Portugal's Political Shift: Navigating Real Estate Opportunities Amid Rising Far-Right Influence

Portugal's political landscape has undergone a seismic shift, with the far-right Chega party emerging as the second-largest parliamentary force and the center-right Democratic Alliance (AD) clinging to power as a minority government. This realignment presents both opportunities and risks for investors, particularly in the real estate and immigration sectors. Here's how to position your portfolio for this new era.

Chega's Rise: A Double-Edged Sword for Real Estate

Chega's meteoric rise—from 2% of the vote in 2019 to 22.76% in May 2025—reflects voter frustration over immigration, corruption, and economic stagnation. The party's anti-immigration rhetoric could directly impact real estate markets, as foreign buyers—particularly through Portugal's Golden Visa program—have been a cornerstone of demand in coastal and urban hubs like Lisbon and Algarve. With Chega advocating stricter residency rules and welfare restrictions for newcomers, the Golden Visa program's appeal may wane.

However, Chega's focus on curbing expatriate emigration and improving domestic living conditions could stabilize demand from Portuguese households. The government's push to address Portugal's chronic housing shortage—a key voter concern—might accelerate construction projects or incentivize developers. Investors should prioritize domestic-focused real estate firms like Sonae Sierra (SSC:LS), which focuses on affordable housing, over reliance on foreign buyer-driven markets.

AD's Fragile Minority Government: Political Risk, Market Resilience

AD's Prime Minister Luís Montenegro faces a precarious balancing act. His refusal to collaborate with Chega leaves him dependent on smaller parties, risking legislative gridlock. Yet, this instability may be less damaging than feared. Portugal's economy has shown surprising resilience, with GDP growing 1.4% in Q1 2025 despite political uncertainty.

For real estate investors, this means avoiding overexposure to politically volatile sectors like immigration policy. Instead, focus on core urban areas with strong local demand or logistics infrastructure, which benefits from Portugal's strategic position in EU trade networks. Companies like Miralago (MLG:LS), active in industrial and commercial real estate, could outperform as supply chains diversify.

Immigration Policy Tightening: Diversification is Key

Chega's influence could lead to stricter immigration controls, even without formal coalition power. For example, proposals to limit welfare access for newcomers or expedite deportations may reduce demand in regions reliant on foreign labor. Investors in rental properties in Lisbon or Porto's expat-heavy neighborhoods should hedge by diversifying into rural or secondary cities, where prices are lower and local demand is more stable.

Meanwhile, the Socialist Party's decline signals an end to the era of open-border policies. The Golden Visa program—responsible for over 10,000 property purchases since 2012—may face eligibility reforms. To mitigate this risk, consider alternative asset classes, such as sustainable housing or student accommodation, which cater to domestic needs and benefit from government subsidies.

The Bigger Picture: Portugal's Strategic Value

Despite political fragmentation, Portugal remains a EU gateway with a young population and improving digital infrastructure. Even as Chega and AD clash, long-term fundamentals—including a 2.8% GDP growth forecast for 2025 and a 4.3% annual housing price appreciation trend—suggest real estate's upward trajectory remains intact.

Investment Strategy: Pragmatism Over Ideology

1. Focus on domestic demand: Back firms building affordable housing or industrial spaces.
2. Diversify geographically: Shift from Golden Visa hotspots to secondary cities like Coimbra or Braga.
3. Monitor defense and NATO ties: Chega's push for 2% NATO defense spending by 2026 could boost construction and materials sectors for military infrastructure.
4. Keep an eye on the Golden Visa: If reforms happen, pivot to local buyer-driven assets or alternative EU residency programs (e.g., Spain or Greece).

Conclusion: A New Era Requires New Rules

Portugal's political shift is a reminder that stability is no longer a given. Investors must adapt by prioritizing resilience over growth alone. While Chega's rise introduces risks, it also underscores the need for policies addressing housing shortages—a trend that could underpin real estate value for years. Act now, but act wisely: the time to diversify and prepare for Portugal's next chapter is now.