Five things you need to know about the Algarve property market
From tax benefits to strengthening US demand, we take a look at the trends and drivers behind Portugal’s top second home destination
2 minutes to read
1. Prime prices vary significantly along the coast
At €17,000 per sq m Quinta do Lago commands the highest price, the resort set a new record in 2023, recording the Algarve’s first sale above €20 million.
The region is also known for its affordability and relatively low cost of living. For those with smaller budgets, resorts such as Quinta Verde and Vilas Alvas offer prices closer to €8,000-€9,000 per sq m.
According to Knight Frank’s Prime International Residential Index (PIRI 100), the Central Algarve recorded 16% annual price growth in 2022, the second-highest rate of any European market.
2. The halting of the Golden Visa will have little impact on the Algarve property market
In January 2022, the rules on where and what type of property qualified for Portugal’s Golden Visa programme changed and in February 2023, Antonio Costa, Portugal’s Prime Minister announced no new Golden Visas would be issued due to concerns around housing affordability.
The initiative has generated over €6.8 billion in investment since 2012, but it is unlikely to impact the Algarve property market given it encompassed limited parts of the coastline.
3. US buyers increase in 2023
In 2023, British, Irish, Portuguese, US and German buyers are most active in the central Algarve. Accessibility is a key draw with Faro Airport offering flights to 79 global destinations.
Of note is the rise in US interest witnessed by Mapro Knight Frank, buoyed by the strong dollar and the region’s 40-plus golf resorts.
4. Portugal’s Non-Habitual Residents (NHR) tax is a key draw for expats
Introduced in 2009, the NHR allows qualifying foreign residents to take advantage of significant tax savings during their first ten years in Portugal. It includes a 20% flat rate of income tax and exemptions for some private sector pensions.
French, Italian and British nationals are the biggest beneficiaries of the NHR regime according to the Portuguese Ministry of Finance.
5. Golfers and cyclists are providing strong rental demand for second homeowners
The Algarve’s golf courses attract over 206,000 visitors each year and cycling tourism, both road and mountain biking, are on the increase providing a valuable source of both buyer and rental demand for the region.
Golf-related real estate transactions and construction has generated c.€68 million nationwide according to Deloitte as expat golfers look to buy a base on the coast. The new One Green Way, a gated development at Quinta do Lago, is a prime example.
Contact Alex Koch de Gooreynd to discuss the Algarve market in more detail.
Read the latest Algarve Residential Market Insight
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