Updated: May 21, 2024

 

Porto, the second largest city in Northern Portugal, has quickly become one of the most sought-after cities for expats in Europe, experiencing a real estate boom in recent years. Considered a very safe city with charming terracotta roofs, winding streets, a historic neighborhood, and trendy bars and restaurants lining the Douro River, it’s easy to see why.

In this article, Real Estate Investment Porto: A Comprehensive Guide, we will offer insightful real estate expertise that will help you navigate the process of buying property in Porto, discuss the investment potential of the Porto property market, and explore some of the most desirable locations to consider for property investment in Porto, Portugal.

Why Porto is an Excellent Investment Opportunity

Porto-Cost-Of-Living

The enigmatic city of Porto attracts expats from all walks of life. Young professionals in search of affordable modern apartments will have many options situated in a buzzing atmosphere with a lively cultural scene.  Porto’s property market also offers spacious properties for families to enjoy, such as those with ocean views at Foz do Douro, while retirees will be able to find a delightful part of the country to spend their golden years in peace.

This is without mentioning the increased popularity of the city amongst tourists, and the fact that Porto is fast becoming a much-loved hub for digital nomads, plus industrial and tech sectors are continuing to set up shop in the city.

The cost of living in Porto is also more affordable than it is in the Portuguese capital of Lisbon and the city has an extensive public transportation network, making it easy to get around the city. Plus, the one international airport, Francisco Sá Carneiro Airport near Porto makes travel easy for international travelers.

An Overview of Porto’s Real Estate Market

The city boasts a wide array of property types, attracting all types of expats. Property prices in Portugal have been increasing gradually since 2013, registering a steeper rise in the past five years or so. This is due to increased interest in foreign investment in Porto real estate. In the sections below, we will share the latest data on the price of purchasing property in Porto and current rental yields.

Porto real estate prices

The property market in Porto, Portugal, has really come into its own over the past few years, rivaling Lisbon and many other European cities as one of the best places for foreign investment and to live in. In the table below, you will find the latest market data on property values per square meter in the areas of Porto, Portugal.

Porto Districts

Price Per Square Meter

Aldoar, Foz do Douro e Nevogilde

€5,678

Bonfim

€4,404

Campanhã

€3,520

Centro Histórico do Porto

€4,665

Lordelo do Ouro e Massarelos

€4,651

Paranhos

€3,531

Ramalde

€3,529

Porto real estate rental yields

Just as the average price for property per square meter has grown in recent years, Porto City’s rental yields have grown from strength to strength as well. Positive rental yields, according to data from the third trimester of 2023, indicate that foreign investment in property in Porto municipality and the city center can offer a significantly positive Return on Investment (ROI). In the table below, you will find the latest market data on property habitation yields in Porto, Portugal.

Porto Neighborhoods

Rental Yield Percentage

Gondomar

6.1

Maia

5.3

Matosinhos

6.1

Porto

5.6

Valongo

5.6

Vila Nova de Gaia

5.9

Investment Potential of Property in Porto

Rental yields in the Porto Metropolitan Area are positive and based on data from the Portugal National Institute of Statistics that displays an annual increase in the median house rental value in Porto the outlook on rental yields growing past the 6 percent standing is hopeful. Foreign investment can prove to be significantly profitable for Porto real estate purchased for long-term rentals, as a holiday home, or as a second or third home for your family.

Before you buy Porto property, it is important to consider the More Housing Package (officially known as Law No.56/2023), which came into effect in October 2023, as well as the changes and limitations it places on foreign investment in property for the purpose of earning rental income. If you buy homes for sale in Porto, Portugal, with the intention of renting it out short-term, you will need to secure an Alojamento Local (AL) license.

The effects of the More Housing Package means that the issuing of new AL (Alojamento Local) licenses for apartments was suspended across Portugal, apart from interior areas of the mainland and the autonomous islands of Madeira and the Azores. This change makes it difficult for property buyers looking to rent out their property for short-stay rentals or registering the property on platforms such as Airbnb.

