Buying Property in Madeira: A 2025 Complete Investor Guide

Why Buy a Property in Madeira: The Island's Unique Appeal

The Madeira Islands, an autonomous region of Portugal, are a beautiful archipelago in the middle of the Atlantic Ocean. You get to enjoy the crystal-clear waters, green mountains, sandy retreats, and rugged cliffs.

Here are the reasons to buy property in Madeira:

• Profitable and affordable market: You enter a lucrative market with a vast collection of apartments, houses, and luxury villas. The cost of living is relatively affordable with a family-friendly environment.
• Modern amenities: The islands provide access to reliable healthcare facilities and quality education.
• Growing market: Madeira’s real estate market has seen significant growth in recent years, driven by factors like the rise of remote work and its appeal to expats and digital nomads (Madeira is home to the world’s first digital nomad village in Ponta do Sol).
• Property prices vary based on location: Funchal, the capital, offers more expensive properties relative to the rest of the island, due to high demand, while other areas like Calheta, Ponta do Sol, and Câmara de Lobos can be more affordable for property purchases and enjoying a coastal lifestyle.
• Tax benefits: Investing in Madeira, Portugal, real estate offers tax benefits through the Non-Habitual Resident (NHR) 2.0 program, which attracts skilled professionals. For ten years, it provides a special 20 percent flat tax on income from specific high-value jobs in Portugal. Bear in mind that while some foreign income can still be tax-exempt, foreign pensions are now subject to standard progressive tax rates.
• Perfect for all foreign profiles: Madeira caters to all foreign buyer profiles, from retirees seeking a calm place to enjoy their golden years in style, to digital nomads seeking a perfect work/life balance, and families seeking a better life quality. There are two excellent international schools in Madeira.

What are the current real estate prices in Madeira?

Real estate in Madeira tends to be cheaper than in many other areas of Portugal, especially prime locations like Lisbon, Porto, and the Algarve.

Property prices vary based on location, with Funchal being the most expensive place to buy due to higher demand and limited property options. In 2025, the overall average asking price for property in Madeira stood at €3,351 per square meter, although you will find many properties at more affordable prices than this.

The table below lists the average property prices by area in 2025:

What rental yields can you expect in Madeira?

Rental yields in Madeira stand at 4.9 percent when buying a property to rent it out. However, there is quite a range, depending on location, property type, amenities, and seasonality, with some properties reaching annual yields of 8 percent.

Working with real estate professionals who can recommend key areas with strong potential for high yields can be extremely beneficial to make the most out of your property investment.

If you would like to rent your property out in the short term, you will need to get an Alojamento Local (AL) License from your local municipality. It can be beneficial to work with a real estate lawyer to help guide you through the process and keep you updated on the latest regulations.

Best Areas to Buy Property in Madeira

Selecting the best area to buy real estate in Madeira can be difficult, as it depends on the type of property you prefer, the location, and its purpose. Whether you plan to buy an apartment, a luxury villa, or a traditional house, these areas can make an excellent investment.

When buying property on Madeira, take into consideration the weather and accessibility. The south of the island is generally warmer, and is also where the international Funchal airport is located.

Bear in mind that the property costs listed below are just a general estimate and are subject to change.

Funchal

Funchal, the capital of Madeira, is a strong real estate investment. It offers a vast collection of properties from modern apartments and luxury penthouses to traditional houses and commercial real estate. The more expensive properties are the newer buildings with ocean views, mainly in the city center, while cheaper options are in the older neighborhoods further from the coast. São Martinho, to the west of Funchal, also offers coastal property at more affordable prices.

• Average property price: €3,500 to €4,100+ per square meter

Calheta

Calheta is an ideal location for a vacation home with stunning views, a sunny climate, and outdoor activities. Properties come at higher prices in sought-after tourist destinations, while you can find more affordable real estate options in older villages and inland hills.

• Average property price: €3,400 to €4,100+ per square meter

São Vicente

São Vicente is a more rural neighborhood for various preferences. It is an affordable investment opportunity for local and international buyers, where you can find modern apartments, rustic cottages, and Madeira houses for sale. You can buy plots of land for building or renovated villas where you can enjoy the natural beauty and stunning views of the Atlantic Ocean.

• Average property price: €1,300 to €2,100 per square meter

Santana

Santana is a fantastic choice for those drawn to a quiet, more traditional lifestyle. Here, Madeira offers a wide range of properties, like cottages, rustic stone houses, and plots of land. It is an affordable neighborhood that you can use for renovation projects and to build your dream home.

• Average property price: €1,500 to €2,800 per square meter

Machico

Machico is a small fishing town with more accessible property prices than Funchal or Calheta. You can choose between a variety of properties, such as modern apartments, traditional Madeiran homes, and some luxury villas. The older houses are significantly more affordable than those in Funchal, but often require renovation and modernization. A buyer’s agent or a real estate agent can analyze the real estate market for you and help you find the ideal property on this Portuguese island.

