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Forget golfing, Portugal's real gems – and bargains – are in its cities

The Lisbon skyline at Alfama - Sean Pavone 2014
The Lisbon skyline at Alfama - Sean Pavone 2014

For the bulk of British buyers in Portugal, a holiday home means the golden dunes and golfing greens of the Algarve. But Lisbon’s large-scale regeneration in recent years and the growing appeal of Porto as a weekend destination, thanks to cheap flights, is encouraging buyers to contemplate city life instead. 

“The British buyers we see in Lisbon and Porto are typically aged 50-plus and specifically say, ‘I don’t want a golf ghetto,’ ” says Charles Roberts of Fine & Country Cascais on the Lisbon coast. “They want monuments and museums, great restaurants and culture.”

The Airbnb revolution has also breathed new life into areas of cities that buyers would never have considered before. Lisbon’s Chiado district – which Roberts likens now to York’s The Shambles or Mayfair’s Shepherd Market – was in a “dreadful state”, with strict rent controls seeing tenants in situ for life, paying peppercorn rents while the buildings fell into disrepair. 

Colourful trams in Lisbon - Credit: Alamy
Colourful trams in Lisbon Credit: Alamy

“Then the rental laws changed and the buildings could be turned into modern apartments that now see high rental demand,” says Roberts. “Chiado is the kind of noisy neighbourhood that you wouldn’t want to live in full-time, but it’s exactly what the Airbnb market wants, and that has made a load of properties much more valuable. Prices in Chiado have risen by 30 per cent in the last two years.”

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City life also draws many of the investors who sign up to one of Portugal’s two residency schemes. The Golden Visa scheme – available only to non-EU nationals (which could be handy for Britons in two years’ time) – offers EU visas and eventual passports for all the family in return for a minimum €500,000 property investment.

New developments such as the Sheraton Cascais, where large, luxurious three-bedroom residences, with use of the five-star facilities, start at €995,000, and Martinhal Cascais, where villas from €650,000 through Fine & Country have a guaranteed four per cent rental return, are selling well to the Golden Visa crowd who are happy with limited personal usage and good yields. 

The Golden Visa scheme – available only to non-EU nationals (which could be handy for Britons in two years’ time) – offers EU visas and eventual passports for all the family in return for a minimum €500,000 property investment

The other sweetener for foreign buyers is the Non Habitual Residents (NHR) scheme – a lifestyle option with tax perks. Spend at least half the year in Portugal, become a tax resident there and the fiscal benefits include no tax on your pension or investment income for 10 years.

So far the highly taxed French are lapping up the NHR scheme: “They are no longer buying in north Africa and they see Lisbon as a similarly exotic substitute,” Roberts says. Britons are latching on, too. “The scheme is poorly promoted in Britain, but it’s open to anyone, regardless of whether they are in the EU or not, and you don’t have to buy – you can rent,” he adds. 

One final thing to remember with city life in this sliver of a country is that you are never far from the coast. For that best-of-both-worlds combination of urban buzz and beautiful beach, here are four Portuguese locations to consider.

Lisbon 

For quality of life, value for money and investment potential, Lisbon ranks above world cities including Madrid, San Francisco, Paris and London, according to a recent report by Savills. Its prime prices are still one fifth of London’s and a third of those in Paris, but Lisbon is poised for recovery and growth – and it offers what Savills calls “a compelling lifestyle story”. 

That lifestyle element spans the decorously historic to the trendily hi-tech. While old trams rattle along colourful cobbled streets, this city rivals Berlin for its cool club scene and has become Europe’s tech start-up capital as host of the huge Web Summit.  

Homes at Santa Helena Palace start at 750,000 with Athena Advisers
Homes at Santa Helena Palace start at €750,000 with Athena Advisers

It is also a place where you are made to feel at home, says Rafael Ascenso from Porta da Frente, Christie’s International Real Estate’s Lisbon agent. “Lisbon’s setting, over the River Tagus, gives it a unique natural light,” he says. “Its history, climate and food make it special. But the main thing it offers is a quiet and safe life in a country where everything works and where visitors are welcomed as if they are Portuguese citizens.” The most sought-after areas, he adds, are Chiado, Baixa and the area around the Avenida da Liberdade.

British buyers are among those capitalising on Lisbon’s booming holiday lettings scene, according to Athena Advisers, which says that Airbnb contributed €268 million to Lisbon’s economy last year.

Homes at Santa Helena Palace start at €750,000 with Athena Advisers
Homes at Santa Helena Palace start at €750,000 with Athena Advisers

“We’re seeing British buyers choose Lisbon for its combination of buy-to-let potential in areas such as Baixa and Chiado and as a place where they can spend cheap weekend breaks, dive down back streets to find hidden restaurants and catch the train along the coast to genteel Cascais,” says Lloyd Hughes of Athena Advisers. 

