With staggering cliffs, hidden sea caves, and pristine beaches, there is nowhere else quite like the Algarve. Whether you are looking for a taste of luxury, or for a more authentic Portugal, the Algarve will welcome you with open arms. This, in essence, is what makes the region so spectacular – it can cater to your needs, whatever they may be. Algarve real estate in Portugal has long been popular with expats, and it’s easy to see why the property market will continue to thrive in the coming years.
In this article, we’ll provide you with an overview of Algarve real estate in Portugal and investment opportunities, before delving into the different areas to buy a property. After this, we’ll run over practical information and some cultural aspects to buying in the sunny south.
Why invest in Algarve real estate in Portugal?
With the possible exception of Lisbon, the Algarve is the most well-known region in Portugal. And you will just need a short visit to see why. With a long coastline, the southern region of Portugal attracts millions of visitors each year – whether it is the sublime climate, the delicious culinary delights, or the vast stretches of sandy beaches. Many celebrities have even come to call the Algarve home.
These are just some of the qualities that have made the south a staple in Portuguese tourism and the reason why expats and investors have consistently set the Algarve in their sights.
Algarve real estate in Portugal – rental yields
The golden coast of the Algarve is a great place to buy real estate in Portugal. This is particularly the case if you are considering beach real estate or luxury properties. In 2019, the Algarve alone accounted for 27% of total foreign sales, according to globally renowned real estate service provider, CBRE. To highlight the region’s consistent rise in popularity, average property prices for the last five years have risen by 50%, with the average property price in the Algarve standing at €2674/m2 in 2020.
Algarve properties are a good investment for buyers. Looking at rental yields in the Algarve, the average stands at 5.3%. However, in areas such as Portimão and Faro, yields are higher, at 6.3% and 5.9% respectively.
Homes for sale in the Algarve Portugal – prices
There are many areas to find homes for sale in the Algarve in Portugal. The Algarve is split into specific regions, each with its own price range. For example, in the central Algarve, you will find luxury properties, with private pools and high levels of luxury. You can even find properties in the “Golden Triangle of Quinta do Lago, Vale do Lobo, and Vilamoura that can cost as much as €12.5 million.
In the west, you have Lagos, which is also an in-demand location. Further west still, Sagres (Vila Do Bispo municipality) tends to be more affordable. In the eastern Algarve, you can find more affordable properties and a more “authentic” side of the Algarve. It is worth noting that, in general, as you move further north from the Algarve, property prices will start to decrease.
Prices in the Algarve will also be reflected by the type of property you are looking for and the additional facilities that you want, such as a pool, gym, etc. The Algarve offers many different property types – modern apartments, beach houses, villas – so it’s best to first determine the property type you’d like to go for alongside the region.
Expats in the Algarve
The British have long held a very special place in their hearts for the Algarve. Their presence has not changed, with British retirees continuing to grace the southern coast. Indeed, the British accounted for 33% of foreign property purchases in the Algarve in 2019.
However, the British are not alone in the South. There is now a strong European expat community, with the French, German, Dutch, and Swedes all setting up shop in the Algarve.
While the climate, beaches, and relaxed way of life are all major pull factors for expats in Portugal, there are also significant tax benefits on offer. The non-habitual residence (NHR) scheme can allow expats to live with certain tax exemptions for ten years – an attractive scheme for retirees and families alike.
Where to buy Algarve real estate in Portugal?
The Algarve is split into 16 different municipalities, and each municipality offers something slightly different for buyers. In each region, you will find attractive homes for sale in the Algarve. Here we provide you with a brief rundown of what to expect from buying in the Algarve – divided neatly into three main areas to find stunning Algarve properties.
The central Algarve is very popular with retirees. Vilamoura (in the Loulé municipality) was built as a resort town and provides luxury residences, beach clubs, a golf course, and a casino, plus a large marina. Portugal’s “Golden Triangle”, close to Quinta do Lago and Vale do Lobo, offers a picture of true luxury. Here you have stunning properties with sea views, private pools, and fine dining.
Almancil, close by, has the same vibe as these resorts, with a smaller price tag. There is also a greater historic flair here, with the graceful 18th-Century white Church of São Lourenco.