• Average property price: €2,400 to €3,300 per square meter

Porto Moniz

Porto Moniz is a municipality on the northwestern tip of Madeira Island, Portugal. It is a small town known for the natural volcanic swimming pools. Properties range from traditional Madeiran houses, rustic cottages, to plots of land for building. Modern apartments, luxury villas, and detached houses are less common. Here, you can enjoy the panoramic views of the Atlantic Ocean and the lush Laurissilva Forest.

• Average property price: €2,050 to €2,300+ per square meter

Ponta do Sol

Ponta do Sol has various houses in Madeira for sale with a growing digital nomad community. Most of the properties foreigners buy are luxury villas with infinity pools, which often come at higher costs. But you can also find affordable traditional houses and land for sale in the hilly areas where you can build your dream home or find a project to renovate.

• Average property price: €3,200 to €4,600+ per square meter

Câmara de Lobos

Câmara de Lobos is a traditional fishing village with easy access to Funchal. Here, you can find modern apartments, semi-detached houses, and villas. The most expensive luxury villas are in areas like Estreito de Câmara de Lobos. A buyer’s agent or a real estate agent in Madeira can help you find the ideal location based on your budget and long-term goals.

• Average property price: €2,400 to €2,800 per square meter

Santa Cruz

Santa Cruz is a municipality in the eastern part of this Portuguese archipelago. It is home to Madeira’s main airport, which makes it an entry point for all visitors to the island. Here, you can find high-quality apartments, modern villas, traditional houses, and many plots of land available for construction.

• Average Property Price: Approximately €2,700 to €3,500+ per square meter

Ribeira Brava

Ribeira Brava is a municipality of Madeira Island on the southern coast. While not as expensive as Funchal or Calheta, prices are higher than those on the more rural north coast. You can find a variety of properties, from apartments in the town center to traditional houses and villas on the surrounding hillsides with fantastic sea views.

• Average Property Price: Approximately €2,700 to €3,500+ per square meter

Is now a good time to buy property in Madeira?

Whether now is a good time to buy property in Madeira will depend largely on your property goals. For example, if you are seeking a holiday home, permanent residence, or investment property.

Property prices in Madeira remain attractive to buyers – currently standing at €3,693 per square meter, although they are rising quite quickly. There has been an increased supply of luxury properties, particularly in Funchal. For buyers seeking more high-end real estate, luxury properties are competitively priced compared with other luxury markets in Europe.

Alongside this, tourism is at an all-time high in Madeira and is expected to continue to increase, leading in 2026 and beyond. Property investors seeking to buy property to let will find high potential to secure nice returns on their investment, with prime locations offering returns of up to 8 percent.

How to find a property in Madeira?

There are several ways to find properties for sale in Madeira. You can visit Madeira in person and speak with local agencies on the island. However, this is not always possible, so the better way to proceed is to do some research online to get to grips with different areas, ballpark property prices, and property types.

Following this, it is best to speak with a real estate or buyer’s agent who will be able to refine your search. For example, if you are moving with family, they will be able to advise on neighborhoods close to schools, while if you are seeking an investment property, they will pinpoint specific areas that are likely to grow in the coming years and offer appealing rental yields. You’re real estate professional will then be able to match you with potential properties tailored to your needs until you agree on the one you wish to purchase.

Legal Requirements for Foreign Buyers

Buying property in Madeira as a foreigner is a simple process without any restrictions based on your nationality. But you must follow different legal procedures during the entire buying process.

So, what are the requirements? Foreign buyers must have:

• A NIF (Número de Identificação Fiscal). You need a NIF to carry out any financial or legal transaction, such as buying property in Portugal, signing the final deed, or opening a bank account. You can apply for a NIF in person at a local tax office (Finanças) or have a real estate lawyer apply on your behalf. Our residency and citizenship division, Global Citizen Solutions, can also help you get a NIF remotely. If you are a non-EU citizen, you will need to have a tax representative in Portugal to complete this process.
• Portuguese bank account: You should open a local bank account to transfer funds for the property purchase, make the initial deposit, and handle recurring costs like taxes, utilities, and mortgage payments.
• Legal representative: Although it isn’t mandatory, it’s highly recommended to hire a Portuguese real estate lawyer. They can conduct due diligence on the property you plan to buy and ensure it is free of debts, alongside warning you of any zoning considerations. They can verify the legal status and property ownership. They can also draft and review the Promissory Contract (Contrato-promessa de compra e venda or CPCV) and the final deed of sale (Escritura Pública). They can help you register your name and property with the Land Registry and Tax Office (Conservatórias do Registo Predial).

The Step-by-Step Process of Buying Property in Madeira

Here is a step-by-step guide for the process of buying property in Portugal:

1. Get your NIF number (Tax Identification Number) and open a bank account. Request your NIF at a Portuguese Tax Office (Finanças) or through a tax representative. We also recommend opening a bank account in Portugal to save on transaction costs.
2. Find your property. Research the Madeira real estate market and find a property that suits your needs and budget.
3. Check the property. Double-check the property for any legal issues, such as outstanding charges, mortgages, building permits, etc. A real estate lawyer can ensure the property complies with Portuguese law.
4. Secure your property. Make the initial deposit to reserve the property and sign the Promissory Contract (CPCV).
5. Sign the final deed of sale (Escritura Pública). Visit the local notary’s office and pay the final balance. The notary will verify the paperwork presented by both parties to ensure that the transaction complies with Portuguese law.
6. Register your new property. After signing the deed of sale (Escritura Pública), you must visit a Portuguese Land Registry (Conservatória do Registo Predial) and receive the legal documents confirming your property transfer.

