Is Lisbon or Porto better for Portugal investment?

Authored by the expert who managed and guided the team behind the Portugal Property Pack

Everything you need to know before buying real estate is included in our Portugal Property Pack

Who is the author of this content?

INVESTROPA

A team specialized in real estate investing in European countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Portugal. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At InvestRopa, we explore the Portuguese real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Lisbon, Porto, and Braga. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

Fact-checked and reviewed by our local expert

✓✓✓

João Morais 🇵🇹

Founder | Real Estate Advisor, at Wilderness Investments

João Morais is an expert in the Portuguese real estate market. With a network of trusted connections and years of experience, João ensures a seamless experience, guiding clients through every step of the buying process, from property search to contract negotiations. After speaking with him, we reviewed the blog post, made some changes, and included his experience to make it richer.

What's the current price per square meter in Lisbon compared to Porto?

As of September 2025, Lisbon property prices significantly exceed Porto's across all market segments.

Lisbon averages €5,610-€6,800 per square meter for apartments, with premium districts like Parque das Nações reaching €8,500/m² while more affordable areas like Olivais start around €3,500/m².

Porto maintains substantially lower prices at €3,400-€4,000 per square meter city-wide. The most expensive Porto neighborhoods like Foz do Douro peak at €4,753/m², which is still below Lisbon's average. Houses in Porto can be found from €2,100/m² in outer areas.

This price gap represents a 65-70% difference between the cities, making Porto the clear winner for budget-conscious investors seeking maximum property size for their investment.

It's something we develop in our Portugal property pack.

How have property prices changed in both cities over the past 5 years?

Both cities experienced strong appreciation since 2020, but Porto outpaced Lisbon's growth rate significantly.

Lisbon saw 38% price increases over five years, with growth momentum slowing in 2024-2025 due to increased supply and buyer caution in the premium segments. The market shows signs of plateauing as affordability becomes a greater concern.

Porto delivered exceptional 50% price growth over the same period, driven by urban regeneration projects and increasing investor recognition. Central neighborhoods like Bonfim experienced even higher appreciation rates as gentrification accelerated.

Porto's annual growth continues at 5-8% projected through 2030, while Lisbon's growth is moderating to 2-4% annually as the market matures.

For investors seeking appreciation potential, Porto's trajectory suggests continued strong performance while Lisbon may offer more stability but slower growth.

What are the current rental yields in Lisbon versus Porto?

Porto consistently delivers superior rental yields compared to Lisbon across both long-term and short-term rental strategies.

Lisbon generates gross yields of 3.8-4% on average, with prime tourist areas like Graça and Bairro Alto potentially reaching 5-7% for well-positioned smaller units targeting Airbnb guests.

Porto offers stronger yields at 4.5-5.7% average, with emerging areas like Bonfim delivering up to 6.2% gross yields and established neighborhoods like Matosinhos reaching 6.7%.

The yield advantage in Porto stems from lower purchase prices combined with competitive rental rates, creating better cash flow opportunities for investors focused on monthly income generation.

It's something we develop in our Portugal property pack.

How strong is long-term rental demand in both markets?

Both cities maintain exceptionally high demand for long-term rentals, driven by strong local employment, university populations, and growing expat communities.

Porto experiences particularly low vacancy rates with quality units finding tenants within 1-3 weeks. The city benefits from expanding tech sector employment, university students, and digital nomads attracted by lower living costs compared to other European capitals.

Lisbon maintains robust long-term rental demand despite higher competition from short-term rentals. The capital attracts multinational companies, government workers, and international professionals willing to pay premium rents for central locations.

Both markets show resilience against economic downturns due to diverse tenant bases including locals, EU residents, and skilled immigrants.

Rental demand stability makes both cities suitable for buy-and-hold strategies, with Porto offering slightly faster tenant placement.

How profitable are short-term rentals like Airbnb in Lisbon compared to Porto?

Lisbon generates higher absolute profits from short-term rentals but faces increasing regulatory restrictions that limit growth potential.

Lisbon's Airbnb market benefits from massive international tourism, achieving 85% occupancy rates during peak summer months and premium nightly rates in central neighborhoods. Tourist hotspots like Chiado and Bairro Alto command €80-150 per night for quality units.

Porto delivers competitive Airbnb performance with 88%+ occupancy rates in summer and growing year-round demand. Nightly rates average €60-100 for central locations, providing excellent yields when combined with lower purchase prices.

However, Lisbon faces stricter licensing requirements and potential future restrictions in historic neighborhoods, while Porto maintains more flexible regulations for short-term rental operators.

Porto offers better risk-adjusted returns for Airbnb investors due to lower regulatory risk and stronger yield fundamentals.

What taxes and fees should you consider when buying in either city?

Both cities follow identical Portuguese tax structures, with total buying costs reaching 7-10% above the purchase price.

The IMT transfer tax applies progressively from 1-8% based on property value, with higher rates for luxury properties above €550,000. Properties over €1 million face additional luxury tax considerations.

Standard fees include 0.8% stamp duty, legal fees (€1,500-3,000), property registration costs (€200-500), and real estate agent commissions (3-6% of purchase price).

Annual ongoing costs include Municipal Property Tax (IMI) at 0.3-0.5% of property value, building maintenance fees for apartments, and potential property management costs for rental properties.

