The population of foreign nationals in Portugal has increased 40% since 2012, including some 10,000 United States citizens.

Portugal has been a magnet for expats in recent years thanks to the lure of its affordable housing, laidback lifestyle, and burgeoning community of digital nomads. Yet, the best time to make this transatlantic hop may have already passed for Americans.  

Data from the relocation agency Get Golden Visa shows a sharp year-on-year drop of 37% in the number of Americans enquiring about moving to Portugal. Interest is dwindling as Portuguese property prices are exploding. Average prices skyrocketed almost 20% last year – the most significant jump in over three decades. 

The government has also rescinded some migrant visa programs as it faces political pressure from voters over unaffordable housing. Taken together, this all spells trouble for what had been an idyllic destination for Americans looking to start over abroad.

Can Portugal maintain its magic appeal? Financial advisors weigh in on what factors make an overseas destination feasible for property investment and migration, and what could be the next big thing. 

European Charm

Although the U.S. has historically been a destination for migrants worldwide, recent years have seen an increasing number of Americans reverse that trend and exit the country for greener pastures abroad.

The U.S. government doesn't calculate how many Americans leave the states. Yet, pre-pandemic estimates reveal the total at around nine million – double the number in 1999. The annual outflow surged further still since the pandemic, according to immigration lawyers and expatriate organizations.

The trend toward emigrating abroad is driven by several factors, including the rising cost of living, burgeoning tax burden, and concerns over the country's political direction. Compared to life in the U.S., Portugal has much going for it. 

“Its affordability, relaxed way of life, and the allure of being a digital nomad hotspot have drawn many Americans seeking a change of scenery,” says Jorey Bernstein, CEO of Bernstein Investment Consultants. “Furthermore, Portugal's safety, political stability, affordable healthcare, rich history, European charm, and English proficiency have also played a role in its appeal.”

The number of Americans living in Portugal tripled between 2018 and 2022. Investing in property has been a significant enticement. While the average home price in the U.S. is now $416,000, Portugal's more affordable regions remain around two-thirds of that figure – around $280,000.

Yet, an excellent price isn't the only factor people should consider when shopping for homes in Southern Europe. 

“For clients eyeing overseas retirement or a seasonal second home, it's crucial to deeply research the local real estate dynamics, be aware of tax and residency rules, and understand property rights,” says Doug Greenberg, President at Pacific Northwest Advisory. 

Geo arbitrage remains a popular tax optimization strategy for high-income earners. With zero tax on foreign income and a reduced 20% flat tax rate for income earned in the country, “non-habitual residents” in Portugal can save big. 

“Diversifying investments across countries can offer both cultural richness and financial security,” adds Greenberg. Engaging local experts, be it real estate agents or attorneys, ensures informed decisions that comply with local norms. Furthermore, a pre-purchase visit is invaluable, providing insights into the community, amenities, and overall vibe of the potential new locale.”

Buying a house was more than a new address. Portuguese programs elevated real estate into a gateway to residency and migration, unlocking benefits of added mobility, healthcare, and others. This can be particularly helpful for getting the most value out of an optimized retirement savings plan.

“One of the attractions to Portugal was their ‘Golden Visa' program whereby one spent seven days a year in Portugal for five years and buying a house or making certain investments,” says Bryan Wisda, President of Almega Wealth Management.

 “This qualified you for Portuguese citizenship, which brings a myriad of benefits, including health care and an E.U. passport. The E.U. passport is especially valuable as it gives travel access to almost 200 countries without needing a visa. I understand this program is set to expire in 2023. This could explain why interest in Portuguese real estate by expatriates has dwindled.”

Nomads on the Move

Yet, not all are looking to settle down. Portugal and places like it have become famous for attracting “digital nomads” with the luxury to move freely around the world while working remotely. Last year, the country introduced its digital nomad visa, which gives remote workers legal rights to work while living outside their country of permanent residence.

“As the digital nomad trend persists, fueled by evolving work policies, destinations might pivot based on living costs, connectivity, and governance,” says Greenberg. “If Portugal's allure diminishes due to increasing expenses, nomads may venture towards alternatives offering a comparable quality of life more affordably.”

“While the country's essence remains attractive, rising costs may divert potential settlers to other European destinations offering similar benefits,” says Greenberg. “Millennials, especially, are exploring unique opportunities like Italy's ‘one Euro house' programs, even as they grapple with property affordability challenges in their home market. As remote work gains traction, countries with a blend of affordability, culture, and infrastructure will remain in the spotlight.”

Cross-border tax expert Derren Hayden Joseph says Spain and France are becoming favorites as affluent Americans seek more developed and better-connected European countries. Other studies show that while Portugal saw the most significant percentage increase in Americans on either side of the pandemic, Mexico, the UK, Canada, and Australia were the top destinations by total relocations in 2021.

Portugal's former allure may be fading in a shifting landscape of migration flows. The surge in property prices and the expiration of beneficial visa programs are causing would-be residents to change their plans. As potential migrants and digital nomads weigh their options, the case of Portugal shows that attracting footloose professionals is not the same as keeping them. Inevitably, future trends will emerge as countries compete to lure more remote workers to their shores.

This article was produced by Media Decision and syndicated by Wealth of Geeks.