Greetings from Coimbra, “the Oxford of Portugal.”

This ancient university city dates from Roman times and has been the seat of Portuguese royalty at various times in history. It’s halfway between the tourism and economic centers of Porto and Lisbon.

Ronan McMahon

Here I am at the University of Coimbra. A decade ago, the historic campus was falling into disrepair. UNESCO World Heritage status has brought money, plus tourists are coming…

The financial crisis and a new modern mall gutted the old town. Businesses and the apartments above them were abandoned to nature and the banks. Then even the banks left.

But now three big trends are converging…

  • UNESCO World Heritage status has brought in a lot of money to Coimbra, including funding from the European Union
  • Portugal’s economy is recovering and tourism is on a tear — growing at more than double the European average
  • Wealthy international students are coming from Portugal’s former colonies, Brazil in particular.

Yet I found an opportunity to buy for as little as €50 per square foot in a historic tourism destination that’s on the up. The bricks and mortar alone would cost double that.

That has my attention.


Coimbra is about half-way between Lisbon and Porto…

Back in Lisbon — just 90 minutes down the road — it’s a different story. A decade ago, Lisbon was dangerous, decaying and half empty.

But prices for renovation have gone through the roof and now labor shortages are obvious. I’m hearing about a 40%-plus spike in construction costs as a result of the boom.

Today, prices are what you would expect to pay in Paris, London or New York. Have a look:

At €2,000 per square foot, the top end of the Lisbon market is now as high or higher than the Paris market…

On my last visit here a year ago, I told you the top end of the Lisbon market was in frothy territory. Now it’s decidedly in bubble territory. Much too expensive.

I’m not calling a crash… yet anyway. The Brazilian and Chinese billionaires buying at the top end of the market here don’t care. And they don’t plan to sell.

A year ago, there was still opportunity. You could buy rundown homes in what historically was a working-class emigrant neighborhood just up the hill from Praça Dom Pedro IV. (Praça means square.)

I stayed in the new My Story hotel overlooking the square. It’s in a newly renovated building. Last year, this square was a mixed bag. One side has been mostly renovated. Another houses the National Theater. The other two sides were largely dilapidated or in poor shape.

Now massive projects are completely gutting and restoring these buildings.

Walking up the hill from the square, those homes I told you about are also being gutted and trendified for the booming Airbnb market. Walk a bit farther and big gates hide multimillion-euro private condo communities. Some are private family compounds.

What a transformation.

Just a few years ago, Portugal was on the verge of economic collapse. The real estate and credit crisis that swept the world about a decade ago was especially destructive to the tiny nation.

But amazingly, the Portuguese government and its people have brought their country back from the brink. In fact, Financial Times recently compared Portugal to Germany, the economic engine of the European Union, stating that “Portugal’s experience of the euro crisis was a bad hybrid of Greece and Italy… [now] Portugal looks more like Germany than Spain.”

Lots of factors have contributed to this… The Golden Visa scheme attracted wealthy Chinese and Brazilians… And Portugal started from a very low base. This modern iteration of the country is so new. Until 1974 it was a terribly run dictatorship — now it’s getting smart.

Plus, the weather is warm for most of the year — and sunnier than California. And the cost of living is low.

But the biggest factor, mostly overlooked, is a little-known change in regulations…

The reason all these buildings were left to fall to ruin is that rent control made any improvement uneconomical. Why upgrade if you can’t increase the rent?

When these rules were changed a decade ago, a huge inventory of historic buildings was freed up and available for improvements. This got the ball rolling — and Golden Visas, economic bounceback and the tourism boom all fed into it.

Since 2012, Portugal has become a safe haven for international investors lured by the Golden Visa program and the promise of a safe place to park their money.

A minimum investment of $350,000 in real estate could get you this visa, which opens up visa-free travel throughout Europe’s Schengen Zone. It’s one of the few citizen-by-investment programs I consider of interest to real estate investors like us.

For now, the opportunity in Lisbon has passed. But studying what happened there has never been more pertinent, given what is happening now in Porto. And what I believe is set to happen in Coimbra.

Portugal is growing up. The best opportunities are still ahead of us. Just not in Lisbon.

Wishing you good real estate investing,

Ronan McMahon

Ronan McMahon

P.S. Get all the upside of investing in real estate internationally without all the effort. Ronan and his team spend thousands of dollars and months on the road doing the legwork so you don’t have to. And Ronan only brings RETA members his best opportunities — the ones he’d be willing to invest in himself — for the biggest potential profits.

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