Buying Property in Madeira: Prices, Process, and Tips for Expats

Madeira, known as the Pearl of the Atlantic, is a beautiful Portuguese archipelago off the coast of Western Africa. It is famous for its sunny, subtropical climate, breathtaking landscapes, and vibrant local culture.

In recent years, this jewel of the Atlantic Ocean has captured the attention of expats, investors, and retirees seeking a high quality of life, affordable real estate, and a safe, peaceful environment. If you’ve ever dreamed of owning a piece of this Atlantic gem, whether as an investment, a new family home, or a retirement retreat, then this guide is for you.

In this article, you’ll discover everything you need to know about buying property in Madeira, from market insights and popular locations to the practical steps of the buying process, legal considerations, costs, and tips to help you make a successful purchase.

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

So, why are so many property buyers and expats drawn to Madeira? While island living is certainly a lifestyle change for many, Maderia has all the comforts and modern amenities one could need to live a high-quality lifestyle or attract lucrative returns on an investment.

We explore some of the key reasons to buy property in Madeira below.

The Pearl of the Atlantic: Lifestyle and environment in Madeira

Madeira offers a safe and peaceful lifestyle, friendly locals, and good infrastructure for healthcare, shopping, and services. Out of the four islands (Madeira, Porto Santo, Desertas, and Selvagens) only Madeira and Porto Santo are inhabited.

Digital nomads, families, and retirees all find Madeira appealing. The capital, Funchal, is the cosmopolitan hub with most development, business activity, and vibrant cultural events throughout the year, while beautiful spots across the islands offer plenty of places to call home or enjoy a visit.

Combining EU-quality services with the charm of island life, Madeira is one of Portugal’s smartest lifestyle and property investment choices.

Economic stability and investment potential

As part of Portugal and the EU, Madeira offers a stable legal and financial environment for property buyers.

Tourism is growing, and the island has become popular with digital nomads and retirees, increasing demand for housing.

Property values have risen over time, and many buyers see good investment potential, whether for future appreciation or rental income.

Connectivity and accessibility

Madeira is well-connected both within Europe and internationally. It offers direct flights to major European cities, making travel easy for visitors and residents.

In June 2025, United Airlines also launched its first direct flight service between Madeira Airport and its hub in New York/Newark, operating three times a week during the summer season. This launch significantly improves Madeira’s connectivity to the USA.

The island benefits from modern and well-kept roads. However, getting around the island itself can be tricky. Public transport exists but doesn’t reach all areas efficiently, and buses can be infrequent, especially in more remote regions like Câmara de Lobos.

If you plan to live or buy property in Madeira, having a car might be a good idea to get around efficiently.

Madeira Real Estate Market: What Buyers Need to Know

If your heart is set on buying a property in Madeira, you’ll want to have a clear picture of the real estate market. In this section, we’ll provide you with a brief rundown of average property prices, current market trends, and the best spots to live on the islands.

Current market trends and price overview

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

Prices can vary significantly depending on the area, with Funchal being the most expensive place to buy property on the island because of its higher demand and abundance of services. You will also find several luxury real estate options across the island, with many located in Funchal.

The overall average asking price for property in Madeira stands at €3,351 per square meter in 2025. Below, we detail the average property prices by area in 2025:

Thanks to Madeira’s high quality of life, steady property market growth, accessibility, strong rental demand, growing luxury real estate market, and developing tourism sector, real estate in Madeira has become increasingly sought after. Because of this, housing demand has begun to outweigh supply, causing housing prices to increase over recent years.  

Recent data shows that the population in Madeira is at the highest it has been in 11 years, with the older population (retirees) increasing in size the most.

