As the Algarve’s real estate scene continues to thrive, we ask the experts how the region is evolving and what lies ahead
Property prices in the Algarve continue to rise as both foreigners and Portuguese flock to the region to secure a safe haven in an increasingly unstable world.
ONE Select Properties – Villa Alma, Loulé
But who exactly is investing in Portugal’s Gold Coast, what are their objectives, and how exactly is it affecting the regional market? We sought insight from Algarve experts.
According to Idealista.pt, Portugal’s leading online real estate platform for buying, selling, and renting properties, real estate prices experienced record surges in the first quarter of 2025, with a 16.3% year-on-year increase, the highest in the EU.
ONE Select Properties – Villa Alma, Loulé
As of May 2025, the average price per square metre nationwide was approximately €2,700, and the median asking price reached €2,851/m².
Strong demand from foreign buyers, young professionals, families, and retirees, combined with limited housing supply due to slow construction, rising costs from inflation, and labour shortages, has resulted in low inventory and increasing prices.
ONE Select Properties – Villa Alma, Loulé
How has this affected the luxury real estate market in the Algarve in recent years, and how is it likely to develop?
José Carvalho, director and founder of ONE Select Properties in Quinta do Lago, believes that, following the pandemic, international demand has remained very strong in the “Golden Triangle” – the area comprising Quinta do Lago, Vale do Lobo and Almancil – with limited supply of new villas or properties on golf courses, overlooking lakes, or close to the beach.
But this is not just the case in this renowned luxurious area.
“The idea that exclusivity was concentrated only in Quinta do Lago and Vale do Lobo is long gone,” says Paul Cotterell, sales director at Casas do Barlavento, in Lagos.
Casas do Barlavento – Lagos
“Currently, the Western Algarve shows an excellent relationship between quality, lifestyle, and maintenance costs, asserting itself as a highly prestigious alternative and becoming an unavoidable reference in the sector.”
So much so that potential buyers need to act increasingly fast to purchase property. “Buyers are naturally looking for good deals, but they are becoming more aware that waiting too long can mean missing out on exceptional properties. The speed of the decision has become a crucial factor in securing the best deals,” warns Cotterell.
Casas do Barlavento – Lagos
So much so that potential buyers need to act increasingly fast to purchase property. “Buyers are naturally looking for good deals, but they are becoming more aware that waiting too long can mean missing out on exceptional properties. The speed of the decision has become a crucial factor in securing the best deals,” warns Cotterell.
However, this may only apply to new builds.
Casas do Barlavento – Lagos
Down in Carvoeiro, Zoie Hawker, managing partner at Fine & Country Algarve, confirms the continued growth pattern, but feels the buyers are a little more cautious and are taking more time to buy.
“Prices are still going up, but this is mainly on new properties; the older villas are a little more challenging to sell”, primarily due to their architecture, layouts and need for refurbishment.
As for the near future, prices are expected to shift from double-digit surges to moderate annual growth.
“Whilst the sentiment remains positive in 2025, analysts predict an increase of 8–9% for the next 12 months, followed by a moderate but steady appreciation of around 5% per year,” says Wilfrid Hoos at Engel & Volkers, in Portimão.
Engel & Volkers – Portimão
What are current buyers looking for?
The concept of luxury is evolving.
Engel & Volkers – Portimão
No longer limited to size or fancy finishes, but about personal preferences – the freedom to live in the style one chooses, with access to the amenities, services, and lifestyle that best suit individual or family needs.
Wellness, sustainability, personalisation, and smart living are now central to the luxury market, and the Algarve has embraced these values wholeheartedly.
Engel & Volkers – Portimão
Whilst traditional Algarvian villas with Moorish influences remain popular, there is a growing demand for modern, energy-efficient homes featuring open-plan layouts, floor-to-ceiling windows, and seamless integration with outdoor living spaces.
“Sustainability has become increasingly significant, with developers incorporating solar power, smart-home technology, and water-efficient landscaping to attract environmentally conscious buyers,” says Wilfrid Hoos, adding that space is becoming the new luxury.
