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
Where are the best places to invest in the Algarve right now? Is Albufeira still the top pick, or are towns like Lagos, Tavira, and Portimão gaining ground? What makes these locations attractive to both local and foreign investors?
We’re often asked these questions because we work directly with notaries, real estate agents, and clients who invest across the region. Our firsthand experience in these markets gives us unique insights into where the real opportunities lie. To save everyone from asking privately, we’ve written this article to share our knowledge broadly.
Our goal is to highlight the hottest markets in the Algarve and explain why they’re worth your attention in 2025.
If you have suggestions or want us to dive deeper into a specific area, let us know. You shoot an email, we answer within 24 hours.
How this content was created 🔎📝
Fact-checked and reviewed by our local expert
João Morais 🇵🇹
Founder | Real Estate Advisor, at Wilderness Investments
1) Alcoutim is attracting interest for its riverside charm and affordable properties, ideal for a quieter lifestyle with investment potential
Alcoutim is becoming a popular choice for those looking for a peaceful lifestyle and investment opportunities.
With its average property price at just 786 euros per square meter in January 2024, Alcoutim is much more affordable than places like Loulé, where prices soar to 3,989 euros. This affordability is a key factor in the growing interest and sales in the area.
Post-pandemic, there's been a noticeable shift towards quieter, rural living, and Alcoutim fits this trend perfectly. Its serene environment and lower property prices make it an attractive option for those wanting to invest in a peaceful lifestyle. The town is also catching the eye of the media as a new real estate hotspot, which is drawing even more potential buyers.
Recent infrastructure improvements are making Alcoutim more accessible, enhancing its appeal for those who want tranquility without sacrificing convenience. The rental yield has increased by 4.8% in the last three months, suggesting promising returns for investors. This aligns with the growing interest in rural and riverside living, which has surged post-pandemic.
Alcoutim's riverside location is a major draw, offering a unique lifestyle that combines natural beauty with investment potential. The town's charm and affordability are attracting a diverse range of new residents, from retirees to young families, all seeking a slower pace of life.
As more people discover Alcoutim, its reputation as a desirable place to live and invest continues to grow. The combination of affordable property prices and a peaceful setting makes it a compelling choice for those looking to escape the hustle and bustle of city life.
Source: With Portugal
2) Ferragudo is attracting investors with its charming village vibe and rising property values
Ferragudo is turning heads with its quaint village charm and rising property values, making it a hot spot for investors.
In 2023, the average property price in Lagoa, where Ferragudo is nestled, was €3,800 per square meter. This is a clear sign of growth, especially when you consider that some top properties in the Algarve are hitting €14,000 per square meter. The Algarve is not just about beautiful beaches; it's a place where property values are climbing steadily.
The region saw a whopping five million visitors in 2023, which is great news for anyone thinking about buying a rental property or vacation home. This tourist boom means there's a strong demand for rentals, and the Algarve is a prime spot for this. In fact, house rents in Portugal, particularly in the Algarve, went up by 6.5% in February 2024.
Real estate agencies are buzzing about Ferragudo as an up-and-coming market. There are plenty of properties up for grabs, like a stunning 5-bedroom villa priced at €2,700,000. The Algarve's property scene is full of potential, with a projected 15% increase in investment volume expected in the latter half of 2024. This is thanks to a more stable economy and a wave of foreign investors looking to get in on the action.
Sources: Rightmove, Benoit Properties, Sardo Real Estate, Portugal Buyers Agent
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) Tavira is attracting buyers with its blend of traditional charm and modern developments
Tavira is a hotspot for property buyers who love a mix of old-world charm and modern living.
In 2023, Tavira's property market was stable, with prices averaging €3,309 per square meter. This balance makes it an attractive option for those looking to invest in a reliable market. By 2024, the Algarve region saw a 5% increase in property transactions, and Tavira was a key player in this growth.
Foreign buyers are flocking to the Algarve, with Tavira leading the charge. Over 50% of property investments in the Algarve come from international buyers, and a whopping 92% of these are in Tavira. This influx is driven by the demand for luxury properties that offer a blend of traditional charm and modern amenities.