Additionally, real estate investors in Portugal who apply for the Alojamento Local license have been restricted to drawing up one temporary lease agreement for tourist purposes annually in major urban centers of Portugal like Porto.

Short- and long-term rentals in Porto

With the significant increase in tourists visiting Porto, short-term rentals have become an attractive option for investors seeking high yields. Although managing short-term rentals demands a more hands-on approach, the recent changes with the More Housing Package (officially known as Law No.56/2023) will make it more difficult to maximize your returns.

Given its popularity with digital nomads, young professionals, and students, and the increasing demand for housing, Porto is an excellent city to invest in property and rent it out in the long-term. A plus of long-term rentals is that there is less tenant turnover, leading to less hands-on management required and reduced risks.

According to Numbeo, in 2024, rent prices in Porto, Portugal, currently stand at €943.54 per month for a one-bedroom apartment in the city center, while the rent prices for a three-bedroom apartment outside the city center, possibly a neighboring coastal town start at €1,187.88 per month. Compared with other Western European cities, rent prices in Porto remain quite reasonable.

Types of Investment Opportunities in Porto

Investing in Portugal real estate can be a smart move. One of the key advantages of investing in Porto property is the wide range of property types available to buyers, coupled with the diversity of neighborhoods, making it suitable for any buyer’s needs.

In Porto, you can explore various options for both residential real estate and commercial properties. Below, we’ll provide you with more information on some of the most common types of each. We’ll also share information about tourist real estate and other projects that you could consider investing in.

Residential real estate

As we mentioned, you’ll find many different residential property types in Porto, including spacious modern apartments with scenic views of the Douro River and luxurious waterfront properties.

Apartments

Whether you desire a contemporary apartment with a pool and riverside views or a smaller property in a burgeoning area, you’ll find several appealing options for apartments for sale in Porto, Portugal.

Waterfront properties

You’ll discover a nice selection of Porto properties with waterfront views, both in the city itself, where you can enjoy stunning views of the Douro River and the wine houses on the opposite side of the river, or spacious mansions and villas on the coast, such as at Foz do Douro, where you will have sweeping views of the Atlantic Ocean.

Luxury properties

Porto luxury real estate options cater to discerning buyers with exquisite waterfront properties, luxury condos, and townhouse apartments boasting stunning city views. Many of these properties come with private pools, gyms, and other luxurious features.

Commercial properties

Commercial properties in Porto also offer attractive investment prospects. Some popular options include:

Offices

Investing in offices can provide stable rental income and potential long-term capital appreciation.

Retail spaces

Opportunities to invest in retail spaces offer steady income from established businesses and potential growth in prime locations.

Warehouses

Warehouses offer lucrative investment opportunities with lower construction costs. Certain areas in Porto, like Campanhã and Bonfim, witness warehouse renovations into trendy craft beer bars and art galleries.

Touristic real estate

Tourism real estate holds great promise due to the thriving Porto tourism sector. Investors can explore options such as hotel projects and serviced apartments to tap into the flourishing tourism market in the city.

Hotel projects and serviced apartments

Given the continued influx of tourists to Porto, you’ll find that investing in hotel projects can be a very profitable business. Serviced apartments, targeted towards students or long-stay tourists, are also a potential option.

Vacation rentals and short-term lettings

As we’ve mentioned before, short-term rentals and vacation rentals can prove to be lucrative, particularly given the popularity of Porto throughout the year. If you can, find a property manager in Portugal who will be able to assist with the legalities of holiday rentals and help take care of the property on your behalf.

Other types of investment and infrastructure projects

Beyond the traditional property investments, there are other exciting projects emerging in Porto. The city’s appeal to digital nomads and tech companies has created investment opportunities in co-working and co-living spaces, a trend expected to continue growing. The city has some of the best co-working spaces in the country, and this trend looks set to continue in the future. Additionally, developers and investors are increasingly interested in green real estate opportunities, indicating a potentially thriving market segment in the years to come.

