As the second largest city in Portugal, Porto is considered the capital of the north and one of the Iberian Peninsula’s major urban areas.
Named as a World Heritage Site by UNESCO, Porto is one of the oldest European centres. Located along the Douro River estuary in northern Portugal – 2 miles from the river’s mouth on the Atlantic Ocean and 175 miles north of Lisbon – it is a city with a long and vibrant history.
Porto is often described as having a Dickensian feel and it certainly has bags of atmosphere with its old, cobbled streets and fascinating buildings. For many visitors, Porto’s most distinctive characteristic is that of ‘faded grandeur’. There are very few other European cities remaining that can do ‘faded grandeur’ at the same scale. It has impressive architecture, all with varying degrees of preservation, with a mix of Baroque, Neoclassical and splash of Belle Epoque.
The Ribeira has been Porto’s commercial area since the Roman period, when the shipping port gave the city its name. Over the next 2,000 years it grew into a major hub for shipments from across the world.
The River Douro crosses the region, entering Portugal between the ravines and mountains of the interior to flow through the entire World Heritage landscape. This is where Port and Douro wines are produced. It is from here that the wine is sent to the lodges at Vila Nova de Gaia, as the cruises touring the region make their way upriver. The 72-meter high Dom Luis I bridge is one of Porto’s most iconic, spanning the River Douro and carting traffic on two levels. It was completed in 1886, and to this day still carries traffic from the Ribeira to Vila Nova de Gaia.
The shopping heart of Porto can be found east of the centre. Rua Santa Catarina is a shop-lined, pedestrian street stretching from Praca da Batalha to Marques de Pombal. There is an impressive mix of shops, from big names to small boutiques, bakeries, cafes, and barber shops.
Porto is very popular with tourists, but is also becoming increasingly popular with developers and investors due to its low cost of living, upbeat economy, and impressive infrastructure.
Home to 42% of Portugal’s workforce, Porto and NW Portugal registered a GDP of €79.1 billion in 2021. The region accounts for 47% of Portuguese exports and has also recently become a hotspot for foreign investment. Over the last 5 years, foreign companies have invested more than 3.5 billion euros in FDI projects, generating 22,000 jobs.
Our experts say
“Porto has seen rapid house price growth with incremental increases every year since 2014. Most recently, property prices increased 8.4% in the year to January 2023 according to Idealista. That being said, prices are still almost half that of the country’s capital city, Lisbon, and we believe this presents opportunity for investors.
Almost half (42%) of Portugal’s workforce lives in Porto and NW Portugal, and with a GPD growth outpacing the EU average, many companies have decided to establish a base in the city, including Microsoft, IBM, and Google.
The city has become a hotspot for foreign direct investment and registered a record-breaking 1.1 billion euros from foreign companies in 2022. The Porto Metro Area is home to 2,250 foreign-owned companies, as well as 550+ startups and 10+ Unicorn companies.
Tourism is also growing rapidly as Porto gains recognition as an ideal city break destination. Investors are therefore landing on Porto as a prime location for investment.”
– Mike Sefton, Senior Property Consultant
How to get there
Porto is well connected by road to many major cities. It is a 3-hour drive away from Lisbon via the A1.
Porto’s main railway station is Campanhã railway station, located in the eastern part of the city and connected to the lines of Douro, Minho and the centre of Portugal.
Porto International Airport, traditionally called Francisco Sa Carneiro Airport, is a 15 minute drive from the city centre of Porto and easily accessible via public transport. The airport has ranked among Europe’s top three airports several times.
It is possible to take a Ferry from northern Spain. The Port of Leixoes is a 20 minute drive from the city, and is Portugal’s busiest port by number of ships handled per year.
Porto enjoys a delightful Mediterranean climate with hot, dry summers and mild winters. Anywhere from April to mid-October is a great time to visit for some sunshine, making it the perfect spot for a second home.
Porto has hot summers with daytime temperatures just above 25° C. The warmest months to visit are June, July and August.
From October to May, it rains quite rarely. From December to February, it can be milder in the daytime with temperatures of around 14/15 °C. Rain occurs in periods of bad weather, which last a few days and may be abundant.
Stunning scenery, a great climate, excellent food and low cost of living are just a few reasons why Porto real estate is so sought after.
There has been a surge in property investments in Porto over the years and the city is one of the main destinations chosen by real estate investors in 2022.
The short-term rental market has been booming in northern Portugal as tourism grows increasingly popular. A revision of Portugal’s rental laws in 2012 have dramatically changed the rental landscape and have seen prices rise dramatically in areas such as Lisbon. In Porto, demand has also rapidly increased, but without the rising purchase prices, meaning that in terms of rental yield, Porto offers one of the most attractive investment opportunities in Portugal.
According to Cushman & Wakefield, house prices in Porto are 26% less expensive than in the capital. Moreover, rent prices grew by a staggering 36.6% in the year to January 2023 (Idealista), making the city a prime spot for rental investments.
Affordable flights, combined with the area’s popularity as a mini-break destination, mean that short-term lets offer excellent yields. However, longer-term tenants are also a great option. The city has seen an explosion of investment by big corporates, and since the beginning of 2022, the demand for commercial real estate in Porto has grown by an impressive 20 per cent. This is bringing in waves of skilled professionals searching for quality rental accommodation.
House prices rose 13% in Portugal from 2021 to the end of the first quarter of 2022 based on year-on-year data. This marked the largest increase recorded since the Instituto Nacional de Estatistica started recording housing market data in 2010. Since then, the market has remained strong, with prices rising 8.4% in the year to January 2023 (Idealista).
People with the means to support themselves on recurring or passive income might benefit from Portugal’s D7 Visa. With no minimum investment requirements, foreign citizens can obtain a residence permit and eventual citizenship in Portugal via the D7 Visa. Alternatively, Portugal’s new Digital Nomad Visa is a great option for remote workers looking to move to Portugal. The new visa program was only launched last year, but has already proved popular with expats from around the world.
Other reasons why Porto has become a great place for foreign investment include the following:
- High living standards:
Porto is safe, welcoming, and culturally diverse. The warm climate, along with low cost of living and stable social climate, makes Porto a very attractive proposition for entrepreneurs and investors from around the world.
- Transport links:
Porto is well connected. With high-speed trains connecting Porto to Lisbon, the city boasts a subway system that stretches 22 miles and an international airport hub that serves continental and intercontinental flights.
- Development projects:
Porto has benefited from major urban development projects. Over the last decade, 1 million sqm of real estate projects were licensed in the Greater Porto Area. The city was also recently awarded third place in the Financial Times’ 2022/23 edition of the “European Cities and Regions of the Future”.
International tourists flock to Porto to experience the city’s history and vibrant atmosphere. An eclectic selection of museums, theatres, restaurants and shops await, and a range of fun international festivals are held throughout the year.