In 2024, Tavira's appeal was further boosted by new residential developments and modern infrastructures. The town is seeing a rise in tourist developments that offer short-term rental investment properties with guaranteed returns, making it even more attractive to buyers.
Media coverage and real estate agents are buzzing about Tavira, highlighting it as a prime spot for property investment. The town's unique blend of traditional and modern attractions is a major draw for both local and international buyers.
Whether you're looking for a quaint historical home or a sleek modern apartment, Tavira offers a bit of everything. Its ability to seamlessly blend the old with the new is what makes it stand out in the Algarve property market.
Sources: Portugal Buyers Agent, Algarve Property, Idealista, The Portugal News
4) Vila Real de Santo António is gaining interest for its affordable coastal homes and strong rental market
Vila Real de Santo António is becoming a hotspot for affordable coastal properties and a booming rental market.
In recent years, the area has seen a significant boost in tourism infrastructure, with 200 million euros invested in new hotels and 185 million euros in housing units. This not only enhances tourism but also creates jobs, making it an attractive spot for potential buyers.
Real estate listings highlight the affordability of properties, drawing interest from both local and international buyers. Compared to other coastal areas in Portugal, the Algarve region, including Vila Real de Santo António, offers more budget-friendly options for investors.
The Algarve region is a magnet for tourists, with international arrivals expected to hit 1.3 million by mid-2024. This influx supports a strong rental market, evidenced by high occupancy rates, like the 83.6% hotel occupancy in July 2024.
These factors contribute to stable rental yields, making property investment in Vila Real de Santo António appealing. The combination of affordable prices and a thriving rental market is hard to resist for savvy investors.
Sources: Opção Turismo, Portugal Buyers Agent, Sul Informação
5) Aljezur is gaining interest for its stunning beaches and growing eco-tourism, boosting property demand and prices
Aljezur is seeing a surge in property demand and prices thanks to its beautiful beaches and booming eco-tourism.
In 2023, Aljezur ranked among the top three priciest spots in the Algarve, with homes costing around 3,592 euros per square meter. This is part of a larger trend in the Algarve, where property prices jumped by 13% that year. The area's natural beauty and eco-friendly vibe are big draws for buyers.
Tourism in the Algarve is on the rise, with 5.13 million visitors in 2023, a 7.7% increase from the previous year. This influx is boosting interest in Aljezur properties, especially those near the coast and with eco-friendly features. People are looking for homes that offer a sustainable lifestyle and easy beach access.
Aljezur's charm is getting a lot of attention online and in the media, which is helping to drive up property interest. The region's eco-tourism appeal is frequently highlighted, making it a hot spot for potential buyers. Government efforts to promote sustainable tourism are also playing a part in this growing demand.
Social media is buzzing with posts about Aljezur's natural attractions, which is increasing its visibility. This online presence is making more people aware of the area's unique offerings, further fueling the property market. The combination of stunning landscapes and eco-friendly living is a winning formula for attracting buyers.
With its mix of natural beauty and sustainable living options, Aljezur is becoming a top choice for those looking to invest in property. The area's appeal is only set to grow as more people discover what it has to offer. The demand for homes in this picturesque region is likely to continue rising.
Sources: The Portugal News, Portugal Resident, TOGOFOR-HOMES
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6) Castro Marim is gaining interest for its golf resorts and closeness to the Spanish border, attracting international buyers
Castro Marim's golf resorts are becoming a hot spot for international buyers, thanks to a surge in golf tourism in the Algarve.
In 2023, the Algarve hit a milestone with 1.4 million rounds of golf played, drawing golf lovers from all over. Castro Marim's location near the Spanish border adds to its charm, offering easy access to both Portuguese and Spanish markets.
This strategic position is a goldmine for cross-border business, making it a magnet for international investors. The Algarve region, home to Castro Marim, has seen over 50% of property investment coming from abroad, mainly from Germany, the UK, and Belgium.
Such strong international interest is no surprise, given the improved transport links. Faro Airport has ramped up its international flight connections, and in 2023, it experienced a significant rise in passenger numbers, making it easier for buyers to reach the area.
