Engel & Völkers Licence Partner Luxembourg > Blog > Porto, Portugal: High demand and limited supply send prices upwards

Porto, Portugal: High demand and limited supply send prices upwards

The coastal city of Porto is located in the north of Portugal, at the mouth of the Douro River. It is the second largest city in the country after Lisbon, with a population of approximately 240,000. Porto is one of the most important financial and industrial centres in Portugal, and the heart of Portugal’s port wine production. The city’s diverse culture and scenery, its proximity to the Atlantic Ocean, and its historic buildings give it a very special charm indeed. The beautiful houses, picturesque narrow streets and numerous bridges attract domestic and international buyers alike. Prices on the real estate market in Porto remain stable, despite the pandemic: “The demand for property in and around Porto has risen by around 40 percent since 2013, due to the fact that prices here remain relatively moderate. The current availability of properties on the market cannot meet the demand however, which is seeing prices steadily rise,” says Gustavo Soares, Managing Partner of Engel & Völkers Porto. 

- (Image source: Engel & Völkers Porto Foz)

Second homes are becoming increasingly popular

In Porto, around 60 percent of all real estate transactions can be attributed to Portuguese clients, with international clients accounting for approximately 40 percent. The latter client group comes predominantly from France, Brazil, the UK, and Germany. Since the corona-lockdown, more and more people have begun looking for holiday properties in the countryside or by the sea. This has led to a significant rise in demand for second homes in recent months. “Since the outbreak of the pandemic, our clients have increasingly been looking for a place to retreat to, offering ample peace and privacy, allowing them to avoid social contact and spend their vacations within their own four walls. In this period with such low interest rates holiday homes make for a crisis-proof investment,” says Gustavo Soares.

Properties in coastal areas are especially sought after

With its upmarket and traditional villas, boutique hotels, array of local taverns and beautiful sandy beaches, Foz do Douro is one of the most expensive districts in the region surrounding Porto. It is located on the estuary of the Douro River, directly next to the Atlantic Ocean and, thanks to this unique location, is especially sought-after among wealthy customers. In Q1 2021, the area commanded prices per square metre of between 3,100 and 5,500 euros for premium freehold apartments. Prices for detached and semi-detached houses were between 1.25 and 3 million euros.
The Nevogilde and Aldoar districts also rank among the most desirable parts of Porto. In Nevogilde, prices per square metre for freehold apartments in Q1 2021 ranged between 3,100 and 5,500 euros, while detached houses sold for between 1.1 and 1.5 million euros. Top prices for freehold apartments in Aldoar in the same period reached as much as 4,400 euros per square metre, while detached and semi-detached houses sold for up to 1.5 million euros. The Covid-19 pandemic has led to a shift in residential needs among Portuguese buyers, with demand intensifying for properties with greater indoor and outdoor space. “Many of our clients have discovered during this period of curfews and travel restrictions that their current home no longer lives up to their expectations. Young couples and families with children are especially looking for modern, high-end penthouse apartments and premium villas with gardens that will allow them to enjoy a good work-life balance and work remotely from a home office,” Gustavo Soares reveals. The areas along the coast of Vila Nova de Gaia and Matosinhos are also very popular with both domestic and international buyers. 

Outlook: Porto becoming increasingly popular as a place to retire

The property market in Portugal has proven to be a safe option for investors, even during times of crisis. For 2021, Engel & Völkers is therefore anticipating an ongoing rise in prices and an increase in the number of transactions. One buyer group that has discovered the coastal city of Porto for themselves are pensioners from abroad. “For some years now, many older clients from other European countries have been moving to Porto to spend their retirement here. They are drawn by the high quality of life, the pleasant year-round climate, the beautiful coastline, and the moderate property prices, not to mention the relatively low cost of living. Changes were introduced to Portuguese pension tax legislation in 2009 that made it even easier and more attractive for foreign citizens, particularly from the EU, to choose Portugal as their retirement home,” says Gustavo Soares.

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