Best cities to buy real estate in Portugal (ROI comparison)

A practical guide to where to invest in property in Portugal — expected returns, rental demand, and risk factors for each region.

Portugal continues to attract international buyers thanks to its favorable climate, safety, strong tourism sector, and appealing residency opportunities. Even without the traditional Golden Visa property route in Lisbon and Porto, real estate remains a powerful investment tool — especially in areas with high rental demand, regional development incentives, or growing digital nomad communities.

But choosing the right city matters. While buying property in Portugal can be profitable, returns vary from region to region. This guide compares the best locations based on ROI, rental occupancy rates, long-term growth potential, and investor profiles. Whether your goal is short-term rental income, long-term appreciation, or a future relocation, you’ll find options that align with your investment strategy.

Lisbon: Premium market with high demand

Lisbon is Portugal’s economic and cultural capital — a year-round tourism magnet and one of Europe’s fastest-growing tech hubs. Although Golden Visa restrictions now limit certain investment types within the city, Lisbon remains the benchmark for long-term appreciation and liquidity.

Pros:

• Highest rental demand in Portugal — both long-term and short-term
• Constant influx of digital nomads, students, and relocations from EU and US
• Strong property appreciation over the last decade

Cons:

• Higher buying prices compared to other Portuguese cities
• Some short-term rental restrictions depending on neighborhood

Average ROI: 4.5% to 6% yearly (long-term rental)
Best for: Investors seeking stability, liquidity, and premium tenants

Porto: Strong rental market and growing expat demand

Porto delivers everything investors love about Lisbon, but at slightly better prices. It combines tourism, student population, and a thriving services economy. Porto’s charm and UNESCO heritage status continuously drive demand for both short- and long-term rentals.

Pros:

• Lower entry price compared to Lisbon
• Growing number of international companies relocating staff
• High tourism occupancy rate with strong seasonality

Cons:

• Certain historical zones restrict new local accommodations

Average ROI: 5% to 7% yearly (short-term rental)
Best for: Buyers seeking strong tourism + residential dual demand

Braga: Best value for long-term growth

Braga has become one of Portugal’s fastest-growing real estate markets. Known as a booming tech and university city, it attracts younger populations and offers competitive prices compared to Lisbon and Porto.

Pros:

• Lower purchase price
• Active student rental market — high yearly occupancy
• Strong projected capital appreciation

Cons:

• Not a top tourist destination — short-term rentals limited

Average ROI: 5% to 6.5% yearly (long-term rental)
Best for: Investors seeking long-term appreciation and low entry prices

Faro and Algarve region: Best for lifestyle + seasonal premium income

The Algarve remains Portugal’s top sun-destination, loved by retirees, remote workers, and beach-focused travelers. Cities like Faro, Lagos, Albufeira, and Portimão attract a mix of short-term holiday rentals and long-term winter renters (especially Northern Europeans).

Pros:

• High seasonal rental income potential
• Extremely strong tourism industry
• Great option if you plan to eventually relocate

Cons:

• More seasonal compared to Lisbon or Porto
• Management costs can be higher due to tourism turnover

Average ROI: 6% to 8% yearly (short-term rental)
Best for: Vacation rental strategy and lifestyle buyers

Madeira: Rising star for digital nomads

Madeira has exploded in popularity thanks to a remote-worker village supported by the government and fast internet across the island — a perfect storm for medium-term rentals (1–6 months). This creates a niche market with less competition than Lisbon or Porto.

Pros:

• Medium-term rental demand (higher rates, less turnover)
• Mild weather all year
• Increasing infrastructure for expats and remote workers

Cons:

• Island logistics: flights and shipping costs influence seasonality

Average ROI: 6% to 7% yearly
Best for: Investors targeting medium-term rentals

ROI comparison at a glance

City	Average ROI	Best rental strategy
Lisbon	4.5% – 6%	Long-term / expat
Porto	5% – 7%	Short-term + long-term hybrid
Braga	5% – 6.5%	Long-term (students + workers)
Faro / Algarve	6% – 8%	Short-term tourism
Madeira	6% – 7%	Medium-term (remote workers)

How to choose based on your investment profile

Ask yourself one question: Do I want passive income or lifestyle flexibility?

• Passive investor: Braga or Porto
• High income from tourism: Faro / Algarve
• Future relocation: Lisbon or Madeira

Portugal offers something for every investor — the key is knowing what you want the property to achieve.

Want a property shortlist in your budget? We can send options filtered by ROI, location, and rental demand.

Last updated: November 2025. Market data from Idealista, INE Portugal, and regional investment reports.