Albufeira, not far east from Vilamoura, is arguably the liveliest city in the Algarve. With many tourist attractions, such as boat trips in the day, and a buzzing nightlife scene, the city is pretty much built to cater to its expat population.
Portimão is also a viable option, with a heavy expat population, watersports, and a buzzing scene. Here, there are plenty of places for evening dining and partying. For some wanting a quieter place, it is recommended to look elsewhere. The eastern Algarve is an appealing area for a more tranquil lifestyle.
All these locations are very close to Faro airport, so travelers looking to get around easily should have no problem.
The Western Algarve is characterized by stunning rock formations, beach houses, and spectacular views. Those who enjoy water sports will also be happy to know that this is the place to be in the Algarve.
Lagos has a strong expat community and a rich history. There is a good nightlife scene here, although the area is also attractive to families – there being two very good international schools close at hand, the Nobel International School and the Vale Verde international school. It has a very relaxed vibe, and if you simply visit for a few days, you will no doubt want to stay much longer.
On the tip of the country, you have Sagres, a town considered quieter in terms of expats, but haunted by the beautiful power of nature. The westerly point still retains its Portuguese essence, with delicious eateries and a laid-back ambiance that doesn’t seem to have changed much over the years.
In comparison to the central and western Algarve, properties in the east tend to be cheaper. This is partially due to the real estate market being relatively underdeveloped.
The Eastern Algarve is perhaps the most authentic and its natural beauty is well known across Portugal. Take the Ria Formosa Natural Park, a coastal lagoon located in between Faro and Tavira. This is one of the standout locations in the country, and well worth a visit.
The beautiful calm of Tavira provides you with the perfect town and beach mix, with beautiful beaches just a short trip away. And the city itself is a gem, with blue and white houses, the Gilão river running through, and hip new restaurants cropping up next to traditional seafood eateries. The seven-arched bridge, constructed by the Romans, and the Moorish flair across the city will keep history lovers happy.
For those looking for a more undiscovered corner of Southern Portugal, Castro Marim could be an excellent option. This is a historic recluse close to nature with whitewashed houses with distinct blue linings. Alcoutim, the least densely populated part of the Algarve. Without the many expats that constantly head to the Algarve, here could be a peaceful retreat for you. An added bonus of these two areas is that real estate here is much more affordable than elsewhere.
Practical information on Algarve real estate in Portugal
The climate of the Algarve
You are no doubt aware that the climate of the Algarve is extremely favorable. The region has more than 300 days of sunshine each day, perfect summers, and mild winters. The daily average highs are 33°C in July and the average temperatures in January, the coldest month, are 12°C. It also tends to rain very little in the Algarve, with most rainfall between November and March.
Beaches of the Algarve
The beaches of the Algarve are one of the main selling points of the region. With white sandy beaches, top surf spots, and stunning rock formations in the middle of the beach, you will be spoilt for choice. Take the Bengali Caves, the striking sea caves accessible by boat, or the seemingly endless beach of Praia do Barril in the east. With the beaches in the Algarve, we are certain that you will find no complaints on this front.
Lifestyle and culture of the Algarve
With most of the year brimming with sunshine, it’s easy to stay active in the Algarve. Whether you are into hiking, golfing, pilates, and yoga, or a multitude of other sports and activities you should be able to find a viable place for you. These are also great ways to meet fellow expats.
There are also perfect waves, so if you are a keen surfer you will be able to get your fix. If you would simply like to try out surfing, or a wide range of other water sports, there are plenty of options for you.
Keen golfers will be happy to know that they are in one of the best possible locations. There are an impressive 31 golf courses across the region.
For those into fine dining, there are six Michelin-starred restaurants in the Algarve. Indeed, you will eat well, with fish specialties across the region, mixed with fresh produce and robust wines.
There always seems to be something going on in the Algarve. With many historical, musical, and food festivals throughout the year and across the region, there is something for everyone.
Transport in the Algarve
The most practical way to get around the Algarve is probably by car. However, the region also has a very good rail system. You should be able to get from one place to another relatively easily. Bus routes are also widely spread out across the region to get from A to B.
When it comes to traveling to the Algarve by plane, Faro airport is in the center. This is very handy if you are living in the central Algarve. Nonetheless, the Algarve is not so big and you can easily get around the region in a relatively short amount of time. With good transport links in Faro, you should not have too many difficulties.