Built on the steep hillside overlooking the Douro river, with the old port warehouses occupying the opposite bank, Porto’s picturesque old town has steep medieval lanes with high, narrow town houses and wide, leafy squares with 19th-century palaces and grand neoclassical buildings. Known as the Ribeira, this historic centre is a Unesco world heritage site. And today it is attracting property investors from around the world.
For many years Porto’s historic heart was shabby, crime ridden and largely empty. From the 1960s, the wealthy started moving to seaside suburbs and many who remained lived in increasingly rundown conditions.
In a 2005 survey, the then newly founded urban revitalisation association, Porto Vivo, found that only 4 per cent of buildings in the old town centre were in a reasonable state of conservation; 50 per cent were in a state of disrepair and a further 46 per cent required “profound intervention”.
Ten years later, the story is very different. The old town is buzzing, building projects abound and new restaurants, stores and bars are opening every month.
“A raft of different initiatives is bringing life back to the historical centre and the places further out that used to be trendy are starting to feel quite old-fashioned,” says Rita Corrêa Figueira of Porto-based development company F2is, which specialises in the renovation of historic buildings.
Porto Vivo’s 2013 figures support Figueira’s view, showing that 69 per cent of building stock in the area is now in good condition and only 3 per cent still requires profound intervention.
An important reason behind this turnround is a law passed by the Portuguese government in 2012. Before then, landlords were unable to increase rents or terminate rental contracts; some contracts stood for decades with tenants paying as little as €20 a month. With no financial incentive to renovate or develop their properties, few landowners did so.
The new law reformed the legislation governing rental agreements, meaning that landowners who plan to renovate or update a property are now able to negotiate with tenants to terminate rental leases or increase rents. Landlords and developers are beginning to take advantage of this legislation and are now investing in their properties, says Álvaro Santos, chairman of Porto Vivo.
“Last year was the best year for urban renewal in Porto,” he says. Santos’s team approved more than 1,000 projects for renovation, including 200 that required “significant” work. “In the first three months of this year we’ve seen comparative figures double,” he adds.
Estate agents support Santos’s positive outlook. “As soon as there was a more liberated real estate market, we saw an immediate demand from investors,” says Antonio Magalhães, owner of Porto-based agency Predibisa, which has a number of properties for sale including a 154 sq metre, two-bedroom apartment in a prime location next to the InterContinental Hotel, priced at €255,000.
José Luís Kendall is the owner of Kendall & Associados. The company specialises in real estate above €500,000, and its properties on offer in Porto’s centre include a 1,500 sq metre, 19th-century palace for €1.75m. Kendall says Avenida dos Aliados, which is home to the InterContinental Hotel, and the area between Rua das Flores, Rua de Mouzinho da Silveira and Largo de São Domingos, known locally as the “Golden Triangle”, are the districts within the city centre attracting the highest values, but he points out that properties are still undervalued in general.
“We’re seeing a lot of transactions and a lot of renovation projects going on. Prices are going up but they definitely have further to go,” he says.
“You can still find undeveloped properties for around €500 to €700 per sq metre in the old town and good quality redeveloped buildings will fetch around €2,000 per sq metre,” says Figueria. “But I think these prices are very low. We are holding back on the sale of one of our developments because we think we will see a significant increase in the market in a relatively short term.”
Figueria’s optimism is supported by a survey undertaken by Confidencial Imobiliário, the trade magazine for Portuguese real estate. According to the survey, there were 272 real estate transactions completed in Porto’s old town in 2014, to a value of €87.5m, double the figures in 2013. Prices in the old town rose 12 per cent in 2014, against a citywide average of 2.59 per cent in 2014/15.
As with other historic city districts, there are limits to the type of stock available in Porto’s old town. Buyers won’t find large villas with gardens and pools, and, for families, the steep streets and medieval houses can be less alluring. But for investors looking for affordability and growth opportunities in a major European city, Porto seems to be increasingly appealing.
● Portugal grants five-year residency permits to non-EU citizens who buy a minimum of €500,000 worth of property, under the so-called “golden visa” scheme. The permit allows holders to work, study, and travel within Schengen countries, and can lead to permanent residency
● There are no restrictions on foreign property ownership in Portugal and transaction costs are about 15 per cent of the transaction price
● Because central Porto is listed by Unesco, restrictions apply to developments and improvement works
What you can buy for . . .
€225,000 A two-bedroom apartment in the city’s historic centre
€1.5m A warehouse requiring some redevelopment on the banks of the Douro
€5m A redeveloped 19th-century palace in the city’s “Golden Triangle” district
For more properties, please visit ftpropertylistings.com
Photographs: Paolo Giocoso/4Corners; Guy Thouvenin/Robert Harding
Get alerts on Porto when a new story is published