Updated: November 23, 2023
With staggering cliffs, hidden sea caves, and pristine beaches, there is nowhere else quite like the Algarve. Out of the region’s 438,000 population, 10 percent come from abroad, highlighting the popularity amongst expats.
Whether you are looking for a taste of luxury or 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.
The Algarve property market has moved from strength to strength, and it’s easy to see why this region of Portugal will continue to thrive in the coming years.
In this Algarve real estate guide, we’ll provide you with an overview of the property market in the Algarve and the investment opportunities you’ll find in the region before delving into the different areas to buy a property. After this, we’ll run over practical information and some cultural aspects of buying in the sunny south of the country.
Why invest in Algarve property in Portugal?
Apart from Lisbon, the Algarve is the most well-known place in Portugal. And you only need a short visit to see why. With a long coastline, the southern region of Portugal attracts millions of visitors each year thanks to its sublime climate, delicious culinary delights, and vast stretches of sandy beaches. Many celebrities have even been enticed by properties for sale in the Algarve, Portugal, and now call this stunning area home.
These are just some of the qualities that have made the south of the country a staple in Portuguese tourism and the reason why expats and investors have consistently set the Algarve in their sights. Whether you are looking for a private condominium, an investment property, or a waterfront home, you’ll find several property types in the Algarve to discover your dream home.
Property Prices in the Algarve
Property prices will vary depending on which part of the Algarve you buy in. As a rule of thumb, the further north you venture, the more affordable the property prices.
Below, you can find a map of the Algarve, highlighting price differences across the region.
Alentejo real estate, the region boarding the Algarve to the north, is another excellent region to consider if you are looking for spacious properties or countryside homes at very reasonable prices by Western European standards.
Algarve property in Portugal: Rental yields
The golden coast of the Algarve is a great place to buy an investment property in Portugal. This is particularly the case if you are considering beach real estate or luxury homes. To highlight the region’s consistent rise in popularity, the Algarve has registered a growth rate of almost 88 percent from 2017 to 2022, with foreign buyers paying an average of €3,660 per square meter in 2022.
You’ll find that rental yields in the Algarve vary depending on the region, ranging from between 3.56 percent to 5.03 percent. In areas such as Vila Real de Santo António and Portimão, yields are amongst the highest, at 5.03 percent and 4.95 percent, respectively.
In the graph below, you can check out the rental yields across the Algarve region.
Is the Algarve a good place to buy property?
With advantages like golden beaches, being one of the sunniest regions in Europe, and having an attractive real estate sector, the Algarve region in Southern Portugal is an excellent place to buy Portuguese property. If you are looking to retire in the Algarve, the high quality of life, long list of activities on offer, and excellent healthcare system make it a top location to consider. The region benefits from hot summers and mild winters, with over 300 days of sunshine each year.
The Algarve has a fantastic selection of beaches and a dramatic coastline characterized by limestone rock formations, arches, and caves. Popular beaches in the Algarve include Praia da Marinha near Carvoeiro, Quinta do Lago near Faro, and Praia da Rocha in Portimão.
The Algarve’s lifestyle and culture benefit from this good weather. Maintaining an active lifestyle with the many outdoor activities available is easy. If hiking, surfing, sailing, and cycling are not for you, there are several golf courses in the region. The Algarve also has a lively culture, with historical, music, and food festivals scheduled throughout the year.
The Algarve also boasts a significant expat community, notably from the UK, France, Germany, the Netherlands, and Sweden, but increasingly Americans are also relocating here.
Expats in the Algarve
As we’ve mentioned, expats make up a huge number of residents 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 percent 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.
Disclaimer: This data is from 2019, and the INE (Institute of National Statistics in Portugal) has not released any new data on the subject. Nevertheless, the current picture is similar in 2023 as it was in 2019, and not a lot has changed in terms of the nationalities snapping up real estate in Portugal.
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.
Do bear in mind, however, that the NHR program may be coming to an end. You can consult this article by our residency and citizenship division, Is the Portugal NHR Ending?, for more information.
Where to buy Algarve property 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 – spacious homes, luxury villas, and many properties with a sea view.
You’ll find a variety of property types across the region. You’ll even come across Portuguese vineyards for sale in the Algarve if this is something that you would be interested in. Here, we provide you with a brief rundown of the key areas in the Algarve, conveniently split into three regions: The Central Algarve, the Western Algarve, and the Eastern Algarve.