He is marketing several central schemes where historic buildings have been turned into contemporary apartments from around €200,000. One of the most striking is Santa Helena, a 16th-century hilltop palace in the Alfama district, which is being turned into 21 apartments with high ceilings and huge windows. Prices start at €725,000 for one bedroom. 

Porto 

The British port-producing families that dominate the Vila Nova de Gaia, on the south side of the Douro River, have known the charms of Portugal’s second biggest city – and the beautiful valley on its doorstep – for centuries. 

Now overseas buyers are starting to latch on to Porto’s appeal and potential as a holiday destination, boosted by a huge volume of low-cost flights. Those wanting winter sun will always head to the Algarve, but Porto is a city that is full of charm, with its Unesco-protected medieval core and beautiful Atlantic beaches within a 15-minute drive. Head east and you are in the magical Douro Valley, where rustic quintas sit among terraces of vines that tumble down to the Douro River.

A riverfront apartment with three bedrooms. €750,000 with Fine and Country
A riverfront apartment with three bedrooms. €750,000 with Fine and Country

The French and Brazilians are Porto devotees, “usually because of the Non Habitual Residents scheme and the sense of security”, says Andreia Silva of Luximo’s, Christie’s International Real Estate’s agency in the city. But others are starting to latch on.

“Porto mainly attracts overseas buyers seeking properties with strong holiday rental potential in its historic centre, in areas such as Praca de Ribeira and Aliados,” says Fine & Country’s Roberts. “It’s behind the curve with the short holiday lets market, but if you are clever, you can buy in Porto for half the price of Lisbon, stick it on Airbnb and get almost the same nightly rate, so a much better yield.”

Porto's Douro river - Credit: Alamy
Porto's Douro river Credit: Alamy

Apartments range from €100,000 for a small city-centre flat – including one overlooking the river in a modern block, through Luximo’s – to €1 million for large, luxury apartments. Houses just outside central Porto, with river views, start at around €230,000, rising to €2 million or so for a large country estate overlooking the Douro or a big detached villa in Foz do Douro. 

Faro 

Like Málaga on Spain’s Costa del Sol, Faro is the destination most overseas visitors to the Algarve know only for its airport. This means missing out on this buzzy, authentic Portuguese town with its well-preserved medieval quarter, maze of car-free alleys, elegant squares and verdant parks, which has some of Portugal’s best beaches on its doorstep. It’s also incredibly handy for the airport, making weekend trips easier. 

Five bedroom apartments in one of the tallest buildings in the city. €1.3 million with Fine and Country
Five bedroom apartments in one of the tallest buildings in the city. €1.3 million with Fine and Country

Just across the Ria Formosa estuary is the city’s hidden gem: the Ilha de Faro, a peninsula linked by bridge to the mainland and home to a magnificent stretch of golden sands. Even in peak summer it feels like you have stumbled across something special that the tourist crowds have missed.

Along the beach side are villas and restaurants – all fairly modest places that belie their extraordinary setting. On the other side of the island, facing Faro, the houses overlook the salt marshes where fishermen wade out in search of cockles.  

Villas on the Ilha de Faro rarely come onto the market, but there is a four-bedroom beachfront villa currently on sale for €650,000 through Property Showrooms. In Faro city itself, a similar budget would buy a well-renovated house three times the size. There is a wide range of property for sale in Faro, from whitewashed houses for €50,000 to a five-bedroom triplex penthouse for €1.3 million through Fine & Country. 

Tavira

If Faro’s island impresses, wait until you see the stunning Ilha de Tavira – a seven-mile stretch of Florida-like golden sands that has won awards for its family-friendliness. It is accessed by a ferry that takes you the few hundred metres between this desert island and the small Roman town of Tavira. There is little on the island but some watersports huts, a strip of cafés and a few small cottages that border the path to the beach through the pines. 

A two bedroom apartment in Tavira, €650,000 with Fine and Country
A two bedroom apartment in Tavira, €650,000 with Fine and Country

Tavira itself – classed a city, although a tiny one – is half an hour from Faro in one direction and the Spanish border in the other (you could be in Seville for lunch in less than two hours). 

Set on both sides of the meandering Gilao River, it combines ancient ruins, cobblestone backstreets with buildings parading beautiful Moorish features and azulejo tiling, shady plazas and a small fishing port. “It also has lots of churches, whose spires remind me of my home town of Oxford,” says David Holder of the local Fine & Country branch.

Tavira - Credit: Lonely Planet Images
Tavira Credit: Lonely Planet Images

Britons have been holding back since Brexit, but NHR-seeking French and Scandinavians are keen on Tavira. “Buyers here specifically want to be away from the resorts. They still have the great Algarve weather and the beaches, but they like the authentically Portuguese, year-round life that resorts lack,” says Holder. 

Holiday home buyers can find great value for money in Tavira and there’s a wide range on offer. From around €110,000 you could buy a one-bedroom flat in a modern complex or an old fisherman’s cottage. Cheaper still are ruins to renovate, or a budget of €340,000 and up will get you a villa. 

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