Foreign investors face no additional tax penalties, but non-residents pay higher capital gains tax rates (28% vs progressive rates for residents) when selling.

How easy is financing for foreign investors in each city?

Both cities offer similar mortgage access for foreign investors, though Lisbon provides more specialized international banking services.

Portuguese banks typically finance 70-80% of property value for foreign buyers, requiring proof of income, employment history, and sometimes Portuguese tax residency for optimal rates.

Current mortgage rates range 3-6% depending on loan terms and borrower profile. EU citizens generally secure better rates than non-EU nationals.

Lisbon's banking sector offers more English-speaking mortgage specialists and established processes for international clients, particularly from major banks like Millennium BCP and Caixa Geral.

Porto's growing international investor base has prompted local banks to improve foreign client services, but Lisbon maintains advantages in specialized mortgage products and faster approval processes for complex international income situations.

Which neighborhoods in each city show the fastest growth?

Both cities feature distinct high-growth areas driven by different market dynamics and urban development patterns.

Lisbon's fastest-growing neighborhoods include Parque das Nações for luxury developments, Avenidas Novas for central business district expansion, and Estrela for premium residential demand. Value-growth areas include Lumiar and Benfica, offering good transport links and development potential.

Porto's growth leaders are Bonfim (urban regeneration and artist district development), Foz do Douro (waterfront premium properties), Cedofeita (creative quarter gentrification), and Campanhã (major infrastructure improvements including new transport links).

Matosinhos, technically outside Porto proper, shows exceptional growth due to beach proximity and business district development.

Porto's growth neighborhoods generally offer better value entry points compared to Lisbon's established premium districts.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Portugal versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What's the current construction and supply situation in both cities?

Both cities face supply constraints but show different development patterns that affect investment opportunities.

Lisbon has limited central new construction due to historic preservation requirements and land scarcity. Recent major projects include a 2,000-home development aimed at addressing supply pressure, but most new supply occurs in peripheral districts.

Porto benefits from active urban regeneration programs that combine historic building renovations with selective new construction. The city maintains better balance between preserving character and meeting housing demand.

Construction permits in Porto process faster than Lisbon, and development costs remain lower, encouraging more diverse project types from affordable housing to luxury developments.

Supply constraints in both cities support price stability, but Porto's more active development pipeline suggests better medium-term supply-demand balance for investors.

How do lifestyle factors compare between the cities?

Both cities offer excellent lifestyle quality but cater to different preferences and life stages.

Lisbon provides metropolitan advantages including extensive public transport, numerous international schools, vibrant expat networks, and cosmopolitan nightlife. The city offers better career opportunities in finance, technology, and international business sectors.

Porto delivers a more relaxed pace with strong family-oriented communities, improving transport connectivity, well-regarded universities including University of Porto, and exceptional safety with lower crime rates than Lisbon.

Living costs in Porto run 15-25% lower than Lisbon for everyday expenses including dining, entertainment, and services. Both cities score highly for healthcare quality and cultural amenities.

Porto maintains stronger local Portuguese character and traditions, while Lisbon offers more international atmosphere and diversity.

It's something we develop in our Portugal property pack.

What government policies affect investors differently in each city?

Both cities operate under identical national policies, but local implementations create different investment environments.

Recent government measures include restrictions on new short-term rental licenses in tourist-heavy zones, affecting Lisbon's historic center more severely than Porto's tourist areas.

The Golden Visa program wind-down impacts both cities equally, but Lisbon's higher property values meant it attracted more Golden Visa investment historically.

Local housing policies in Lisbon include stricter Airbnb licensing and rent control considerations in some areas. Porto maintains more flexible local regulations while still complying with national housing policy objectives.

Both cities benefit from government programs promoting long-term rental availability, but Porto's lower baseline prices make these incentives more attractive for smaller investors.

Which city offers better exit strategy potential in 5-10 years?

Porto currently offers superior exit strategy potential due to higher growth trajectory and lower entry costs, while Lisbon provides premium market stability.

Lisbon historically delivers solid capital appreciation but recent plateauing suggests future gains may be more modest. The mature market offers better liquidity and international buyer recognition for premium properties.

Porto's rapid growth phase and affordable entry prices suggest stronger percentage returns over the next decade. Gentrifying neighborhoods like Bonfim and waterfront areas like Matosinhos show exceptional appreciation potential.

For investors planning 5-year exits, Porto's growth momentum and value gaps compared to other European cities suggest better capital gains potential. Lisbon suits investors prioritizing stability and proven liquidity.

Ten-year projections favor Porto for total returns combining yield and appreciation, while Lisbon offers safer, more predictable performance for conservative investors.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Average Apartment Price Lisbon - InvestRopa
2. Lisbon Property Market Mid-Year Snapshot 2025 - LinkedIn
3. Property Prices Porto Portugal - Green Acres
4. Porto Price Forecasts - InvestRopa
5. Lisbon Real Estate Trends - InvestRopa
6. Portugal Rental Yields - Global Property Guide
7. Lisbon Real Estate Market - InvestRopa
8. Porto Rental Yields - Best Yield Finder
9. Average Rent Porto - InvestRopa
10. Portugal Vacation Rental Market 2025 - PriceLabs