Renovate or Rebuild? What to Consider Before Buying an Older Property in Lagos

Buying an older property in Lagos can be appealing, but deciding between renovation and rebuilding isn’t always straightforward. From construction costs to permits and investment potential, each path has its pros and cons. This article helps you make an informed choice before committing.

By LiveAlgarve on 4th July 2025 - 3-4 m. reading time 

Older properties in Lagos often attract buyers for their location and pricing. But before committing, it’s important to understand what’s involved. Renovation and rebuilds are two very different paths, each with its own cost structure, legal requirements and potential risks. With increasing scrutiny on construction standards and urban planning in the Algarve, making the right call depends on how well you understand local regulations and market expectations.

Understanding the Costs

Renovation Costs: Renovating a property in Portugal can vary widely based on the scope of work. Estimates suggest renovation costs range from €500 to €1,200 per square meter, depending on complexity and specifications . It's essential to obtain multiple estimates and ensure quality workmanship. (Source: Portugal Investment Properties)

Rebuilding Costs: Constructing a new home typically starts at €1,700 to €3,500(+) per square meter for builds meeting European standards. While potentially more expensive upfront, rebuilding offers the advantage of modern design and materials, potentially reducing long-term maintenance costs.

Navigating Permissions and Regulations

Renovation Permits: In Portugal, minor renovations may only require a 'Comunicação Prévia' (prior notification), but significant structural changes necessitate a construction permit ('Licença de Obras') from the local council. Engaging a licensed architect is often a prerequisite for obtaining the necessary approvals.

Rebuilding Considerations: Rebuilding, especially in historic areas, involves stricter regulations. Properties classified as heritage sites may have limitations on alterations to preserve their historical integrity. Additionally, recent legislative changes, such as Decree-Law no. 10/2024, aim to simplify urban and construction licensing, potentially impacting rebuilding projects. MdME | Forward Thinking Law.

Assessing Property Value and Investment Potential

Renovation Benefits: Renovating an older property can enhance its value, especially if it retains unique architectural features. Renovated homes often appeal to buyers seeking character and charm, potentially yielding a higher return on investment.

Rebuilding Advantages: Constructing a new home allows for modern amenities, energy efficiency, and customisation to current market preferences. This approach may attract a broader range of buyers or tenants, depending on the property's location and design.

Assessing Property Value and Investment Potential

Renovation Benefits: Renovating an older property can enhance its value, especially if it retains unique architectural features. Renovated homes often appeal to buyers seeking character and charm, potentially yielding a higher return on investment.

Rebuilding Advantages: Constructing a new home allows for modern amenities, energy efficiency, and customisation to current market preferences. This approach may attract a broader range of buyers or tenants, depending on the property's location and design.

Financing Options

Portuguese banks offer various financing solutions for both renovation and construction projects. Renovation loans may cover both the purchase and refurbishment costs, while construction loans are tailored for new builds. It's advisable to consult with financial institutions to determine the best financing strategy for your project.

Conclusion

If you’re deciding whether to renovate or rebuild an older property in Lagos, it depends on multiple factors: budget, regulatory considerations, investment goals (amongst others). Understanding local regulations and consulting with professionals are your crucial steps. 

Considering a property investment in Lagos? Contact Live Algarve for expert guidance tailored to your needs.