The English have a long relationship with Porto and the steep-terraced slopes of the remote but beautiful Douro valley. More than 200 years ago, fashionable gentlemen discovered a taste for the sweet red wine of northern Portugal, but it turned to vinegar on the trip home. So it was fortified with sugar to last the journey, and port was invented.

Today, British househunters are making a return trip, navigating the vertiginous roads into the hilly hinterland to rediscover the rural villages, 18th-century quintas, or farms, and the new boutique developments springing up in the wilder wine-growing regions. Indeed, the Portuguese Real Estate Association says 18,000 of us bought property in the country last year, and a growing number are choosing homes in the Minho and Douro regions within two hours’ drive of Porto, the country’s second-largest city.

In the Douro, the names of the famous port companies – Sande-man, Graham’s, Taylor’s, Offley and Cockburn’s – are displayed in letters up to 10ft tall on the vine-clad hillsides. Traditional whitewashed quintas, whose thick walls have kept generations of wine-makers cool during the blistering hot summers, rarely come up for sale. When they do, they are often exorbitantly priced (decent period properties with some vines start at £1m) or in need of complete, and equally expensive, renovation. According to Jerry Harris, a director of Abacus, a Lisbon-based chartered surveyor, a rundown farmhouse in the Douro costs from £320,000 to £500,000, but, he warns, allow another £500 a square metre to do it up.

As a result, most buyers are looking to the new. However, building in the Douro and, to a lesser extent, in the Minho, is a tricky business. Hemmed in by the rugged landscape and strict local planning laws, developers can build only small-scale projects, which means more expensive properties aimed at the sophisticated buyer who knows the difference between tawny and ruby port.

At the Aquapura hotel, a converted 19th-century country house near Peso da Regua – and one of the first luxury hotels in the region – the owners have built 21 residential units, each with a private wine cellar, for sale freehold on a leaseback basis. Under the formula, which is common in France but an innovation for Portugal, buyers lease back their property to the hotel, but have eight weeks’ use a year and benefit from rental income for the rest of the time.

“It’s a completely new concept,” says Miguel Simoes de Almeida, the managing director of the boutique hotel group who is overseeing the project. “It is directed at second-home owners who want a luxury lifestyle and an investment. “It’s closer than South Africa, cheaper than Tuscany and, well, just different from France.”

The properties, 14 riverside terraces clad in the local purple-grey slate and seven villas surrounded by vineyards, come fully furnished and are surprisingly modern: the wood floors are stained a rich pink reminiscent of port wine, dark colours and suede are used throughout, and each bathroom features a vast, freestanding porcelain bath.

Prices start at £433,000 for the smallest one-bedder, up to £1m for the largest two-bed terrace. Rental income is guaranteed at 6% for the first two years; thereafter, it will depend on how well the properties let out. As part of the deal, owners can use the hotel and its 20,000 sq ft spa complex, two restaurants and optional butler service. “Prices are still about 25% behind those in Porto,” says Simoes de Almeida. “We expect them to catch up over the next couple of years. There is a lot of opportunity.”

This is Portugal for grown-ups. The rustic farmhouses and ambitiously modern new developments are many miles from the pastel-coloured villas and golf courses of the Algarve and the cosmopolitan glitz of Lisbon.

Where Aquapura leads, others follow: the Vidago Palace, on the border of the Douro and Tras-os-Montes, is launching a similar scheme in the next year. At Castelo de Paiva, a 40-minute drive southeast of Porto, work has started on Douro 41, a project that comprises 26 villas and a hotel. Prices start at £271,000 for a one-bed flat; two-bedders cost from £433,000.

Rui Martel, a sales agent for Douro 41 and freelance property finder, admits property in the area is pricey: a reflection of the growing demand for second homes from Portuguese as well as foreign clients. Buyers should be especially wary of the “crazy prices” being asked by the owners of some traditional manor houses, in particular, he says. His advice? As always, do your research.

Head east to Lamego, which produces sparkling wine rather than port, and there is more building under way. Here, Francisco Lopez, the mayor, is promoting similar small-scale development. “We don’t want to be an Algarve or a Madeira,” he says, “but we need houses to sell. We need more high-quality rooms to encourage visitors and the local economy. We want second-home-owners and foreign investors to come to the Douro. We want to do it and do it right.”

There are plans in the pipeline to build seven more hotels in the area – from 14 up to a maximum of 50 rooms. Both the local tourist board and the planners are pushing for the schemes to include second homes or a residential investment scheme.

Venture south to the mountainous Beira Alta, an hour’s drive from Porto airport, and you’ll find the medieval village of Povoa Dao, which is being restored by the Catarino Group, a Portuguese construction company. The 700-year-old properties have been immaculately renovated: they all now have water, electricity and heating, and are kitted out with mod cons and comfortably rustic interiors suitable for holiday lets.

On the banks of the River Dao, the new tourism village will have 52 units, 45 of which are offered as leaseback, with four weeks’ use per year. The properties all share on-site management services, a swimming pool, tennis court and club bar. Prices start at £132,000.

“When we first saw the village, we were completely enraptured,” says Vitor Catarino, president of the building group, about Povoa Dao. “We have paid close attention to recreating the authenticity of the village, complementing its natural surroundings and providing buyers with all the modern comforts.”

One British buyer, Liam Donnelly, 53, and his wife, Monica, 51. fell in love with the area, to the extent that they have acquired two properties. The couple bought a four-bedroom farmhouse near Ponte de Lima in the Minho, for about £67,000, about 18 months ago. They have also kept their seaside villa near Porto.

“Most English people head to the Algarve, but you have to pay English prices,” says Donnelly, a businessman originally from Liverpool, who is based now in India but calls Portugal home. “It is beautiful, cheaper and less developed here.

“I’m sure it will all change eventually, but it certainly won’t happen overnight. It still has that lost-in-time charm,” he adds. “You see old ladies dressed in black carrying bundles of sticks on their backs, and you can still get lunch with wine in the village for less than £8.”

Porto of call

A fully furnished two-bedroom riverside flat at Aquapura, in the upper Douro, has a private terrace and rooftop splash pool.

For sale for £750,000 on a leaseback basis, through Cushman & Wakefield; 0870 042 9773, www.aquapuravillas.com

Quinta das Nogueiras, an 18th-century country house near Peso da Regua, has a chapel, three further properties and 15 acres.

For sale for £2.6m; viewing by arrangement with the owner: vallado.fc@mail.telepac.pt

A three-bed, 246-square-metre villa at Douro 41, near Castelo de Paiva, is due to be built into the steep riverside terraces by December.

For sale for £795,000, with Abacus, in association with Savills; 00 351 21 317 0577, www.abacusproperty.pt

A two-bed cottage is one of 45 in the restored medieval village of Povoa Dao, which lies an hour’s drive south of Porto airport. Owners will have use of a pool and club bar.

For sale for £219,000, with Catarino; 0870 112 5472, www.povoadao.co.uk

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