The central Algarve is very popular with retirees. Vilamoura (in the Loulé municipality) was built as a resort town and provides luxury property types, 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 where many would like to find their dream home. Here, you have stunning luxury homes with a sea view, private pools, and fine dining.
Nearby Almancil has the same vibe as these resorts, with a smaller price tag. There is also a greater historical flair here, with the graceful 18th-century white Church of São Lourenco. Algarve homes here are perfect for history buffs.
Albufeira, not far east of 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 those wanting a quieter place, it is recommended to look elsewhere. The eastern Algarve is an appealing area for a more tranquil lifestyle.
And then you have Faro, the captivating, historic capital of the Algarve. If you are looking to be conveniently located right in the center of the region, with excellent train links to Lisbon and further afield, Faro is a good option to consider.
All these locations are very close to Faro International Airport, so travelers looking to get around easily should have no problem.
Below, you can find our area guides for key locations to consider in the Central Algarve:
- Vilamoura Portugal: An Overview
- Portimão Portugal Real Estate
- Faro Portugal Real Estate: An Overview
- Property for sale in Alvor, Portugal
- Carvoeiro Portugal Real Estate: A Helpful Guide
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. You’ll find some of the best surf sports in the country alongside many other activities such as paddleboarding and kayaking.
Lagos has a strong expat community and a rich history. There is a good nightlife scene here, although the area is also attractive for families as there are two excellent 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. If you are thinking of buying here, a real estate agent in Lagos can help you with your purchase.
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 retains its Portuguese essence, with delicious eateries and a laid-back ambiance that doesn’t seem to have changed much over the years.
Below, you can find our area guides for key locations to consider in the Western Algarve:
- Portugal Lagos Real Estate: An Overview
- Sagres Portugal Real Estate: Coastal Investment Opportunities
- Aljezur Portugal Real Estate
- Bugau Portugal Real Estate
In comparison to the Central and Western Algarve, properties in the Eastern Algarve tend to be cheaper. This is partially due to the Eastern Algarve property 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 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 mix of beach and town, with pristine beaches just a short trip away. You definitely won’t have to sacrifice a sea view to find your dream home here. 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 that have distinct blue linings.
Alcoutim is the least densely populated part of the Algarve. Without the many expats that constantly head to the Algarve, this 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, meaning you can still find luxury homes without paying the maximum price imaginable. You’ll also find land for sale in the Algarve, which is the perfect way to build your dream home from scratch.
Below, you can find our area guides for key locations to consider in the Eastern Algarve:
How to choose which part of the Algarve is for you
Choosing the right part of the Algarve for you depends on your specific needs and preferences. If you’re seeking investment opportunities, check out some of the real estate hotspots in the Central Algarve. If moving with a family, look for areas with good schools and family-friendly amenities. Retirees may prefer peaceful, scenic locations with access to healthcare facilities.
Practical Information on Algarve Property in Portugal
In this section, we’ll provide you with some key practical information that you should be aware of if you are considering moving to the Algarve.
The climate of the Algarve
You are no doubt aware that the climate of the Algarve is extremely favorable and is one of the key reasons why so many expats head to this part of the country. The region has more than 300 days of sunshine each year, perfect summers, and mild winters. The daily average highs are 33 degrees C in July, and the average temperatures in January, the coldest month, are 12 degrees C. It also tends to rain very little in the Algarve, with most rainfall occurring between November and March. Even in the winter months, you should be able to head to the beach and the great outdoors.
Beaches of the Algarve
It is common for people to look for houses for sale in Algarve near the beach. In fact, alongside the year round sunshine, the stunning beaches are one of the main selling points of the region. With white sandy beaches, top surf spots, and stunning rock formations, 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, where you’ll be able to marvel at the spectacular landscapes. 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, yoga, or other sports and activities, you should be able to find a viable place for you to enjoy yourself. These are also great ways to meet fellow expats.
There are also perfect waves, so if you’re a keen surfer, you will be able to get your fix. Sagres is a particular favorite among surfers. 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. However, if you move to the Algarve, you’ll quickly come to realize that all food found here is excellent, from international restaurants to family-owned Portuguese eateries. 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, but public transport is not out of the question. In fact, the region 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 International 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. Portugal’s train network is reliable and is handy for travel between major towns like Faro and Tavira. With good transport links in Faro, you should not have too many difficulties. From Faro, you can easily get to Lisbon by train, which takes between three to four hours.