These factors, combined with the allure of Castro Marim's golf resorts, are driving its popularity among international buyers. The region's appeal is further enhanced by its proximity to the Spanish border, which opens up a world of opportunities.
With the Algarve's property market thriving, Castro Marim stands out as a prime location for those looking to invest in a vibrant and accessible area. The combination of golf tourism, strategic location, and improved transport links makes it a desirable destination for international property buyers.
Sources: Idealista, Portugal Resident, Assetfolio
7) Monchique is attracting interest for its scenic mountain views and affordable properties, ideal for a peaceful retreat with growth potential
Monchique offers stunning mountain views and affordable property prices, making it a perfect spot for a peaceful retreat with growth potential.
With property prices averaging €2,300 per square meter, Monchique is a bargain compared to coastal hotspots like Lagos or Albufeira. This affordability is a big draw for those seeking value in the Algarve.
While Portugal's real estate market has seen price hikes, Monchique has kept its property prices stable and affordable. This, along with a lower cost of living than coastal towns, makes it a great escape from the daily grind.
Post-pandemic, there's a growing interest in rural and scenic locations, and Monchique's natural beauty and tranquility fit the bill perfectly. Buyers are increasingly drawn to its serene environment.
The rise of remote work has boosted demand for rural properties, adding to Monchique's charm as a peaceful haven. Infrastructure improvements, like thermal springs and hiking trails, make it even more appealing.
Real estate agents report a surge in interest for Monchique properties, highlighting its potential for growth. This demand underscores the area's attractiveness and future prospects.
Sources: Real Estate in Portugal's Algarve: Prices and Popular Regions, Portugal Real Estate & Homes for Sale in Portugal, Cost of Living in Portugal: The Algarve Compared to Other Regions
8) Olhão is attracting buyers with its waterfront developments and rising property prices
Olhão's waterfront developments are boosting property prices and attracting buyers interested in modern living spaces.
In 2023, the average asking price for properties in Olhão hit €3,395, showing a clear upward trend. This rise is partly due to the high demand for luxurious rentals, which are priced at €1,690 per month, making waterfront living quite appealing.
The town is buzzing with new residential projects, thanks to urbanization and a shift towards vertical living. This has sparked a construction boom, with many properties being renovated to meet contemporary standards, catering to the growing demand for modern spaces.
Olhão's thriving tourism industry and local job opportunities are fueling this demand. The Algarve region, including Olhão, is a magnet for foreign buyers, drawn by residency rights and tax incentives, which further push property prices up.
Rental yields in Olhão are at 4.7%, indicating a balanced market with steady interest from both local and international buyers. This makes it an attractive spot for investment, especially for those looking to capitalize on the area's growth.
Sources: Olhão Portugal Real Estate, Best Places to Airbnb in Algarve, Portugal, 2024-2025 Market Trends for Homes in Portugal - Live Algarve, Algarve Property Prices in 2024 – What to Expect
We have made this infographic to give you a quick and clear snapshot of the property market in Portugal. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Silves is gaining attention for its rich history and tourism investment potential
Silves is becoming a hot spot for property buyers, and property prices have jumped by 9.1% in 2023.
With the average cost per square meter now at 3,251 euros, it's clear that demand is on the rise. This charming town is not just about numbers; its rich history is a big draw. Silves is famous for its ancient castle, a stunning reminder of its past, and the lively urban attractions that keep visitors coming back.
One of the highlights is the annual Medieval Fair, one of the biggest summer festivals in the Algarve. This event showcases the area's cultural heritage and pulls in tourists from all over. It's a perfect blend of history and fun, making Silves a unique place to invest in.
Adding to the allure is the development of new tourism-related infrastructure. The Orange Route, for instance, offers visitors unique experiences and boosts the area's appeal. This kind of development is a game-changer, positioning Silves as a must-visit location.
Increased media coverage and glowing reviews are also playing a part in this trend. Silves is getting noticed, and for good reason. The combination of history, culture, and new attractions makes it a prime spot for property investment.
For those looking to invest, Silves offers a mix of old-world charm and modern opportunities. It's a place where history meets potential, making it an exciting choice for property buyers.
Sources: The Portugal News, Explorial, Portugal Buyers Agent
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. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.