Portugal has emerged as a European hot spot for real estate investors in recent years. Its blend of sun-kissed beaches, rich culture, stable economy, and favorable tax policies elevated Portugal as one of the most desirable markets in Europe.
Portugal offers many investment opportunities, but real estate investors often choose between the growing northern city of Porto and the metropolitan capital city to the south, Lisbon. Porto has vintage charm with its port wine legacy, while Lisbon is a sprawling big city with historic districts and beautiful seaside views.
Portuguese businessman and entrepreneur Luis Horta e Costa has been active in the Portuguese real estate market for decades. While the co-founder of Square View operates his business out of Lisbon, he believes both Lisbon and Porto have genuine appeal for the right investors.
Luis Horta e Costa shares his insights on investing in Porto versus Lisbon in this guide. Several real estate experts and foreign investors also share their insights for aspiring investors and property owners.
Investing in Porto Versus Lisbon
History and Lifestyle
Porto is best known for its significant role in the wine trade. This port city has cobblestone streets and a vintage appeal that attracts tourists, residents, and investors. Porto is much smaller than Lisbon—in fact, its population of 214,000 is half of Lisbon’s population of 504,000. Its smaller size gives Porto a more laid-back culture that balances the best of traditional and modern Portugal.
As the capital city of Portugal, Lisbon is a bustling city by the ocean that hosts millions of visitors every year. Lisbon has a vibrant culture as a truly international city with top-tier amenities. It’s more populated and lively than Porto, but the city’s energy is one of many reasons why investors, tourists, and new residents are flocking to the capital city. “I love Lisbon because there’s a lot of beautiful places to visit,” Luis Horta e Costa says.
Tourism and Foreign Investment
While both cities are tourist hotspots, Lisbon takes a slight lead with major attractions like Belem Tower and Jerónimos Monastery. Porto isn’t far behind Lisbon, though, thanks to its famous Dom Luis I Bridge and Livraria Lello.
However, when it comes to foreign investments, the north of Portugal is more popular. Jose Cardoso Botelho of Vanguard Properties says, “About 65% of our clients are foreigners or Portuguese nationals living abroad. The vast majority of these sales are for people who wish to live and work in Portugal.”
Many foreign investors and real estate buyers say they felt drawn to northern Portugal for its affordable living, beautiful hills, and attractions.
John and Tara Newby are two foreigners who moved from the UK to northern Portugal. In an interview with Business Insider, John says, “Prices over the last few years in Bristol had been going quite crazy, so we had a bunch of equity in that property that’s enough to buy the farm here.”
Tara adds, “The first idea was a lifestyle business or a holiday home. We also thought about moving permanently, and when we came back out here, we fell in love with it more and more the longer we spent here.”
Also read: 8 Ways to Get Started in Real Estate Investing.
Pricing Trends
With its thriving wine industry and tech startups, Porto offers diverse employment opportunities that attract many growing families to the city. Meanwhile, Lisbon, as the capital, has a broader economic base, including tech, tourism, and administration.
With average property prices that are slightly more affordable than Lisbon, Porto is gaining momentum among international investors. Key neighborhoods like Ribeira and Foz are particularly noteworthy for their investment potential. While Porto offers competitive rental yields, its real strength lies in the potential for capital appreciation, given the city’s increasing popularity and lower property prices.
Also read: What You Need to Know About Real Estate Investing.
Despite higher real estate prices, Lisbon’s districts like Alfama, Baixa, and Chiado remain in high demand due to their historic charm and central location. Though property prices are higher, Lisbon’s rental market is robust, especially in its more central areas. The ROI here is more consistent for real estate investors, but might offer slightly lower yields than Porto because of its higher prices.
Ultimately, an investor’s return on investment depends on finding the right property and charging the right price. “You have to understand what the market wants,” Luis Horta e Costa explains.
Investing in Portugal’s Future
Portuguese real estate is continuing to grow at a rapid pace, thanks to both domestic and foreign investments. When it comes choosing between investing in Porto versus Lisbon, it comes down to the investor’s preferences. Lisbon’s prices are higher but offer more opportunities. Porto has lower prices but fewer people, although its low pricing could allow investors to see price appreciation over time.
Portuguese real estate experts know the country’s thriving market will only continue to grow regardless of where investors purchase property. This is due in large part to Portugal’s beautiful culture. “What I think is more attractive in Portugal is the people, the [cost of living], the safety. And the weather, for sure,” Luis Horta e Costa says.
“We were looking at a lifestyle that would mean we could get out of the UK, spend more time outside, have a better climate, and space for our children to grow a bit more wild and free,” Tara Newby adds.
