Luxury property market in Portugal

Portugal has often been seen as a relatively cheap market for second home buyers, who have looked, for instance, for a little flat on the coast, or a ruined cottage up in the northern hill country. But now, Portugal is also a serious player in the luxury market.

Prices of top-end Lisbon property have doubled in a decade; at EUR 8,400 a square metre for prime property, prices are still way below London (nearly EUR 18,000) and Paris (EUR 15,500), but no longer a steal. None the less, Knight Frank sees Lisbon as one of just four global prime markets set to see strong growth this year (the others are Shanghai, Monaco and Vienna), citing its attractive location, tax breaks for foreigners relocating, and excellent response to the pandemic.

Apartments in older buildings in the centre remain attractive, but a lot of luxury development is happening just outside the centre. For instance, Athena Advisers is offering 19 renovated apartments in Estrela, just to the west of the historic centre and away from the tourist traps; duplexes on the 7th floor and attic space are available at EUR 2.6m while one to three bed flats in the rest of the building cost from EUR 675,000.

Marvila, a former industrial area on the riverside, and Intendente](v), to the north of the centre, have seen new developments creating attractive modern environments. Largo Intendente 57, for instance, is selling two-bed apartments at EUR 550,000. There's a hidden advantage to buying in these areas if you want to let - they're outside the AirBNB exclusion zone.

What to choose if not Lisbon?

Many wealthy buyers, though, are looking outside Lisbon to the suburbs. Cascais and Estoril remain popular, but buyers who want a more relaxed and secluded lifestyle are now looking south of the capital at Comporta. About an hour's drive away from Lisbon, it's relatively undeveloped and has tight planning rules, so developers are focusing on luxury rather than build-it-high-sell-it-cheap.

The Melides Art development offers 30 villas, with prices starting at EUR 2m, planned around a sculpture park and art pavilion. The Comporta Retreat sold building plots for owners to develop individually, while the Quinta da Comporta hotel and residential complex is aimed more at investors, with 3 bed apartments available for EUR 1.5m. Closeness to the city together with almost completely undeveloped - and often deserted - beaches make this area particularly attractive.

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Of course, Algarve!

Meanwhile, the Algarve has seen international brands arriving to push its existing tourist infrastructure into overdrive. For instance W Residences, in Albufeira, sold out its first phrase of beachfront properties in less than two months: three bed apartments in the next phase will cost EUR 1.4m plus, and even the smaller flats are priced from EUR 550,000.

At Quinta do Lago, immediately before the pandemic hit, prices had achieved record levels with the sale of villas for EUR 14.5m and EUR 17m. Now Wyndham Grand is bringing in a five-star hotel and developing serviced apartments which will cost from EUR 450,000.

Meanwhile, near Loule, Viceroy has created a five-star Viceroy Hotel, an 18 hole golf course, and a development - Ombria Resort - including both villas and turnkey serviced apartments. Here, the appeal is to investors, with up to ten weeks' personal use a year together with a guaranteed investment income from managed lettings.

Porto as a destination goal

In the north, Porto was a crumbling, rather seedy town 15 years ago - now it's a major tourist draw with a fashionable town centre and soaring property prices. That's brought property developers to town. A decade ago you'd have had to buy a crumbling old house in Porto and hire your own renovation team; now, mansions are being turned into key-ready luxury apartments so you can buy without the hassle.

Palacete Cedofeita, for example, is a fine 19th century house which has been renovated to a high standard to provide three and four bedroom apartments. The in-price here is EUR 500,000. At the same time, luxury hotels are bringing glamour to Porto, for instance at The Rebello, which has adapted seven historic waterfront warehouse buildings to create 106 hotel apartments. Here again, there are opportunities for investors to buy serviced apartments within the hotel.

Luxury buyers who want to use the golden visa scheme might note that there was a big cloud hovering over the horizon - homes in Lisbon, the Algarve and Porto were set to be excluded from the scheme. Plans to disqualify these locations have apparently now been put on hold, indefinitely.

In any case, it's worth noting that less than 7% of total property purchase by foreigners came under the golden visa scheme, according to APEMIP, the association of Portuguese real estate professionals. That should limit the impact on prices if the limitation does ever come into effect.

So while bargain hunters can still head for the hills or the northern coast, if you want a life of luxury, Portugal has a lot to offer - and for a lot less than many other European destinations.