Updated: May 19, 2023
Portuguese urban regeneration areas are significant investment opportunities that can provide very beneficial financial rewards. Real estate rehab is a central part of the Portugal Golden Visa scheme, providing one of the most cost-effective routes to residency. At Goldcrest, we are ready to help you discover this business opportunity and make the best investment for you in the Portuguese real estate industry.
Changes to the Portugal Golden Visa scheme came into effect on 1 January 2022, which prevented investors from investing in high-density urban areas and prompted greater interest in low-density areas. However, the Golden Visa Program is set to come to an end. If you are interested in this route to Portuguese citizenship, it is essential that you begin your application as soon as possible.
You can read more in our article: Portugal Golden Visa: Your Ultimate Guide 2023.
Each city has its underutilized land, and those in Portugal are no different. If you are looking to invest in Portugal, taking on rehab projects and making these areas attractive to live in can prove to be extremely favorable investments. This is because the buildings in these areas are purchased relatively cheaply, redone, and then ready to be rented out, providing reliable rental income and high returns on investment. It is about finding the best urban regeneration investment opportunities for you.
In this article, we’ll highlight some of the most attractive urban regeneration areas for investors, focusing on the cities of Lisbon and Porto, where many rehab properties and Portuguese urban regeneration areas are located. We will also highlight some areas elsewhere in the country that are viable options for real estate rehab. If you would like more information on the subject, you can schedule a meeting with our team of real estate consultants.
What counts as a Portuguese Urban Regeneration Area?
An urban regeneration area, also known as an “urban rehabilitation” area by the state, is defined as an area that has degradation. It goes without saying that these areas may not be considered the most attractive investment option for foreign investors, which limits their appeal. However, these areas have the potential for good returns on investment and are considered one of the more affordable options under the Golden Visa scheme.
When it comes to defining what is meant by a renovation project, the following requirements must be met:
- The building must be more than 30 years old or in an area of urban redevelopment, according to the local city hall.
- The property needs to have been officially set up for renovation.
The Golden Visa
Under the Golden Visa Program, the following routes are available to real estate investors, whereby only urban areas in interior parts of Portugal will qualify:
- Purchase residential real estate in a designated interior area of Portugal that is worth at least €500,000 (or €350,000 if investing in a rehab project). If the residential property is located in a designated “low-density” area, then a 20 percent discount will apply.
- Purchase commercial real estate anywhere in the country that is worth at least €500,000 (or €350,000 if investing in a rehabilitation project). If the commercial property is located in a designated “low-density” area, then a 20 percent discount will apply.
- Purchase residential and commercial real estate anywhere in the autonomous islands of Madeira and the Azores that is worth at least €500,000 (or €350,000 if investing in a rehabilitation project). The entire islands of Madeira and the Azores are classified as high-density, so a discount is not applicable when investing in the islands.
To learn more about the Golden Visa Program, visit our article: Understanding the Portugal Golden Visa Changes.
Portuguese Urban Regeneration Areas
Portugal’s urban development has been largely driven by foreign investments over the past few years. Whether you are looking for a historic city apartment in Porto to renovate or looking into up-and-coming investment opportunities, such as Marvila, there are many Portuguese urban regeneration areas that are excellent options for real estate investing.
Talking to local real estate associations will help you to better understand each neighborhood. Book a call with Goldcrest to uncover the best rehab properties to renovate in Portugal with profitable investment potential and develop a real estate investment strategy. Here, we outline some of the most desirable areas for urban regeneration investment opportunities.
Goldcrest: Who we are and what we do
Goldcrest is a local buyer’s agent situated in Portugal. We provide insightful real estate expertise and strategic advice. From sourcing to property acquisition, we help clients identify outstanding investment opportunities in some of Portugal’s finest locations.
If you’re interested in the rehab process and finding a rehab project investment property in Portugal, our team of experts can help you find the right property without the hassle or fuss. Contact us to get the ball rolling on your Portuguese property investment.
Lisbon – Marvila
Real estate in Lisbon provides some of the most sought-after properties. However, there are many areas in the city that have the potential to become a rehab project for real estate investors.
Located in the east of Lisbon, Marvila is fast becoming one of the most trendy parts of the city. Once a dilapidated area of distressed properties, Marvila is now thought of as the place to be by many. With many old warehouses converted into workspaces, art spaces, and craft breweries, this is now one of the coolest areas of Lisbon.
While Marvila is continuing to increase in popularity, now is a good time for investors looking into renovation areas in Lisbon. Demand here will likely increase over the next few years, and investing in a rehab property now, while prices are still relatively low, could be a good option for potential buyers.