How much tax do I pay when buying a property in Madeira?

When it comes to buying properties in Madeira, you will need to be aware of your tax obligations, which you will need to pay at the time of purchase and on an annual basis. There are also additional costs like lawyer and Notary fees to factor in.

Property purchase taxes

The following taxes are due at the time of your property purchase:

• Property Transfer Tax (IMT)

Property Transfer Tax or IMT (Imposto Municipal sobre Transmissôes Onerosas de Imóveis) ranges from 0 to 10 percent of the property’s purchase price.

The 0 to 8 percent range depends on the price, location, property type, and purpose for which the property will be used (for example, as your permanent residence or secondary housing). The 10 percent rate applies in cases where the buyer has connections with territories that benefit from favorable taxation schemes, known as blacklisted jurisdictions.

• Stamp Duty (Imposto do Selo)

Stamp Duty is one of the oldest state taxes and an additional transaction cost for property buyers on real estate transfers in Portugal. Stamp Duty is calculated at 0.8 percent of the property value or the deed’s total value.

Other purchase fees

In addition to property taxes and the purchase price, you will need to budget for the following fees and costs at the time of your property purchase:

• Legal fees: €2,000-€5,000
• Land Registry fee: €250
• Notary fees: €500-€1,000

Ongoing property taxes and costs

The ongoing property taxes and costs to budget for include:

• IMI (Imposto Municipal sobre Imóveis – Annual Municipal Property Tax): This annual tax is levied on the Property Tax Value (VPT) and not the property price paid upon purchase. For urban properties, the IMI rate ranges from 0.3 to 0.45 percent of the VPT, which can increase to 0.5 percent in some instances. The IMI rate applied to rustic buildings is 0.8 percent.
• Condominium fees (if applicable for apartments)
• Utilities, such as water, electricity, and internet
• Home insurance

How to finance your property purchase in Madeira?

If you’re not from Portugal and are considering buying a home in Madeira, it’s normal to wonder how to finance your Madeira property purchase. Portuguese banks allow foreigners to apply for mortgages, so you don’t need all the money up front. In this section, we’ll walk you through the main options and what to expect.

Mortgage options for foreign nationals

Several major banks offer loans to non-residents, like Caixa Geral de Depósitos, Novo Banco, Bankinter, and Banco BPI. These mortgages can cover a large part of the property price, usually between 60 percent and 80 percent of the property value.

Here’s what foreign buyers need to know about mortgage terms in Portugal:

• Loan length: You can spread your payments over as much as 40 years.
• Age limit: Banks typically require the loan to be fully paid off before you reach 75 years (sometimes up to 80 with special conditions).
• Interest rates: You can choose from fixed interest rates, variable interest rates, or mixed interest rates.
• Insurance: Most banks will ask you to take out mortgage insurance to cover the loan in case of unexpected events.

In short, while getting a mortgage in Portugal as a foreigner is possible, you will need to contribute a chunk of the property price as a down payment.

What are the pitfalls of buying property in Madeira?

As experts in the property market in Portugal, here are some of our final tips and pitfalls of buying property in Madeira to watch out for:

• Older properties can have hidden problems like damp, leaks, or structural damage. We suggest you get a professional survey or inspection before buying.
• Many buyers forget to budget for extra costs such as taxes, notary fees, stamp duty, and legal fees. These additional expenses can add around 7 to 10 percent or more to the purchase price.
• Most of the documents are in Portuguese. So, it’s wise to hire a translator or work with multilingual property professionals to avoid misunderstandings.
• Only use properly licensed property professionals. Check their reputation and reviews before deciding to work with them. They should have an AMI license issued by IMPIC.
• Many foreign buyers overlook the local laws about zoning, rental rules, and permits for renovations or new builds. A real estate lawyer can help explain these regulations.
• Portuguese banks typically require non-residents to make a higher down payment of 20 to 40 percent of the property’s value. This is because they generally offer a lower loan-to-value ratio for foreign buyers.
• Currency exchange rates can affect your costs if you’re buying from outside the Eurozone. To save money and reduce risk, you may want to use a specialist currency service. It is also recommended to open a Portuguese bank account to save on transaction costs.

Goldcrest: How We Can Help You 

Goldcrest is a buyer’s agent that is based in Lisbon. We provide expert, impartial advice on real estate investments and how to buy property in Portugal. From scouting out the perfect property through to property acquisition, we have you covered throughout the process.

If you are looking to purchase property in Portugal, don’t hesitate to get in touch. Our team of skilled experts is available to solve all your real estate doubts, helping you with the property search and offering insightful expertise and strategic advice.

Why choose Goldcrest?

• 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: We have a close network of partners, including 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.