Check out our complete guide about making a Portugal real estate investment

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Prime Locations for Property Investment in Porto

One of the most appealing aspects of Porto is the diversity of the city and the surrounding area. Breathe in the fresh, clean ocean air at Foz do Douro, meander down the cobbled streets in the historic center, or enjoy an ice-cold beer by the river. If you’re undecided on where to buy Porto, Portugal real estate, this section will delve into the key parts of the city.

Porto Neighborhoods map real estate prices

 

GC-ICON-95Aldoar, Foz do Douro and Nevogilde

Aldoar offers a peaceful residential environment with easy access to modern amenities and green spaces. Its proximity to the coastline and beaches makes it an attractive spot for property investment. The area is well-connected to the city center, making it a convenient choice for families and professionals.

If you want the perfect mix of city and ocean life, then Foz do Douro is for you. Foz do Douro boasts a privileged location with stunning views of the Atlantic Ocean. This upscale neighborhood is known for its beautiful promenade, charming cafes, and luxury properties. Its exclusive ambiance attracts affluent buyers and investors seeking a sophisticated lifestyle by the sea.

Meanwhile, Nevogilde offers a mix of old-world charm and contemporary living. The neighborhood’s architecture is a blend of traditional Portuguese houses and modern residences. With excellent schools, parks, and cultural attractions nearby, it’s an excellent choice for families looking for a high-quality living experience.

GC-ICON-95Centro Histórico do Porto

If you’ve ever been to Porto, you’ve no doubt been captivated by the cobbled streets in the center of the city. As a UNESCO World Heritage site, the historic center of Porto is rich in culture, history, and charm. Buying property here, such as in the city’s downtown district (Baixa) area or Bonfim, offers a unique opportunity to own a piece of the city’s heritage, plus the area’s popularity with tourists ensures a thriving rental market and potential for high returns on investment. From boutique shops to trendy bars, you’ll always find something to discover tucked away in the center of the city.

GC-ICON-95Lordelo do Ouro and Massarelos

Lordelo do Ouro is another great place for families, with a peaceful ambiance and plenty of green spaces. You are not far from either the center of Porto or the ocean, providing you with the best of both worlds. The area’s proximity to the Douro River and its elegant residential options makes it an appealing location for many expats from all walks of life.

GC-ICON-95Bonfim

Bonfim is an up-and-coming area with a vibrant atmosphere. Its central location and good transport links make it convenient for daily commuting. Investors can find affordable property options here, while residents benefit from the neighborhood’s diverse community, local markets, and lively street life.

GC-ICON-95Campanhã

Located in the east of the city, Campanhã offers a mix of traditional and modern living, and we have already mentioned how Campanhã is an excellent option for investors looking to secure a nice return on their investment. With its recent revitalization, the area presents attractive investment opportunities at more affordable prices compared to central Porto. As an emerging neighborhood, Campanhã has the potential for substantial property value appreciation in the future.

GC-ICON-95Ramalde

Ramalde is a residential haven, popular among families due to its tranquil environment and excellent infrastructure. The neighborhood’s numerous parks and leisure facilities add to its appeal. For property investors, you should be able to get a nice return on your investment here, and property prices are the most affordable in Porto City.

GC-ICON-95Vila Nova de Gaia

Vila Nova de Gaia is located just across the river from Porto and renowned for producing excellent port wine and its captivating charm. There is a saying amongst locals in Porto that the only good thing about Vila Nova de Gaia is its breathtaking views of Porto. However, this does Vila Nova de Gaia a great disservice, as it has great restaurants and amenities, and properties are much more affordable here than in Porto City. The area is renowned for its world-famous Port wine cellars and proximity to stunning beaches. Buying property here provides a mix of city living and a relaxed coastal lifestyle, and if you want to spend the day in a small seaside town, you have many options just a short drive away.

