28 de March, 2019
It’s a big decision. Where to buy property in Portugal will define cost, quality of life and earnings potential of real estate investments.
If the objective is exclusively housing, you need to meet your personal preferences, which we will detail below. A house in the Algarve is compatible with warm climate lovers, Porto is for those who like a mild climate and Lisbon is the best city to develop a professional career.
If the objective is the return on investment, there is a clear advantage in one of the options.
The first reaction of the Brazilian who is deciding where to buy property in Portugal is to focus on Lisbon, naturally better known and commented. With a little more research, however, it turns out that it is not the best financial option. It all depends on price and return on investment.
Lisbon’s prime market prices are already around €10,000 per square metre, very close to similar markets such as Madrid and Barcelona, indicating that it is close to a valuation ceiling.
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On the other hand, Porto still has inviting prices with space for recovery (2.500€ to 5.000€ per square meter).
The return on investment in Lisbon is considerably lower. For every 100€ invested in a property for tourists, expect to get an average of 8€ to 10€ of annual revenue from daily sales in Lisbon and 12€ to 14€ in Porto.
Living in Lisbon or Porto? See the differences in lifestyle in each city.
This difference is both a great injustice and an opportunity for the intelligent investor. In the end, a capital of 100.000€ will generate revenues in 20 years of 180.000€ in Lisbon and 260.000€ in Porto. The yield of 20 years (gross return on invested capital) will be 180% in Lisbon and 260% in Porto, a relevant difference.
Since the arrival of low-cost airlines, Porto has almost tripled the number of tourists. There are already more than 11 million passengers passing through the new and modern airport. It is a large city with strong industry and agriculture, reaching 1.7 million inhabitants in the metropolitan region.
Unfortunately, the Algarve is not a great option for investments. The popular saying is that every Portuguese has a holiday apartment in the Algarve, with a huge stock of empty properties, in a location that there is fierce competition from major hotel operators selling cheap packages to northern Europeans.
If you want to work for companies in the country, the decision of where to buy property in Portugal will depend on Lisbon, which is by far the city with the greatest and best opportunities. Not only does Greater Lisbon account for a third of Portugal’s gross domestic product (GDP), but it is also home to 28% of the country’s population.
The average monthly gain in Lisbon, according to the National Statistics Institute (INE), is 1,551€, while in Porto reaches 1,318€ and in Faro is only 1,089€. In other words, Lisbon earns on average 17% more than Porto and 42% more than the Algarve.
For entrepreneurs, Lisbon also provides the best opportunities, with the largest and most qualified consumer market. However, Porto is much better for those who want competitive advantages in cost and labour.
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Those who come with income from Brazil and need to worry about the cost of living in Portugal, end up leaving Lisbon aside.
The costs of living in Lisbon are significantly higher than Porto and the Algarve, mainly due to housing. The rent of a three-bedroom apartment in the city centre costs an average of 1,700€ in Lisbon, 1,200€ in Porto and 750€ in Faro (the main city of the Algarve). The budget of a family with 2 children will be 40% more expensive in Lisbon and 16% higher in Porto, both compared to the Algarve.
What few people say is that the budget can be dramatically reduced when the house is located outside the centre of Lisbon and Porto. The rent of a three-bedroom apartment in the region of Almada (Greater Lisbon) costs 750€ and in Vila Nova de Gaia (Greater Porto) costs 880€.
It’s not the same experience as living in the city centre, as it always involves crossing a bridge to get to where everything happens, but it’s an affordable option for those who want to be close to the busiest life in the big Portuguese metropolises and a good decision on where to buy property in Portugal.
See what it’s like to live on the outskirts of Lisbon and on the outskirts of Porto.
The tiebreaker may come from the climate, which has marked differences between the three regions. The cold comes from the north and the heat from the south. The coast presents strong wind and humidity. Porto is further north, Lisbon is in the centre-south and the Algarve is on the tip closest to Africa, being the district further south.
The Algarve has higher temperatures, easily exceeding 40ºC in summer, while remaining above 30ºC in Lisbon and almost always below 30ºC in Porto.
Winter is milder in the Algarve (average min. 9ºC / max. 16ºC) with little rain (5 days per month), Lisbon is colder (average min. 9ºC / max. 15ºC) and rainier (10 days of rain), while Porto is colder and wetter of the three (average min. 7ºC / max. 14ºC and 12 rainy days per month).
The general rule for deciding where to buy property in Portugal according to the climate: if winter and wet weather do not please, avoid the North and head south. If excessive heat is what worries you most, give preference to the North. If you want dry weather, go inside. If you prefer wet weather, the coastline…
Although the experience of quality of life is very subjective, a common way to measure it is through six main components: purchasing power of wages, safety, health service, pollution, climate and cost of living.
According to Numbeo, Lisbon has a somewhat inferior quality of life to Porto and I risk saying that the Algarve, although not on the list, will be a little better than the other two options.
Lisbon is more cosmopolitan, populous, with 2.8 million people, with many options for leisure, restaurants and nightlife, more traffic, crowded public transportation, a little less safe but still with excellent quality of life compared to any Brazilian city.
Greater Porto is more provincial, despite the 1.7 million people, smaller traffic and transport capacity, fewer options for restaurants, but still with a beautiful nightlife, while the Algarve is essentially a tourist region of unquestionable quality beaches, but which can be more complicated to live during the season.
The important thing is to choose where to buy property in Portugal in order to fit the preferences and goals, but be sure that the quality of life provided will always be better than any Brazilian city, especially in security, displacement, organization and civility.
To know where to buy property in Portugal with all the security and within the legality, we suggest doing the whole process accompanied by a lawyer and real estate consultant. If you are interested, click here and receive the advice of a consultant from Atlantic Bridge, a company that we at Euro Tips trust.
Read also our step by step guide to buy property in Portugal and know all the details of the process.
Article published on the Euro Tips website: https://www.eurodicas.com.br/onde-comprar-imovel-em-portugal/
Author: Marcio Fenelon
Real Estate Investment