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A new international real estate market report has highlighted the Algarve’s sustained potential for capital growth within Portugal’s luxury property hotspots.
Driven by strong international investment, the region remains a magnet for affluent expats and investors with its growing reputation for delivering high-quality development programs that meet with the objectives of discerning buyers and investors.
The “Portugal’s Property Hotspots Report 2024-2025” from international luxury real estate market research provider Property Market-Index gives an in-depth look at the country’s most coveted areas. It reveals how the Algarve’s cultural richness, high-quality new builds, and attractive tax incentives are fuelling remarkable capital appreciation.
The Algarve, as highlighted in the independent report, continues to draw substantial demand, positioning itself as a prime location for ongoing investment.
Key hotspots identified in the report highlight the Algarve’s dominance:
- Quinta do Lago, Algarve
- Vale do Lobo, Algarve
- Ferragudo/Carvoeiro, Algarve
- Lagos, Algarve
- Estoril, near Lisbon
- Comporta, near Lisbon
- Lisbon districts: Liberdade, Lapa, and Principe Real
- Cascais, near Lisbon
- Silver Coast
- Sintra, near Lisbon
- Foz do Douro, near Porto
- Vilamoura, Algarve
These locations are highly rated based on factors such as regeneration investment, growth trends, cultural heritage, and investment potential.
Senior researcher Amanda Collison from Property Market-Index elaborates, “The luxury real estate market in the Algarve is flourishing, offering significant capital growth potential. The steady arrival of entrepreneurs and affluent families opting for the Algarve is proving beneficial for investors, with construction quality now reaching or even surpassing international benchmarks.”
“The high demand from wealthy buyers at the top end of the market is leading to a shortage of available properties, which is driving substantial capital growth. Property values here are rising at twice the rate compared to the UK, EU, and North America, and we anticipate this trend will persist for at least the next three years due to the imbalance between international demand and supply in the luxury property market.”
Paul Stannard, Founder of Portugal Pathways, an online community that supports affluent families relocating and buying property in Portugal, said:
“The new government in Portugal have shown their intentions to build more homes for local people, but this will take time to implement. The luxury end of the market driven by international expats is set to continue to increase real estate values, and this new report from Property Market-Index highlights some of the areas that offer more value, such as the central Algarve areas of Ferragudo, Carvoeiro, Lagoa and Benagil.”
The scarcity of new property developments in Portugal has become a critical factor in this growth. Last year, only 20,000 new properties were built, a stark contrast to the 200,000 constructed over a decade ago.
This scarcity, coupled with heightened demand, has accelerated real estate values in Portugal, outstripping the growth rate of many international property markets in recent years.
Portugal’s attractive tax regimes are a significant draw for wealthy expats, even with the changes that will come in early 2025 for new entrants. The Non-Habitual Residency (NHR) tax incentives offered substantial tax savings on non-Portugal-derived passive income for ten years, and over 75,000 international expats have taken advantage of this since 2009, when it was introduced.
Even with the transition to the new NHR 2.0 tax regime in 2025, Portugal will continue to attract high-net-worth individuals with the right professional qualifications to qualify for the new scheme. This is also driving inward investment and entrepreneurs, bringing new talent and innovation to Portugal.
Sarah Thompson, a British expat, reflects on her experience: “The real estate opportunities here over the past two years have been astonishing, both in terms of architectural quality and the breathtaking locations. With the exceptional quality of life on offer, I’ve never regretted moving here.”
Brookes Property Group is strategically positioned to leverage the current momentum in the Algarve’s luxury property market with their upcoming Quinta Heights development, located between Carvoeiro and Ferragudo.
Managing Director at Brookes Property Group, Phil Button, shares, “We are just launching and have already sold 25% off-plan. The central Algarve is in high demand, offering a rich cultural experience and luxury developments like Quinta Heights, which provides incredible value compared to similar projects in the Golden Triangle, just 30 to 40 minutes away. The capital growth potential in this region, particularly near Ferragudo and Carvoeiro, further enhances our development’s appeal and investment prospects.”
Button adds, “Our Quinta Heights luxury development boasts stunning sea and mountain views, the highest specifications, and amenities such as wellness and yoga spa facilities, garden walks, and even our own rooftop observatory for stargazing under the clear Algarve night skies. Having built international luxury real estate for over 20 years, initially in Florida, then The Bahamas and Antigua, we are excited by the opportunities emerging in the Algarve.”
Anne Brightman, founder of Brightman Group, a luxury boutique real estate agency, offers her perspective on the Algarve’s real estate market:
“While the Golden Triangle, with its proximity to Faro Airport and its strong appeal to wealthy expats, remains a prime area, numerous other regions in the Algarve also offer a lot to affluent buyers and investors. The Algarve is full of hidden gems that buyers and investors should explore. Moreover, the capital growth potential in these less discovered areas is significant, making them attractive options for savvy investors looking to maximize their returns.”
Significant investments in regeneration and infrastructure are also enhancing the appeal of regions like Lisbon, the Algarve, and the Silver Coast, driving further interest from international buyers and investors.
As the Algarve remains a focal point for luxury real estate, its potential for ongoing capital growth remains robust. Portugal’s cultural richness, safety, and lifestyle benefits cement its status as a top destination for affluent expats and savvy investors.
You can access the full Property Market-Index report here for more insight into the latest property hotspots as identified by the research.
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