Lisbon – Beato
Also, on the east side of the city, sandwiched between Alfama and Parque das Nações, Beato is one of the oldest municipalities in Lisbon. Ongoing rehabbing projects are aimed at cultivating this area of the city by providing modern residential homes while still preserving its historical roots. Therefore, for incoming real estate investors, this is an exciting opportunity.
With some work to the buildings, this could be one of the most fashionable areas of the city if Beato could retain its historic charm while providing a modern area for residents to live.
Porto real estate – The Historic Center
The historic center of Porto has also seen many reworkings and rehabbing projects in recent years, including Baixa and Massarelos. A profitable investment would be to buy distressed properties in these areas at a lower price. After this, you can make home improvements and then rent them out to meet the increasing demand. The historic center is much sought after by tourists and is considered a good location for short-stay rental investment properties.
Long-term rentals could also be a good option, as they offer more stable monthly rental income, lower tenant turnover, lower maintenance costs, and require less hands-on involvement from the landlord.
While house prices in Porto have increased, they are still more affordable than housing in Lisbon. This makes Porto real estate a nice option for investors as not only is it more affordable but also in high demand.
Check out our article: Porto Real Estate: Where to Buy Expert Guide.
Porto – Lapa
A historic part of Porto and home to the beautiful Igreja de Nossa Senhora da Lapa, Lapa is located a little to the north of the city. Urban regeneration here includes a drive for more residential areas and an urban park. In addition to this, local authorities are looking to implement better access to the metro station. There are several areas in the neighborhood that could prove to be excellent investment opportunities, particularly as the demand for housing will continue to rise in the future.
Porto – Campanhã and Bonfim
Two up-and-coming neighborhoods in the city. As the popularity of the city increases, both Campanhã and Bonfim are becoming excellent locations to the east of the city.
Campanhã is a traditional neighborhood but is becoming the fashion hub of the city. Bonfim, however, provides a vibrant mix of young creative types living alongside older residents.
Porto municipality is aiming to implement projects for coworking spaces, a business center, and art galleries here. In terms of residential real estate, demand is also growing in this part of the city. This could be a good area for many investors looking to flip houses and meet the increasing need of potential buyers.
Porto – Vila Nova de Gaia
On the other side of the Douro River to Porto, you have Vila Nova de Gaia. Renowned for its spectacular views of Porto, Vila Nova de Gaia has become a great area for potential homebuyers. Here, residential houses are close to both Porto and the sea.
Vila Nova de Gaia has many different types of properties. On the coast, you have more luxury houses. There are also many residential apartments with locals inhabiting them. Expats are also moving to Vila Nova de Gaia, as house prices are more affordable than in Porto City.
Setúbal has been labeled as the “sexy new investment opportunity in Portugal” by Idealista, with urban real estate rehab driving interest from investors. New business concepts are opening up in the city, with locals, expats, and tourists all showing increasing interest in this part of Portugal. Interest in short and long-term rentals are both increasing, providing ample opportunity for real estate investors interested in flipping houses to increase the home value.
In the past years, there has been a great increase in the acquisition of buildings for urban regeneration. This is particularly the case in the historic center. However, at present, regeneration and developments are spreading from the city center to other areas to cater to increased demand.
Setúbal has become a popular destination as it’s not far from the capital of Lisbon. Its proximity to the beautiful beaches at Sesimbra also makes it a desirable location.
The Algarve – Olhão
The Algarve is a unique area. Home to premium properties, incoming tourists, and a top-quality life, the Algarve is a much sought-after location.
When it comes to Portuguese urban regeneration areas, the municipality of Olhão is a good option when looking for Portuguese areas ideal for real estate rehab. There are increasing numbers of foreigners interested in the traditional houses in the Barreta quarter of Olhão, a very traditional neighborhood where life has not changed too greatly for many. Olhão is very different from the more tourist-driven parts of the Algarve, and investing in this city could be a very attractive option.
If one of these areas has caught your eye, or if you would simply like more information on any of them, you can schedule a call with a Goldcrest advisor, who will be able to provide you with tailored advice on which area is a viable location for you, based on your needs.
Classic Real Estate Investment Versus Urban Rehabilitation Real Estate Investment
“Classic” real estate investment for Golden Visa
“Classic” real estate investment for the Portugal Golden Visa Program refers to the original investment option provided by the scheme – the acquisition of real estate with a minimum value of €500,000. To obtain your residence permit, it does not matter the number of investment properties, where in Portugal the investment property is located, or whether it is new, old, or restored.
As per the changes that came into effect on 1 January 2022, residential real estate, whether the full €500,000 option or the real estate rehab option, must be in a designated interior area. Commercial property is not affected by this rule and can be located in any area.
You can read more in our article: Invest in Portugal: Low-Density Areas Guide.
