Should you invest in Lisbon or Porto?

Portugal’s two biggest cities are among the most exciting expat hubs in Europe right now. As Lisbon and Porto attract a global high-tech elite to start-ups in innovative work-live apartments, we spoke to Filippo Simonato, Residential Business Development Manager for JLL, based in Lisbon.

He points out the opportunities for both property investors and digital nomads, and the differences between these two wonderful seaside cities. Is it time for you to invest in Lisbon or Porto?

Mr Simonato, what’s the buzz about Lisbon at the moment?

If you look at the PwC report Emerging Trends in Real Estate, Europe 2019, Lisbon has been the rising star. The report ranks cities to invest in and Lisbon took first position (from Berlin, which held it for the past three 3 years), rising 10 positions from last year. Lisbon has similar dynamics to Berlin and Barcelona; lot of international companies moving there and a boom in tourism.

Its rental yield is one of the best in Europe, but it also wins for quality of life, positive leadership, and an economy growing healthily. All in all, it’s a destination for international businesses, investors and tourists.

Is Lisbon a place to move to or invest in?

Both! The main driver used to be quality of life, its historical heritage, natural beauty and over 280 days of sunshine. But its a very interesting market for putting your savings and investments now too. You can get a return both on rental yield and in capital appreciation.

It’s not just about golden visas then?

No, golden visas were a big contributor but not only thing. The PwC report was mainly in regard to German investors, funds, and big international companies seeking to move their office here.

Why Porto?

It has same dynamic in terms of lifestyle. But it’s also the research and development hub of the country. It’s where much industry is based, and most of the money from Portugal’s wealthy families is concentrated here.

In the last two years there’s been huge redevelopment; big public investment in new roads, libraries, universities, etc. This attracts a lot of international capital. Yet the square metre price of property is still lower than Lisbon. It’s like going in a time capsule back to Lisbon five to seven years ago.

If you walk around Porto you will still see even in very central locations with views of the river, lots of abandoned and run-down buildings. And every day you see that a new one of these is being refurbished. We have many projects at JLL and we now have a higher amount of new developments coming out of Porto than out of Lisbon.

So what’s going to happen is that in Lisbon “the cement will overcome the offers” so we will have less product coming into the market and the price will continue to rise as we have plenty of demand. But we do not have the new stock of product coming out.

In Porto the opposite is happening. We still have strong demand, especially from locals and also international now, but we also have a lot of product coming up. Lots of investors come to Lisbon, they like Lisbon and they buy here.

But many are looking to have this extra capital appreciation. And then Porto is the natural answer. It has a lower square metre price to buy, so you have higher potential for capital appreciation.

Many investors start enquiring about Lisbon. But when they ask for something that has a higher yield or capital appreciation potential, we say: “yes, we do. In Porto”.

Browse homes for sale in Porto on our property portal.

 

What sort of properties are selling?

We sell about 50:50 existing and new. We think new developments are more interesting as you have a guarantee from the developer. And exciting things are happening in the new developments. For example, during construction you will get a good price and then buy the time it is completed you will get your capital appreciation. So you can sell it when it is ready to move in and you already had a good investment.

There are pros and cons for both, but I think new developments are more interesting. Especially for our company as we look at the more medium-to-high segment.

For rental, Lisbon is a more established and secure market. If you want security, choose Lisbon. You have many more international, cosmopolitan clients and they are more willing to pay higher rents. Porto is a little more focused on the local market and international clients are just arriving.

But while you’ll get higher and more stable rents in Lisbon, the price to buy property is lower in Porto. You can buy at the very central location in Porto, then rent it short term or to students and get a higher yield than Lisbon. It really all depends on the product.

What about student accommodation?

Yes you get some great student property, such as micro apartments. They’re maybe 30 or 40 square metres, with a small balcony and separate bedroom, and living room and kitchen. They cost roughly €200,000, and you can get a good yield from that. They’re very popular for the family of the student to buy, but are very tradeable. Not just for students, they could rent to young professional and couples as well as students.

There are many more single person households now. They constitute a huge part of the rental market. And it’s still relatively hard to find a studio apartments. Lots of people want them. The new developments have social spaces now. Such as a communal laundry, TV area for sports, a common area for everyone to meet, a co-working area…. This is what the renters are looking for. Fewer square metre inside but social opportunities on the ground floor. That’s not just with students flats. with regular flats too.

But it’s not just students. These are real expatriate hotspots. It’s mainly French and Italian people, but also huge numbers of German, Dutch and British coming here to set up start ups too, all speaking English. You can live in Lisbon without speaking a word of Portuguese. Even movies are shown in English with Portuguese subtitles. Indeed there is some criticism that it’s all a bit of a bubble.

Can you suggest some good areas in Lisbon?

Alcantara. We have Alcantara 55 there. It includes the largest private hospital being built there. The bank BNP Paribas is building an HQ there. It has a young hipster kind of feeling. You have LX Factory, a former industral building converted to hipster playground. There are start ups, a library and restaurant in an old printing factory, with street art and trendy food, clubs and nightlife.

Also, in Beato. With Beato Hub. Co-working is huge here, for example with Factory Berlin. It’s one of largest co-working groups in Europe. BMW and many other international companies are going there. so young start ups, entrepreneurual community. we have some products there and think this is an area that will come along a lot.

Find homes in Lisbon via our property portal.

For sale

Porto apartment for €395,000

Three bedroom apartment of over 1520 square metres as well as a spacious balcony is at the heart of the city. So its two parking spaces are especially handy!  The building is of contemporary architecture, and the comfortable, functional interiors are characterized by high-end materials and finishes. Click on the image to see more detail.

It’s vital that you protect your budget from moving exchange rates – or you could find yourself losing thousands of pounds. Find out what you need to do in the Property Buyer’s Guide to Currency.

Studio in Lisbon for €285,000

Brand new Studio+2 apartment with an area of 50 square metres. It is in a new but traditional style building, well-positioned in a peaceful area close to Mercado da Ribeira, between Cais do Sodré, Santos and Santa Catarina. It benefits from excellent transport links as well as established local shops.