Authored by the expert who managed and guided the team behind the Portugal Property Pack
Yes, the analysis of the Algarve's property market is included in our pack
What do the latest numbers reveal about the Algarve’s real estate market? Are property prices on the rise, or are they stabilizing? Which areas offer the highest rental yields, and how does foreign investment influence these trends?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who invest in the Algarve, we’ve gained firsthand insights into these trends. Instead of answering these queries one-on-one, we’ve written this article to share key data and statistics with everyone interested.
Our goal is to provide you with clear, reliable numbers that help you make informed decisions. If you think we’ve overlooked something important, feel free to reach out. Your feedback helps us create even more useful content for the community.
How this content was created 🔎📝
Fact-checked and reviewed by our local expert
João Morais 🇵🇹
Founder | Real Estate Advisor, at Wilderness Investments
1) New apartment construction in the Algarve increased by 9% in 2024
In 2024, the Algarve experienced a 9% increase in the construction of new apartments.
This boom is largely due to the region's appeal, bolstered by the development of golf courses and enticing tax incentives for foreign buyers. These factors have made the Algarve a hotspot for property investment, drawing in buyers from around the globe.
Back in 2023, Portugal's residential construction sector was already thriving, with licensed dwellings rising by 6% to 32,053 units. This strong performance laid the groundwork for the Algarve's continued growth in 2024.
Meanwhile, property prices in the Algarve were climbing, with apartment prices up by 6.1% year-over-year in April 2024. This price hike signals a robust demand for new apartments, pushing developers to build more to satisfy eager buyers.
For those considering a property purchase, the Algarve's market dynamics offer a promising opportunity. The combination of rising prices and increased construction suggests a vibrant market with potential for future gains.
Sources: Global Property Guide, Imovirtual, My Portugal Residency
2) In 2025, Algarve property prices are rising by at least 3% compared to 2024
In 2025, the average property price in the Algarve is increasing by at least 3% compared to 2024.
In 2024, the Algarve's property prices averaged €3,533 per square meter, reflecting a modest rise. While the Algarve saw a 1.3% year-over-year increase by April 2024, Portugal as a whole experienced a more robust growth. Nationally, from April 2023 to April 2024, the median price of dwellings in Portugal increased by 7.04%.
The Algarve's popularity means its property market can vary significantly depending on location and type. Economic growth and foreign investment are key drivers here. With Portugal's GDP expected to grow by 1.8% in 2025, this could further boost property demand in the region.
Foreign investors are particularly drawn to the Algarve, attracted by its scenic beauty and favorable climate. This interest often leads to increased competition for properties, which can drive prices up. The region's appeal is not just limited to vacation homes; many are considering it for permanent residence, adding to the demand.
Moreover, the Algarve's infrastructure and amenities continue to improve, making it an even more attractive option for buyers. The combination of these factors suggests a dynamic property market, where prices are likely to keep rising.
Sources: Properstar, Global Property Guide
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Portugal versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Eco-friendly property developments in the Algarve increased by 12% in 2024
In 2024, the Algarve experienced a 12% increase in eco-friendly property developments.
This surge is largely due to a growing emphasis on sustainability in the region's property market. Developers have started to focus on eco-friendly construction methods and energy-efficient designs, with many new properties now featuring solar panels, sustainable materials, and high-quality insulation.
The Portuguese government has also been instrumental in this shift by offering green incentives like grants and tax breaks. These financial perks have made it more appealing for developers to invest in eco-friendly projects, aligning economic benefits with environmental goals.
Moreover, there's a noticeable rise in demand from environmentally conscious buyers. These individuals are actively seeking homes that meet sustainability criteria, further driving the trend towards eco-friendly developments in the Algarve.
In the years leading up to 2024, the combination of government support and consumer demand has created a fertile ground for sustainable real estate. This has resulted in a market where eco-friendly properties are not just a niche but a growing segment.
As a result, the Algarve is becoming a hotspot for those looking to invest in properties that are both environmentally responsible and economically viable. The region's commitment to sustainability is evident in the increasing number of green developments that cater to a new generation of eco-conscious buyers.