Engel & Volkers – Portimão
“The COVID-19 pandemic further accelerated demand for larger homes with private gardens, pools, and home offices, as well as for properties in quieter, less touristy areas. Remote working trends have enabled many buyers to spend more time in the Algarve, boosting interest in primary residences rather than just holiday homes.”
This shift has brought inland and western Algarve locations – such as Monchique, Aljezur, and even the Costa Vicentina – into focus for buyers seeking space, privacy, and natural beauty.
Adding to the region’s appeal, its infrastructure has developed in parallel. “Access to international schools, excellent healthcare, Michelin-starred restaurants, cultural experiences, and year-round recreational activities ensure that residents can enjoy a complete, well-rounded lifestyle, whether living alone, as a couple, or with a young family,” highlights Scott Bennett, head of marketing at the Portuguese Chamber of Commerce in the UK, for whom connectivity is another major factor.
Engel & Volkers – Portimão
The ability to work remotely, travel efficiently, and stay digitally connected has made the Algarve particularly appealing to remote workers, entrepreneurs, and international families.
Faro Airport’s expanding routes, including to North America, have helped strengthen the region’s reputation as both accessible and globally connected.
Crucially, the Algarve offers peace without solitude, modern infrastructure without traffic congestion, and an international flavour without losing authenticity.
This balance is rare, and it is exactly what makes the region stand out in today’s competitive property market.
When it comes to usage, are most properties purchased as an investment, second home, or primary residence?
Before 2020, the luxury real estate market was mainly driven by holiday or second homes, which were used seasonally and rented out during vacant periods to offset expenses.
Fine & Country Algarve – Tavira
This segment still dominates, accounting for 50–60% of buyers, with investment buyers comprising 25–30%. These investors usually focus on short-term holiday rentals, branded residences with about 4–6% guaranteed annual returns, and capital growth.
The smaller segment of primary homes (10–20%) has become the fastest-growing part since the pandemic, driven by remote work, lifestyle migration of retirees, and the increasing number of wealthy Portuguese.
“We observe a growing trend of families moving to the Algarve in search of quality of life,” admits Paul Cotterell, of Casas do Barlavento. “Even so, most acquisitions continue to be associated with the second home, often also thought of as an investment with a return through renting.”
Which nationalities are currently buying the most property in the Algarve?
Regarding the origin of buyers, British and Irish buyers, historically the largest group, still account for 45–50% of foreign purchases, followed by Germany (10–12%), France (8–10%), the Netherlands (6–8%), the US (6–8%, and increasing rapidly), other Europeans (Swiss, Belgian, Scandinavian, Spanish 10%), Brazil and others (5%).
Fine & Country Algarve – Tavira
The diversity is significant, as Fine & Country Algarve’s Zoie Hawker highlights: “We have sold to buyers from 32 different countries in the last two years at our four offices across the Algarve.”
Driven by geopolitical tension, political instability, lifestyle rebalancing, and the pursuit of a better quality of life, Americans are now the fastest-growing group, showing a steady increase in interest, especially in luxury resort areas.
Fine & Country Algarve – Tavira
At the same time, the number of Portuguese cash buyers entering the luxury segment has risen, indicating high confidence and significant domestic wealth accumulation.
And how has the end of the Golden Visa programme for real-estate investment affected the market?
Although the Golden Visa programme for real estate was discontinued in late 2023, foreign investment in Portugal remains strong, driven by the country’s high quality of life, expanding luxury property market, and economic stability.
Fine & Country Algarve – Tavira
The way José Carvalho of ONE Select Properties sees the end of the Golden Visa through Real Estate, it has not and will not affect the luxury segment: “For the Golden Visa, in the ultra-prime segment of the Algarve, the impact was limited, and most of these buyers rarely depended on the real estate visa route.
Although the NHR regime has been terminated, it has been replaced by a new tax incentive (IFICI) aimed at research, innovation and specific qualified profiles.” Essentially, for this luxury market, demand has remained because lifestyle appeal and product scarcity prevail.
“Initially, there was some impact, but it was soon recognised that Portugal, especially the Algarve, offers compelling reasons to attract investment without relying on tax incentives.
The climate, safety, hospitality, and overall quality of life make the decision to invest straightforward, regardless of the existence of these programmes, concludes Paul Cotterell of Casas do Barlavento.
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