GC-ICON-95Matosinhos

Matosinhos is a Portuguese city in Northern Portugal, located to the northwest of Porto. This charming city is renowned for its blend of new and old architecture and its strong links to the ocean through its fishing community. You’ll find that the city has lovely beaches to explore and excellent seafood, and has become a top location for lifestyle buyers. In the next few years, expect Matosinhos Portugal real estate to increase in popularity as more and more expats take note of this stunning part of the country, making it a city with high investment potential in the future.

How to Buy a Property in Portugal 

If you are looking to buy your dream property in Portugal, there are certain aspects that you should consider.

Risks and challenges to consider

Having a firm grasp on the dynamics of the Portuguese real estate market poses an early challenge for investors. Conducting in-depth research and analysis is vital to comprehend aspects like property prices, demand-supply trends, local regulations, and market shifts. Working on your investment journey with experts in the property industry can be beneficial. Their expertise will prove to be an invaluable asset in minimizing risks or losses thanks to their valuable insights and guidance.

Understanding the market

One of the hurdles faced when venturing into the Portuguese real estate market is making sure you know the ins-and-outs of the market. It is vital to conduct extensive research and analysis, considering factors such as house prices, demand-supply fluctuations, local regulations, and market trends. An experienced real estate agent in Porto, like a local buyer’s agent, can provide invaluable insights and discuss your options with you.

Market volatility and economic influences

Investing in any real estate market involves considering market volatility and economic influences. When it comes to Portuguese real estate, make sure you understand the return on investment potential alongside macroeconomic factors, such as inflation rates.

Due diligence

Emphasizing the importance of due diligence cannot be overstated. This involves meticulous scrutiny of the property’s legal aspects, such as title deeds, permits, licenses, and any potential encumbrances. Engaging the services of a specialized real estate lawyer can help you navigate through the legal complexities and identify any risks or issues before property acquisition. Additionally, verifying the credibility and financial stability of the seller is paramount to avoid possible fraudulent transactions or disputes.

Goldcrest: Who We Are and How We Can Help You

Goldcrest is a buyer’s agent that provides expert, impartial advice on real estate investments and how to buy property in Portugal. From scouting out the perfect property through to property acquisition, we have you covered throughout the process and work solely on your behalf.

Investing in Porto can provide you with more affordable properties than you would find in Lisbon. Plus, attractive yields and its popularity amongst buyers continue to increase, making it an excellent location for real estate investments. Compared to other Western European cities, Porto is still considered affordable, although prices have been increasing rapidly in recent years.

Many expats who live in Porto stay in the central districts of the city, although those who prefer to be by the beach live in areas such as Foz do Douro. There are many areas in the city where you can secure your dream property. Foz do Douro is popular with families, given the spacious properties that have sweeping views of the Atlantic Ocean, and you’ll also find all the amenities you need on your doorstep. Vila Nova de Gaia is another excellent option for families. If you are looking to live in a quiet seaside town, you have many options close to Gaia.

The Porto property market offers an incredible range of real estate properties that cater to diverse investor preferences. These include townhouses, apartments, mansions, villas, and houses for sale in Porto, Portugal. The diversity of real estate options makes it one of the most desirable European cities to invest in right now.

 

The city’s real estate landscape provides a wide range of investment options. Two that come to mind are Bonfim and Campanhã, two up-and-coming parts of the city offering high returns on investment, while the historic center is also a top location to consider.

The buying process in Porto can be broken down into the following steps: 

  • Step 1: Decide whether you’d like to take out a mortgage to finance your property.
  • Step 2: Find the perfect Portugal property
  • Step 3: Negotiation
  • Step 4: Promissory Contract (CPCV)

Step 5:  Sign the Escritura (Final Deed)

When investing in real estate in Porto, it’s important to consider legal aspects such as property ownership regulations, tax obligations, and hiring a reputable lawyer for guidance.

Risks and challenges in the Porto real estate market include market fluctuations, doing your due diligence, and the need for thorough market research before investing. You should also ensure that you understand your tax obligations when buying property in Porto.

