Foz do Douro, Soon to be the New Darling of the Real Estate Market

17 September 2018

Foz do Douro – which stretches from Jardim do Passeio Alegre to Castelo do Queijo – is Porto’s most-sought-after area and may soon become a new centre of attraction for real estate investment in Porto. Many of the professionals that discussed the matter with idealista/news believe that this will be a reality soon. Alongside Foz, Baixa do Porto will also have a rival in the area of Matosinhos Sul, where the supply of housing for sale and rent is also very limited.

The increasing cost of housing, especially in downtown Porto, is leading many buyers to seek homes in other areas of the city, generating new opportunities for investment in real estate development. The average price per square meter (m2) in residential projects amounted to €2,129 in the city’s historic centre and €2,025 in Foz, according to data from the first edition of Marketbeat Porto, a market study by Cushman & Wakefield (C&W).

The Foz area, which has been a home, historically, too many of the city’s richest families, now has a major ally: the newly created Foz Velha Urban Rehabilitation Area – ARU, which was approved unanimously at a meeting of the Municipal Assembly and is expected to be ratified soon. Some critics of the measure believe, however, that the ARU for the area was not required since any properties in the region are quickly sold out.

Prime region with degraded areas

Carlos Vasconcelos of through Quantico-Albatross, who is investing in the rehabilitation of the Montevideu mansion – located on the avenue with the same name – has no doubts about Foz’s potential.

“It is a prime area of the city and, because of its historical and architectural attractions, it has all the necessary conditions to attract investment, especially since the region has many degraded areas,” the developer stated.

The executive chairperson of Quantico, which leads a joint venture that will invest 18 million euros in transforming the iconic mansion into a luxury residential project, guarantees that “it makes perfect sense” that the municipality has created the Foz Velha ARU.

In his opinion, “similar to what happened with other ARUs, this will allow an acceleration in investment and the requalification of the area.”

Increase in supply as a factor in reaching equilibrium

Francisco Bacelar, president of ASMIP (an association that represents real estate agents), believes that the area has everything necessary to attract investment.

“Of course the area has traditionally been inaccessible due to its higher prices, but an increase in supply may be a factor towards reaching equilibrium, in addition to other advantages stemming from increased jobs and tourism,” he said.

Thus, Mr Bacelar added, “with the advantages from the ARU coming into play, the new interest in possible investments will become a reality.”

João Nuno Magalhães, director general of Predibisa, is of the same belief. “I think that we have to defend this valuable asset and with an ARU, we will have tax incentives that will allow us to rehabilitate and regenerate many of those streets and crossings,” he noted.

Limit incentives to just owners

However, some disagree, including David Pinto. The CEO of Promotop, which has developed a number of projects in the areas of Foz and Fluvial in recent years, has doubts about the need to move forward with incentives in an area where every building that is offered for sale is quickly bought.

“It would be all right, provided that the tax benefits and incentives are always strictly associated with people (owners) who are affected by social vulnerability,” Mr Pinto said.

However, he added, “it is clear that any benefits/incentives would also have to be removed automatically, or even be clawed back, should any of the recovered/enlarged properties later get sold and become a part of the ongoing real estate speculation.”

Thirty to 40 buildings under reconstruction

Manuel Santos Silva, the head of Cerâmica Valadares – who has extensive experience in real estate development – disagrees with the need for the creation of an ARU in an area which already has significant demand for real estate and where housing prices are at a high. In his opinion, “it makes no sense to be giving incentives in an area like Foz Velha, where, at the moment, 30 to 40 buildings are being redeveloped.”

Mr Silva added that any new real estate in the area is quickly absorbed and housing prices are high “even in undesirable buildings on almost inaccessible streets.”

Municipality wants to reduce tourism pressure in the centre

The Porto City Council, according to information available on its website, noted that “with the approval of the Foz Velha Urban Rehabilitation Area – ARU, the ninth ARU in the city, [the city council] is continuing to pursue a municipal policy that encourages the dynamisation of urban and economic areas in regions outside of the city’s downtown, thus stimulating the revitalisation of the city and its surroundings while also seeking to reduce pressure from tourism in the centre.

According to the same source, the Foz Velha ARU covers “a large part of the territory in the Union Parishes of Aldoar, Foz do Douro and Nevogilde, and a small part of the Union of Parishes of Lordelo do Ouro and Massarelos.”

Original Story: Idealista – Elisabete Soares

Photo: Promotop

Translation: Richard Turner