The beauty of Portugal is that you don’t have to pay the absolute maximum price to live a good-quality life in a place as beautiful as the Algarve. Homes for sale here range from luxury and modern to traditional and rustic, catering to the needs of its diverse population. With the opportunity to have a breathtaking sea view, reliable public transport, and an excellent standard of living, the Algarve, Portugal, is certainly the place to find your dream home.
If you have your eye on a home for sale in Algarve, Portugal, visit our guide on How to Buy Algarve Real Estate.
Schools in the Algarve
The Algarve is a great place to live with family because it is possible to be outdoors for most of the year. You’ll be able to enjoy watersport activities, hikes, and spending quality time together in the great outdoors . There are also 12 excellent international schools in the Algarve region, providing a variety of curricula and teaching styles.
If you are considering moving to the Algarve with your family, you should be able to find the perfect school to suit your needs. You can find out more in the International Schools in Portugal Guide, put together by our residency and citizenship division, Global Citizen Solutions.
Real Estate Algarve Portugal: Key Considerations
Buying property in Portugal is more straightforward than in many other countries. However, you should be aware of important considerations to be aware of when investing in real estate in the Algarve.
Understanding the legal implications of buying property is crucial when purchasing real estate. We recommend working with an experienced lawyer who will be able to guide you through the process.
It can also be beneficial to work with a property surveyor, who will be able to ensure that there are no problems with the interior or exterior of the property.
There are many banks that offer mortgages for foreigners in Portugal, and you will want to spend some time determining which one suits your needs. The mortgage process itself can also take longer than expected, so it is best to get the ball rolling as soon as possible.
Key steps in the buying process
The buying process in Portugal can be broken down into the following five steps.
- Step 1. Decide whether you’d like to take out a mortgage to finance your property.
- Step 2. Find the perfect property
- Step 3. Negotiation
- Step 4: Promissory Contract (CPCV)
- Step 5: Sign the Escritura (Final Deed)
Real Estate Investment Algarve: Risks and Challenges
In this section, we have outlined some risks and challenges to investing in the real estate market.
Understanding the Portuguese market
When investing in the Portuguese property market, one of the main challenges is getting a good grasp of how it works. You will need to conduct thorough research on property prices, demand and supply, local regulations, and market trends. To make it easier, seek advice from experts who know the ins and outs of the market.
Doing your homework is essential. This means carefully checking all the legal aspects of the property, such as title deeds, permits, and any potential issues that might come up. To avoid trouble, it’s wise to hire a real estate lawyer who can guide you through the legal complexities. Also, make sure the seller is trustworthy and financially stable to avoid disputes down the road.
Market volatility and economic influences
Like any real estate market, the Portuguese one is affected by market ups and downs and economic factors. Before diving in, be sure to consider the potential return on investment and how things like inflation rates might impact your investment. The Portuguese real estate market responded well to the COVID-19 pandemic, indicating that the market is quite resilient to external pressures.
Why choose Goldcrest?
At Goldcrest, our team will be delighted to help you find the perfect property for your investment. We offer expert and impartial advice, working with you to find the perfect home or substantial real estate investment in Portugal’s most desirable locations and at the best possible terms.
Our team works diligently to ensure the correct steps have been carried out, safeguarding you from poor property investments. For the past decade, we’ve been building our inside knowledge of the local property market and have established extensive connections across Portugal, enabling access to an exclusive list of properties and investment routes, as well as new listings.
- Local knowledge: With offices located across Portugal, our presence nationwide allows us to assist you personally across the country.
- Independent service: As an independent buying agent, we do not represent any development or project. Our service is entirely tailored toward each individual client, providing you with everything you need to secure the perfect property at the best possible price. As an impartial advisor on the market, we work solely on behalf of our client and provide a service tailored to your needs and requirements.
- Streamlined process: Our real estate agents speak English and Portuguese, and our service is completely focused on providing you with a hassle-free buying experience, saving you time.
- Experienced team: Our expert real estate team has a vast local knowledge of the Portuguese property market. We have cutting-edge technology and metasearch tools at your disposal to provide full market coverage, ensuring the best investment choices and negotiated prices.
- Network of partners: Lawyers, property management services, builders, architects, designers, and landscape gardeners, again saving you time and hassle by providing you with trusted experts in their field of work.
Frequently Asked Questions about Algarve Property in Portugal:
Where is the best place to buy Algarve, Portugal, real estate?
This will depend on what you are looking for. The “Golden Triangle” in the central Algarve, with Quinta do Lago, Vale do Lobo, and Vilamoura, offer a taste of true luxury. Elsewhere, Albufeira and Portimão are both solid options for those looking for a lively place to call home. Those opting for something quieter should look to the eastern Algarve, where you should be able to find the ultimate, quiet, coastal retreat.