Sources: Sardo Real Estate, Ocean Horizon, The Magnolia
4) Demand for properties with private pools in the Algarve rose by 5% in 2024
In 2024, the Algarve experienced a 5% increase in demand for properties with private pools.
This surge is largely due to the Algarve's growing reputation as a luxury living destination. International buyers and digital nomads are flocking to the region, drawn by its high-quality living spaces. Properties with private pools are especially appealing to these groups, offering a touch of exclusivity and comfort.
The Algarve's thriving tourism industry and strong rental yields are also key factors in this trend. Buyers are keen on properties that promise year-round living potential, and those with private pools fit the bill perfectly. Such properties are not just for personal enjoyment; they are also seen as smart investments, providing substantial rental income.
Moreover, the Algarve's real estate market is buzzing with significant investment activity. Low interest rates and increased foreign investment are fueling this momentum. Properties with private pools are particularly attractive for both short-term and long-term rentals, further boosting their demand.
For those considering a property purchase in the Algarve, the allure of a private pool is undeniable. It not only enhances the living experience but also offers a lucrative opportunity in the rental market. The combination of lifestyle and investment potential makes these properties highly sought after.
As the Algarve continues to captivate international interest, the demand for properties with private pools is expected to remain strong. This trend highlights the region's appeal and the strategic value of investing in such properties.
Sources: Sardo Real Estate, Algarve Property, Portugal Buyers Agent
5) Rental yields in the Algarve are averaging about 5% in 2025
In 2025, rental yields in the Algarve are averaging around 5%.
Over the past couple of years, the Algarve's real estate market has been buzzing with activity. In 2024, there was a 5% increase in property transactions compared to 2023. This surge was largely fueled by foreign buyers eager to take advantage of residency rights and tax incentives. The region's popularity as a tourist hotspot also played a role, with more visitors opting for short-term holiday rentals.
However, this boom has led to a shortage of affordable housing, especially in the luxury segment. The demand for properties has outstripped supply, pushing property prices higher. For instance, in Lagos, the average price per square meter hit €3,936 by mid-2024, making it a sought-after location for both local and international buyers.
These rising property prices have a direct impact on rental yields. As property values climb, so do rental rates, which helps maintain the 5% average rental yield in the region. This trend is particularly evident in popular areas where the allure of the Algarve lifestyle continues to attract investors.
For potential buyers, understanding these dynamics is crucial. The combination of high demand, limited supply, and increasing property values creates a unique investment landscape. It's a market where strategic decisions can lead to rewarding returns, especially if you're considering entering the rental market.
As the Algarve continues to draw interest from around the globe, keeping an eye on these factors will be key to making informed property investment choices. The region's appeal shows no signs of waning, making it an exciting prospect for those looking to invest in real estate.
Source: LiveAlgarve
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6) By 2025, 20% of property buyers in the Algarve are purchasing for rental income
In 2025, 20% of property buyers in the Algarve are purchasing for rental income.
Tourist hotspots like Vilamoura and Lagos are prime locations for generating rental income, especially during the bustling peak seasons. Coastal towns such as Portimão and Loulé are also appealing, with rental yields of 5.9% and 5.1%, respectively, making them attractive to investors seeking steady returns.
The Algarve's charm continues to draw in expatriates, retirees, and investors, even with the recent tweaks to the Golden Visa program. The real estate market here is on an upward trajectory, with property values expected to rise by 5-10% over the next six months, thanks to ongoing demand and limited supply.
Foreign interest remains strong, with many seeing the Algarve as a perfect blend of lifestyle and investment opportunity. The region's appeal is not just in its scenic beauty but also in its robust rental market, which offers a reliable income stream for property owners.
Investors are particularly drawn to the Algarve's potential for capital appreciation, alongside the immediate benefits of rental income. The combination of high demand and limited property availability is a key driver of this trend.
Whether you're looking for a holiday home or a long-term investment, the Algarve offers a compelling case with its strong rental yields and growth potential.
Sources: Portugal Residency Advisors, Private Luxury Collection, Ocean Horizon
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.