A high quality of life combined with a tourism boom and strong property market have made Portugal’s seaside city Porto a favourite among global investors. Porto is the second-largest city in Portugal, one of the Iberian Peninsula’s major urban areas – has been stealing the international spotlight lately.

With its authentic, hip vibe, balmy weather, unparalleled food and wine scene, and booming economy, Portugal’s Porto is a rising star among travellers and investors alike.

As some foreign and local investors look beyond traditional European property markets, Porto has grown in popularity among global investors and entrepreneurs.

A study from EY’s European Investment Monitor calls Porto “a magnet for investment” and cites an average yearly growth rate of 11.4 percent in foreign direct investment (FDI) in Porto and the surrounding region from 2013 to 2018.

Four reasons Porto stands out compared with other European cities:

An upswing in tourism

Portugal is witnessing an unprecedented growth in international visitors. Porto in particular has emerged as a shining example of Portugal’s tourism boom. Voted the #1 European Best Destination in 2012, 2014, and 2017, Porto is welcoming record-high numbers of international tourists seeking vibrant culture, idyllic beaches, striking medieval architecture, affordability, and an outstanding culinary scene. In fact, last year Porto had highest increase in revenue per available room in all of Europe.

Massive development

To prepare the city for becoming a competitive and stable economic hub, the local government has made extensive public investments in infrastructure. In 2016, the city launched construction on the Campanhã Intermodal Transport Terminal, which will integrate buses, trains, subways, and taxis. Poised to become a transportation centre for all of northern Portugal, the terminal will offer connections within the city and region as well as internationally. Massive development has made the city a magnet for global investors.

High capital appreciation potential

Even amid the economic boom and rising property values, property in Porto and all of Portugal remains a remarkably good value. The Global Property Guide ranks Portugal’s home price to GDP per capita ratio as one of the lowest in Europe. And in terms of price per square meter, Portugal boasts some of the most affordable city centre real estate in Western Europe. As demand surges, Porto’s housing market is forecasted to continue to thrive. Low property values coupled with rising prices can mean higher capital appreciation for investors who act quickly.

High standard of living

Of course, tax incentives, economic growth, and high capital appreciation potential by themselves would not be enough to make Porto the latest darling of smart real estate investors. Fortunately, Porto has a lot more going for it. Situated on the northeast coast, Porto enjoys a temperate climate year-round and 220 days of sunshine per year. The bustling waterfront hub combines modernity and tradition, juxtaposing its historical monuments and baroque with contemporary architecture and cutting-edge Michelin-starred eateries. A safe city with excellent infrastructure, colourful culture, and low cost of living, Porto pulls in an eclectic mix of expats, entrepreneurs, digital nomads, and retirees from around the globe. Energetic, charming, and innovative, Porto has become one of the most promising investment opportunities in Europe.