For those who love watersports and a friendly expat community, Lagos in the western Algarve should be on your hit list.
Whether you are looking for a private condominium, old townhouse, modern apartment, or an Algarve, Portugal, real estate beachfront home in a quiet fishing town, you should be able to find the perfect property due to the wide range of property types on the market.
Is real estate in the Algarve a good investment?
Yes, buying property in Algarve, Portugal, is a good investment. As a hot tourist destination, you should not have problems renting out your property, particularly in the summer months.
Is the Algarve a good place for retirees?
The Algarve, Portugal, is the perfect place for retirees. There are a variety of property types available, good healthcare facilities where English is widely spoken, and many activities to get involved in, a great way to meet fellow retirees. For keen travelers, you also have the Faro International Airport, so you can easily get around Europe and further afield.
Can foreigners own property in the Algarve?
Yes, foreigners can own property in the Algarve region. Portugal has no restrictions for foreigners who want to buy property in the country. From the quiet north of the country to the sunny Algarve region in the south, you’ll be able to purchase property as a foreigner in Portugal.
Where is the best place to live in the Algarve?
The Algarve has long been a popular location in Portugal for purchasing property, and it looks set to continue to be a hotspot for buyers in the future. In many ways, the region is the perfect place in Europe to find a coastal retreat where you can enjoy year round sunshine.
While prices have been increasing rapidly over the years, you should still be able to find properties at affordable rates, particularly when compared with property prices in other Western European countries.
How to search for property in the Algarve?
Whether you’re searching for luxury Algarve homes or modern apartments, research is key. A quick online search for “buying property in Algarve Portugal” or “Algarve Portugal real estate for sale” will provide you with a nice overview of the market. You can also enlist the help of a buyer’s agent, such as Goldcrest, who can help you secure your dream home without having to pay the maximum price. With many different properties for sale in the Algarve, a buyer’s agent can also discuss your needs to help you on your buying journey.
Where is the cheapest place to buy property in the Algarve?
Alcoutim, in the Eastern Algarve, is the cheapest place to buy property in the Algarve.
What types of real estate properties are available for investment in the Algarve?
The Algarve offers a variety of real estate properties for investment, including luxury villas, apartments, townhouses, and plots of land for development.
What are the key areas in the Algarve for real estate investment?
Key areas for real estate investment in the Algarve include Albufeira, Lagos, Vilamoura, Portimão, and Faro due to their popularity among tourists and expats.
What are the legal considerations when investing in real estate in the Algarve?
Important legal considerations include verifying property ownership, examining planning permissions, and understanding local regulations. Engaging a competent lawyer is crucial to navigating these aspects.
What are the risks and challenges involved in real estate investment in the Algarve?
Potential risks include economic downturns, fluctuating demand, and changing tourism patterns. As the Algarve is one of the most popular tourist locations in Europe, it is highly unlikely that tourist numbers will fall. Additionally, navigating language barriers and legal complexities can pose challenges. You will also need to make sure you are aware of the property tax implications of buying property in Portugal.
How is the resale market for properties in the Algarve? Can I expect a good return on my investment?
While returns depend on factors like location, property condition, and market conditions, a well-chosen property in the Algarve can yield a good return on investment. Rental yields in the Algarve vary depending on the region, ranging from between 3.56 percent to 5.03 percent. In areas such as Vila Real de Santo António and Portimão, yields are amongst the highest, at 5.03 percent and 4.95 percent, respectively.
What are the tax implications of real estate investment in the Algarve for international investors?
Property taxes will fall either at the time of purchase or on an annual basis. At the time of purchase, you should consider Property Purchase Tax (IMT) and Stamp Duty. On an annual basis, you will need to take into account Municipal Property Tax (IMI). Rates and exemptions can vary based on factors like residency status and property usage. It is important to understand your property tax obligations when buying property in Portugal.
Are there sustainable or green real estate investment opportunities in the Algarve?
Yes, the Algarve offers sustainable and green real estate options, including eco-friendly developments and investment properties with energy-efficient features. Sustainable practices are becoming more popular in the region’s real estate sector.
Is property expensive in the Algarve?
How expensive the Algarve property market is will depend on where in the region you buy. For example, in Lagos and Loulé, you will find more expensive and luxury properties, whilst in Alcoutim, in the Eastern Algarve, you will find very reasonable prices. The property type will also hugely influence the property price.