Popular areas for property purchase in Madeira

Consider these popular areas when beginning your property search to see where you can picture yourself living or investing in real estate:

• Funchal: The island’s capital offers urban living, shops, restaurants, and cultural activities. Prices are higher here, but rental demand is strong thanks to tourism.
• São Martinho (Lido area): Modern apartments, plenty of amenities, and popular with expats
• Santa Maria Maior (Old Town): Full of historic charm and cobbled streets, perfect for those who love walkable neighborhoods
• Monte: A peaceful, green area in the hills above Funchal, with beautiful views and a more tranquil atmosphere
• Calheta and Ponta do Sol: Known for being the sunniest parts of the island, attracting digital nomads and beach lovers with coastal scenery
• Machico and Santa Cruz: Closer to the airport and offering a more local feel, with growing facilities and infrastructure
• Ribeira Brava and Câmara de Lobos: Charming coastal towns, often offering more affordable property prices than Funchal
• North Coast (Santana and Porto Moniz): Quieter and more traditional, with stunning natural beauty and landscapes and often lower property prices
• Porto Santo Island: A separate island part of the Archipelago. Famous for its golden sandy beaches and relaxed atmosphere, this smaller island has its own distinct real estate market.

Types of properties available in Madeira

Buyers in Madeira can choose from a range of properties:

• Apartments: Available in modern buildings or older complexes, often with sea views
• Villas: Ranging from traditional Madeira houses to luxury modern homes with pools and gardens
• Traditional Madeiran houses: Stone-built homes with rustic charm and historic character
• Land plots: For those who wish to build their dream home from the ground up
• Commercial properties: Including shops, restaurants, and small hotels, with great opportunities for commercial investors and entrepreneurs

Understanding Madeira’s microclimates and topography

Madeira is famous for its unique microclimates and mountainous terrain, and the island’s weather can change dramatically over short distances because of the hills and valleys. This may play a significant role in where you choose to buy property.

A good measure for where to situate yourself in Madeira is the “banana line”, a zone along the lower coast where the weather is warm and sunny enough for banana plantations to thrive. Living below this line usually means enjoying more sunshine and milder temperatures year-round.

Higher areas are cooler, cloudier, and more humid. These places offer lush greenery and beautiful views but may not be as warm as the coast.

Madeira is also very hilly, which can affect daily life. Some areas have steep streets, making a car necessary. Meanwhile, flatter central areas in towns and cities are more walkable and convenient.

Keep these details in mind when choosing the right location for your lifestyle and comfort.

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

Buying property in Madeira, Portugal, involves a multi-step process and careful consideration of key factors.

You’ll need to obtain a Portuguese tax number (NIF), engage a real estate lawyer and buyer’s agent (highly recommended), conduct due diligence, and navigate the final purchase stages.

We explore each step below:

Step 1: Preparation and research

Before buying a property in Madeira, there are a few initial steps to take to make sure you are well prepared.

• Obtain a Portuguese tax number (NIF)

This is essential for any financial transaction in Portugal, including buying property or opening a bank account. You can get your NIF at your local tax office (Finanças) or remotely.

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.

• Open a Portuguese bank account

It is recommended to open a Portuguese bank account to avoid hefty transaction fees when making your purchase. There are a variety of Portuguese banks to consider, many of which also offer mortgages for international buyers.

Some popular banks in Portugal include Millennium BCP, Novo Banco, and Banco Santander Totta.

• Define your budget and financing

Assess your finances and work out what sort of budget you will need to stick to. To help finance your purchase, decide whether you want to take out a mortgage and what plan works for you, while also making sure you understand the associated property costs, such as property taxes, lawyer and agent fees, and mortgage interest costs.

• Identify your needs and preferences

Do your own initial research on houses for sale in Madeira. Decide which location and property type most appeals to you and will meet your needs and preferences.

Also, think about the purpose of the property (residence, holiday home, or investment), as that can also help you decide which amenities and features the property should have.

Step 2: Property search and making an offer

Now that you have a clear budget and a good idea of your preferences, it’s time to actively search for your property.

• Engaging a property agent to find a property

Although you can search for properties on your own when buying a property in Madeira, it’s smart to get help from an experienced real estate agent or buyer’s agent. A local real estate agent will guide you through the whole process, from finding the right home to completing the purchase properly. They can also answer any questions you have along the way.

