[Portugal] Algarve’s Real Estate Boom: 50% Foreign Investment

Discover how over 50% of real estate investment in the Algarve is foreign, with Lagos leading in housing price increases. Explore the implications.

In a striking revelation from Engel & Völkers' Market Report Portugal, it has been unveiled that a staggering majority—over fifty percent—of property investments in the picturesque Algarve region are sourced from foreign investors. The demographic landscape of these investors is predominantly characterized by German, British, and Belgian nationals, each vying for a slice of this sun-kissed paradise.

The Lagos area emerges as a veritable hotspot for foreign investment, with an astonishing 82% of transactions facilitated by the agency attributed to international buyers. Meanwhile, Albufeira-Carvoeiro follows closely, where foreign investments account for a commendable 72% of property acquisitions. Tavira, however, takes the cake with a remarkable 92% of its property transactions being conducted by foreign entities. In the more urban locales of Vilamoura and Faro, international investors comprise approximately half of the market.

When it comes to the types of properties that pique the interest of these overseas investors, the allure of villas boasting three to four bedrooms reigns supreme. These coveted abodes typically span an area of 200 to 300 square meters, often featuring luxurious pools, expansive outdoor spaces, and proximity to the idyllic beaches that define the Algarve's charm. In Vilamoura, there is also a notable demand for two to three-bedroom apartments, particularly those with generous terraces that invite leisurely afternoons under the sun.

Turning our gaze to the fluctuating landscape of house prices in 2023, it is Lagos that has witnessed the most pronounced increase compared to the previous year. In contrast, Portimão, Vilamoura, and Albufeira have experienced relatively modest price hikes, with Vilamoura and Portimão reporting a 12% increase, while Albufeira saw a slightly higher rise of 17%. Faro and Tavira, however, have not been left behind, with increases of 20% and 25%, respectively, adding to the competitive nature of the market.

In the realm of rentals, Vilamoura claims the title for the highest prices, with a staggering €9.40 per square meter, closely followed by Portimão at approximately €9.25 per square meter. Albufeira, Tavira, and Lagos are not far behind, with rental prices hovering around €9 per square meter. On the other end of the spectrum, Faro emerges as the most affordable option, with rental prices languishing at around €7.30 per square meter.

The Algarve's real estate market is a vibrant tapestry woven with foreign investment, rising prices, and a diverse array of sought-after properties, all set against the backdrop of its stunning coastal allure.