oct 27
- 3 min read
From opportunity to risk: what Portugal’s real estate market still hasn’t learned
Over the past decade, Portugal has become one of Europe’s most attractive destinations for real estate investment. The country combines political stability, growing international demand, and a rare blend of historic heritage and modern development. Yet behind this promising landscape lies a more complex reality — one that many investors underestimate when navigating the Portuguese construction and renovation process.
The initial enthusiasm is easy to understand: returns are appealing, the setting is inspiring, and the cost per square metre remains competitive compared to other European markets. But that enthusiasm often blurs caution, leading to a series of predictable — and costly — mistakes.
From Lisbon’s urban rehabilitation to rural investments in the Alentejo, certain patterns persist. Experience shows that, regardless of budget or scale, investors tend to fall into the same traps. Three, in particular, stand out.
1. How Real Estate Investment in Portugal Becomes Risky Without a Detailed Cost Plan
The first and most common mistake is beginning construction based on a rough estimate. In reality, no serious project should start without a detailed Bill of Quantities (BOQ) — a technical document that itemizes every aspect of the build, from foundations to finishes.
Without it, investors operate in a vacuum of assumptions. Costs drift, contractors interpret scopes differently, and “minor adjustments” quickly accumulate into overruns of 20%, 30%, or more. The BOQ is not merely an accounting tool; it is the foundation of financial transparency and a safeguard against ambiguity.
In more mature markets such as the UK or Germany, no investor would consider proceeding without one. In Portugal, however, projects frequently advance based on “ballpark figures.” It’s an old habit — and an expensive one.
2. Appointing a Contractor Too Early
Impatience is another classic pitfall. In an attempt to “save time,” investors often hire contractors before the architectural and engineering designs are finalized. On the surface, it feels like progress; in practice, it’s the beginning of a cost spiral.
When design decisions change — and they always do — the contractor’s scope shifts. Budgets inflate, timelines stretch, and quality control weakens. Good project management demands sequencing: design first, procurement second, execution third.
Contractors should compete on the basis of clear, measurable information, not approximations. Otherwise, the construction site becomes a testing ground for improvisation — and improvisation is never efficient.
3. Underestimating Portugal’s Licensing Maze
The third error is cultural rather than financial: neglecting the bureaucratic tempo of Portuguese licensing. Each municipality operates under its own rhythm and interpretation of regulations. Between submission and final approval, timelines can range from a few months to over a year, depending on location and complexity.
Treating licensing as a minor formality is a costly misconception.Investors who plan realistically — aligning their schedules with the local administrative process — avoid idle time and penalty costs. Delays in Portugal are rarely accidental; they are the direct result of misaligned expectations.
Building in Portugal Requires Method, Not Urgency
The Portuguese real estate market continues to reward those who approach it with patience and structure. Success lies not only in choosing the right property, but in managing the process with technical precision and respect for local context.
Understanding the BOQ, completing the design before tendering, and respecting the licensing cycle are not bureaucratic burdens — they are signs of financial and cultural intelligence. In a country where architecture and identity are inseparable, building with rigor is the truest expression of value.
Written by Karolline Dutra
Civil e Environmental Engineer | Interior Designer
Building Conservation and Rehabilitation Specialist
Cost Consultant & Project Manager
Founder & CEO at Guedu Atelier
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