For an extra edge in the property market, consider working with a buyer’s agent. Most real estate agents in Madeira work for the seller, but a buyer’s agent works only for you, with no conflict of interest.

You should always make sure your real estate agent is licensed. The most trusted license is the AMI License, issued by IMPIC. This license is required for property agents and real estate agencies to conduct real estate mediation activities. You can find out more on the Portuguese government website.

• Property Viewings

If you’re able to visit Madeira while searching for your home, schedule in-person visits to get a real feel for the property and neighborhood. Pay attention to things like noise levels, natural light, and nearby amenities.

If you’re viewing remotely, many real estate agencies offer virtual tours or live video calls. Ask for a full walkthrough of the Madeira property, including the exterior and surrounding area. It’s important to feel confident before making an offer.

• Making an offer

When you’ve found your dream property, your agent will help you submit an offer to the seller or their agent. Offers are not legally binding at this stage, and there’s usually room for negotiation.

Negotiation is common in Portugal, so don’t be afraid to do so, especially if the property needs renovation or has been on the market for a while. A good buyer’s agent can guide you on a fair offer based on market conditions and help you get the best deal.

Step 3: Legal due diligence and Promissory Contract

Once you have negotiated and your offer has been accepted, it’s time for the legal formalities and processes to kick in. Below, we detail how to navigate this stage.

• Engage a real estate lawyer

Hiring a real estate lawyer in Portugal is essential when buying property. Your legal representative will handle all the legal processes, protecting your interests and making sure all documents are in order. They also assist with key due diligence checks, such as:

• Confirming the seller legally owns the property
• Checking for debts or legal issues
• Reviewing licenses, registration, and the required energy certificate
• Verifying property plans and status
• Making sure you’re not liable for the previous owner’s debts

• Signing the Reservation Agreement and Promissory Contract (CPCV – Contrato Promessa Compra e Venda)

The Reservation Agreement shows you’re serious about buying and takes the Madeira property off the market. You’ll pay a reservation fee at this stage.

Next comes the CPCV, a contract that sets out the terms of the sale. You’ll pay a deposit, usually about 10-20 percent of the price. If you back out after signing, you might lose this deposit.

Step 4: Final Deed and registration

The last step in the process is to sign the Final Deed (Escritura) in front of a Notary, pay the remaining balance and fees, and officially become a property owner in Portugal. This is the final step in the property acquisition process. The purchase and sale of the property also need to be registered at the Land Registry Office to register the change in property ownership.

Costs and Taxes Involved in Buying Property in Madeira

When it comes to buying properties in Madeira, you will need to be aware of your tax obligations that 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 purchase price of the property. 

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 property 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 on 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

Common Pitfalls When Buying Property in Madeira and How to Avoid Them

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, so it’s important to 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, which can add around 7–10 percent or more to the purchase price.
• Because most documents are in Portuguese, it’s wise to hire a translator or work with multilingual property professionals to avoid misunderstandings.
• Only use properly licensed property professionals and always check their reputation and reviews before deciding to work with them.
• It’s essential to understand local rules about zoning, rental laws, and permits for renovations or new builds. A lawyer can help explain these regulations.
• Portuguese banks often require non-residents to provide higher down payments, around 20–40 percent, so it’s important to compare mortgage offers carefully and ensure you have enough of a down payment ready.
• If you’re buying from outside the Eurozone, remember that currency exchange rates can affect your costs, so consider using a specialist currency service to save money and reduce risk.

How Goldcrest Can Help

Goldcrest is a buyer’s agent based in Porto, Lisbon, and the Algarve. Equipped with local knowledge, extensive networks, and international experience, we provide expert, impartial advice on real estate investments, the real estate market, and how to buy property in any part of Portugal, including Madeira.

From scouting out the perfect property to property acquisition, we have you covered throughout the process. Our team of skilled experts can cater to all your real estate needs, offering insightful expertise and strategic advice. Book a complimentary call with us today.