Tuesday, October 12, 2021
Dear Your Overseas Dream Home Reader,
Last week I spent three days in Portugal’s second city, Porto.
It’s a place I love to visit, and I return often. It’s walkable, laidback, and the food is great. The famed historic neighborhood of Ribeira lies right alongside the River Douro where, along with barrels of fortified wine, the barges now carry tourists on sightseeing trips.
The city spreads up the hill from the river, a warren of historic homes mixed with uglier construction from the ’70s and ’80s.
There was a period here when the right kind of real estate buy could prove exceptionally profitable…
When I visited two years ago, the gentrification that ripped through Lisbon was well and truly in full swing in Porto. There were restoration projects everywhere. And lots of small short-term rentals.
My focus was on a more overlooked niche. I was searching for larger buildings that could cater to bigger groups, bachelorette parties, families, or groups of friends on a weekend break…or that could be restored and subdivided into smaller units.
The sweet spot was to buy a historic house with high ceilings, grand windows, and a private oasis in the back garden.
It was a strong play…
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But our window for profit was short-lived. Porto’s gentrification story has now all but played out.
The best time to buy in Porto was a decade ago, when Portugal was having its financial crisis moment and while tourism was beginning to boom. There was still opportunity there as recently as 2019, when I wrote to Real Estate Trend Alert members about buying large but overlooked historic homes.
Now, the opportunity has largely passed in terms of money-making potential.
But there is still value here if you’re looking for a pure lifestyle play. Especially if you search beyond Porto’s historic center.
Most visitors never venture far from the Ribeira neighborhood or the River Douro, but Porto also offers some of the finest Atlantic beaches you’ll see…
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You’ll find wooden boardwalks for long strolls through the dunes and nature preserves. There are miles of cycle paths, popular for rollerblading too.
It’s a bit like what I imagine La Jolla, outside San Diego must have been like 30 (or maybe more) years ago.
And it’s just a 13-minute Uber ride from my hotel in historic downtown Porto.
These 16 miles of beaches are hidden on the edge of residential areas of Porto’s sister city—Vila Nova da Gaia—that makes up part of the greater Porto area.
You could buy a three-bedroom house of 1,800 square feet for under €350,000 ($404,958) just a few steps from the beach.
Or a sleek new two-bedroom condo for €289,000 ($334,380).
For me this is a very appealing lifestyle proposition. Last time I visited, I got those “Wow, I could live here” butterflies in my stomach.
The beach is dotted with bars and restaurants. The feel is decidedly local. And it’s all remarkably affordable.
That this beach neighborhood is so close to the historic center is for me the icing on the cake of Porto. The place stacks up as a city destination, then serves this hidden kicker of miles of beach.
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On the southern bank of the Douro, Vila Nova da Gaia is technically another city, although part of the greater Porto urban area.
Back from the river, the residential areas are well connected with downtown Porto’s historic center. Hop on public transport and you will be there in 10 to 15 minutes. What the guide books, internet research and late dinners with Porto’s elite won’t tell you is that there’s also these 16 miles of amazing Atlantic beaches tucked in the strip between the suburbs and the ocean.
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I’ve visited twice now and the only downside I see is that winter weather here can be dreary…wet, cool and overcast.
Is there an investment angle? Well, the condos you find here are some of the best-value city beach condos I’ve seen anywhere. With this setting and proximity to a historic city, you won’t find anything better.
But, that doesn’t mean they will go up in value. And comparing the prices now with what I found two years ago, the price rise hasn’t matched the phenomenal surge in the historic center.
For values to rise there needs to be a driver. For example, this neighborhood becomes chic for locals. Or, it begins to attract tourists or mobile internationalized people. I don’t think it will become chic for locals any time soon. My sense is they stick to their home neighborhoods. For mobile foreigners and digital nomads, I see a lot of potential.
But, there’s also a long stretch of beach with multiple beach neighborhoods along the way. Some might stay the same while others become chic. You’d need to spend some time here in high season to get a sense of where the money is flowing.
During my search for a Portugal base—before I bought on the Silver Coast—I was tempted by this beach neighborhood. But the weather here is too marginal for some of the months I want to be here…March and April in particular.
But if you are looking for the combination of beach and city in Europe to spend time in, Vila Nova de Gaia should be on your radar.
Wishing you good real estate investing,
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Ronan McMahon, Real Estate Trend Alert
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Your Comments and QuestionsNancy says: Hi Ronan. I’ve become very interested in investing in Portugal before I retire next year. But I have a problem with the Golden Visa program… To wit, I don’t have €500,000 in cash to put down on a property. Are there some other alternatives where I can find a lovely place call my own and build residency? Ronan says: Hi Nancy. The cruise is incredible. I’d recommend it to anyone. Regarding the visa, yes, it’s a high threshold to qualify. But remember, that’s just for the new builds in high density areas. There are other options if you look into the more rural areas of Portugal and focus on older homes. If the property is in a “low-density area,” and more than 30 years old, the minimum requirement is reduced to €280,000. It’s still a lot, but they don’t just hand out European visas. These are highly coveted. In other European countries you often have to pay more than €1 million to qualify. My favorite play is to lock in Portugal’s visa with money-making real estate. However, because of the changes coming to the visa at the end of this year, there is little time left on this—you need to act immediately.
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