Portugal Real Estate Market: Resort Housing Sales Hit New Highs

Explore the surge in resort housing sales in Albufeira-Loulé, with British buyers making up 47% of villa purchases as expectations soar.

In the picturesque realm of the Albufeira-Loulé area, British nationals constitute a significant 47% of villa purchasers, according to the latest “Portuguese Resorts Market Report” crafted by Confidencial Imobiliário in collaboration with the Portuguese Association of Residential Tourism and Resorts. This report unveils a remarkable resurgence in operators' expectations regarding transaction volumes for resort homes, reaching a three-year zenith—an indication of burgeoning confidence in the market's trajectory.

The optimism is not merely a whimsical notion; it is underpinned by an improving macroeconomic landscape and a notable rebound in the residential market's sales figures. Interestingly, while operators maintain their forecasts regarding price stability, the first half of 2024 has witnessed a 5.9% uptick in sales prices for resort homes compared to the same period in 2023. This follows a previous cycle characterized by robust price escalations, culminating in an astonishing annual increase of 26.6% in H1 2023. The current appreciation levels appear to align more closely with the broader residential market trends, perhaps reflecting the already elevated price points within this niche.

However, the narrative is not devoid of complexities. The first half of 2024 was marked by a conspicuous decline in transactional activity within the resort sector, attributed largely to the cessation of foreign investment incentive schemes, notably the Golden Visas. This policy shift not only curtailed transaction volumes but also narrowed the spectrum of nationalities engaging in the market. A striking illustration of this phenomenon can be observed along the Atlantic Coast, where Brazilian investors dominated foreign purchases in early 2024, contrasting sharply with the diverse array of nine nationalities represented in the latter half of 2023.

Conversely, the Albufeira-Loulé axis, renowned for its well-established resorts, experienced an expansion in the diversity of purchasing nationalities, escalating from five in the latter half of 2023 to eight in the first half of 2024. Despite this diversification, British buyers remain the predominant foreign investors in this locale, albeit their market share has diminished from 62% to 47% during the analyzed periods.

In a noteworthy development, luxury resort properties have seen their values soar, with prices nearing €11,000 per square meter—an unprecedented milestone across the four monitored regions. The Atlantic Coast, in particular, has witnessed prices ranging from €10,450/m² in Sotavento to a staggering €12,250/m². The second quarter of this year revealed a stabilization in sales prices across Albufeira, Lagos, and Loulé, with minimal fluctuations that underscore the resilience of these key residential markets.

The findings of this report unequivocally affirm the sustained interest from both domestic and international investors in acquiring villas within Portugal's resort landscape. Despite the market's temporary slowdown in early 2024, largely due to the withdrawal of Golden Visas, there are promising indicators suggesting a resurgence in sales of resort villas among industry stakeholders, with expectations reaching three-year highs. The outlook for the remainder of the year appears exceedingly favorable, with projections of continued property appreciation in sought-after regions like the Algarve and Alentejo, which remain magnets for both national and international investment.

While the residential market has experienced a cooling phase over the past two years—largely a byproduct of rising interest rates and inflation—the recent macroeconomic improvements herald a revival. The resort sector mirrors this trend, with a clear recovery in demand anticipated, aligning with the broader market dynamics. Thus, the allure of Portuguese resorts, celebrated globally for their excellence, continues to solidify their status as prime destination for real estate investors and residence.