Urban rehabilitation real estate investment for Golden Visa
In 2015, the Portuguese government amended the requirements to include an additional form of real estate investing – urban rehabilitation. This has come to be known by many terms, such as rehab properties, rehabbing houses, and house flipping.
To qualify, the investment property must be older than 30 years or located in a designated urban rehabilitation area. The property must undergo rehabilitation in accordance with municipality regulations, and the total cost of the property (purchase price and the cost of the real estate rehab) must be at least €350,000.
Important note: If the investment/rehab property is located in a designated “low-density area” within Portugal, the minimum investment amount is reduced by 20 percent, bringing it to €280,000.
Rehabilitation Real Estate Investment Requirements
The requirements of the rehab real estate investment route for Portugal’s Golden Visa include the following:
- The property must have been constructed at least 30 years ago, or the location must be an Urban Rehabilitation Area.
- The property renovation activities must be evidenced by work contracts (such as an independent contractor agreement).
- Proof of property acquisition must be submitted
- The minimum investment amount of €350,000 must include the property amount and the cost of the renovation activities.
If there is more than one investor in the rehab project (i.e., joint ownership of the investment property), the share of the Golden Visa main applicant must amount to at least €350,000. If the applicant has multiple investment properties, their costs must amount to at least €350,000 to qualify for the program.
Advantages of Portugal Golden Visa €350,000 Real Estate Rehabilitation Option
This option to investment in a rehab property is beneficial to both Portugal and the investor. For the country, investment in rundown real estate helps to improve the property conditions in Portugal’s cities. Local real estate associations also benefit by being able to sell properties that most investors may not otherwise be interested in.
For investors, the advantages of this route include:
- The right to live and work in Portugal
- Visa-free travel within the Schengen Zone
- The ability to include family members in the application
- The ability to apply for Portuguese citizenship after five years of maintaining the investment
The biggest advantage for many is the fact that this investment option requires a much lower financial commitment compared to the other Golden Visa investment routes. So, if you’re interested in investing in Portuguese real estate rehab, make sure to contact us today and start your application before the Golden Visa officially comes to an end.
Frequently Asked Questions about Portuguese Urban Regeneration Areas
1. Where are the best Portuguese urban regeneration areas?
There are many Portuguese urban regeneration areas in the cities and plenty of urban development real estate investing. In Portugal, the outskirts of the city are often good investment opportunities. Lapa, Bonfim, and Campanhã are such areas in Porto, as are Marvila and Beato in Lisbon. The historic center of Porto is also a good investment option. Outside these two biggest cities, Setúbal is also a very viable choice.
2. How will the Portugal Golden Visa changes impact urban regeneration in Portugal?
The Golden Visa changes came into effect on 1 January 2022, meaning that Lisbon, Porto, and many other areas no longer qualify for the scheme. However, there are many beautiful interior areas that are excellent options for real estate investing. As the Golden Visa Program is coming to an end, it is essential to begin your application as soon as possible.
3. What are the benefits of investing in portuguese urban regeneration areas?
To invest in Portugal is a promising option at the moment, with high rates of return on your investment in many areas. With the increased demand for housing, revamping a distressed property for potential buyers and flipping houses for short- and long-term rentals are all profitable investment options to increase cash flow and earn passive income.
4. What is ARU in Portugal?
Municipalities in Portugal have classified ARU (Áreas de Reabilitação Urbana) domains as areas designated for urban regeneration. The property must be older than 30 years old or be located in ARU. As the name suggests, these areas are opened to “urban rehabilitation” by the State.
5. Is Setúbal eligible for a Golden visa?
Real estate purchases in Lisbon, Porto, the Algarve, Setúbal, and other well-known coastal destinations no longer qualify you for a Portuguese Golden Visa as of January 2022. You are only able to invest in residential real estate in designated interior areas of the country. However, these areas still qualify for commercial real estate investment.
6. What does rehabilitate mean in real estate?
In real estate, to rehabilitate means to improve the condition of a property from distressed or substandard to good condition. The extent of a rehabbing project may vary in degree depending on the condition of the property.
7. What does rehab cost mean in real estate?
In real estate, rehab cost refers to all the costs involved in rehabilitating a property, such as money spent on materials, specialty tools, and labor. Rehab cost, repair cost, and renovation cost are all terms that are used interchangeably.
8. What is it called when you rehab a house?
There are many different terms used to refer to a rehabbing project, such as a house flip or house flipping, rehab property, rehab project, rehab investment property, home improvements, rehab work, fixer-upper, real estate rehab, and more.
9. What does it mean to rehab a building?
Rehabbing houses means to make improvements to better the condition of the building. Rehab project details can include foundation repairs, entry door replacement, replacement light fixtures, new construction on structural elements, and even redoing the entire property and starting from scratch.