The resale market for properties in Porto is generally driven by ever-increasing demand and tourism and a strong rental market for both long- and short term rentals, offering good potential for a return on investment.

You will need to be aware of property taxes to pay at the time of purchase and annually. Taxes during the process include Property Purchase Tax (IMT) and Stamp Duty, while taxes that you will be required to pay on an annual basis include Municipal Property Tax (IMI). Our guide, Property Taxes in Portugal 2024: An Overview, offers more helpful information about navigating taxes in Portugal.

As with the property market in any country, Porto’s real estate market is influenced by economic fluctuations, but its resilience and consistent demand make it an attractive investment option in the long term.

Yes, sustainable and green real estate investment opportunities are becoming more and more common in Porto amongst buyers and developers, with a growing focus on eco-friendly developments and energy-efficient properties.

Buying real estate in Porto, Portugal, can be a lucrative investment in the long run, given the positive rental income growth in the Porto Metropolitan Area, which currently stands at strong 6 percent. Due to increased foreign interest in the vibrant city attracting digital nomads, young professionals, and students, Porto is also an excellent city to invest in property for long term rentals.

The Porto real estate market is experiencing growth with increased demand for luxury properties, investment in long and short-term rentals, and revitalization of historic buildings. Sustainable and energy-efficient developments are also trending. Note the restrictions to obtaining new Alojamento Local (AL) licenses for short-term rentals following the Mais Habiticão legislation.

The property purchasing process in Porto involves choosing a property, making an offer, signing a promissory contract, conducting due diligence, and finalizing the transaction with a public deed at a notary. Working with a buyer’s agent will ensure a smooth property buying process, helping you navigate an unfamiliar buying process and local customs.

There are no restrictions on foreigners buying property in Portugal. However, they must obtain a Portuguese tax number (NIF), and it is recommended to open a local bank account. Foreign buyers will also need to comply with property and residency laws, and it’s highly recommended to seek legal representation.

Investors in Porto can choose from apartments, spacious mansions, houses, villas, commercial properties, and historical buildings, with options ranging from modern developments to renovated traditional homes.

Average property prices in Porto vary, with the average price for properties in the historic center being more expensive, standing at €4,665 per square meter in 2023. Neighborhoods like Campanhã and Paranhos offer more affordable options at €3,520 and €3,531, respectively. Note that this is the average asking price and the sales price can be significantly lower than this.

Rental yields in Porto can vary depending on the property type and location. The average rental yield for the Porto Metropolitan Area is 6 percent.

You should be aware of the property taxes you’ll need to pay both at the time of purchase and annually. At the time of purchase, you’ll encounter taxes such as Property Purchase Tax (IMT) and Stamp Duty. Annually, you will be responsible for paying the Municipal Property Tax (IMI).

Foreign investors in Porto can access local mortgage options with Portuguese banks, with more than 15 banks offering financing options for foreigners, with fixed and variable rate mortgages available.

There are no major restrictions on foreign property ownership in Porto, allowing international investors to freely purchase real estate.

Investing in real estate no longer qualifies for the Portugal Golden Visa. If you are interested in this residency by investment program, Portugal Golden Visa investment funds are an attractive option to foreign investors.

Future developments in Porto’s real estate market include continued urban regeneration projects, increased foreign investment, and growth in sustainable and smart building initiatives. Speaking with a real estate professional, such as a buyer’s agent, will provide key insights into investment options in Porto.

 

Risks include market volatility, potential regulatory changes, property market saturation in tourist areas, and economic fluctuations impacting property values and rental income.

Conduct due diligence by verifying property titles, conducting structural inspections, understanding zoning laws, assessing rental potential, and consulting with a real estate lawyer, real estate professional, and surveyor.

Property management services in Porto include tenant screening, rent collection, maintenance, and legal compliance, offered by local real estate agencies and specialized management companies. Should you be seeking assistance with property management or leasing your property in the long term, Goldcrest can assist you.