Why buy property in the Algarve, Portugal?
The Algarve may be the most well-known region in Portugal for expatriates and holidaymakers alike, making it an attractive location for potential property owners.
With its affordable property prices, the Algarve region is an easy way to enter the Portuguese real estate market.
Portugal’s incredible southern coastline attracts millions of visitors yearly because of the fantastic climate, the good food, the stunning beaches, and the warm, clear water. These enduring qualities make purchasing property in the Algarve such a great investment.
Property in the Algarve: Overview
Regions of the Algarve
The Algarve, Portugal, is divided into 16 concelhos (municipalities) that span the whole of the country’s southern coast. Some of the most visited areas include the regions around Lagos, Portimão, and Albufeira.
Climate in the Algarve
One of the main attractions of the Algarve is its incredible climate. It has hot summers and mild winters, with daily average highs of 33°C in July. The average temperature in January, the coldest month, is 12°C, and the region gets, on average, over 300 days of sunshine per year.
Beaches in the Algarve
If you would like to go to the Algarve beach, you will find yourself spoiled by choice. The Algarve has a great selection of different beaches to choose from, from the picturesque Benagil caves to the otherworldly rock formations of Ponta de Piedade. The coastline along the southern coast of Portugal is typically characterized by dramatic limestone rock formations dotted with arches and caves and surrounded by clear turquoise water. Some of the most popular beaches include Praia da Marinha, near Carvoeiro, Quinta do Lago, near Faro, and Praia da Rocha in Portimao.
Culture in the Algarve
The Algarve has a lively cultural schedule throughout the year, with several historical, musical, and food festivals taking place throughout the year. One of the highlights is the carnival in Loulé, which involves ostentatious costumes, floats, and a lot of samba music. The carnival has occurred yearly for the past century, making it the oldest in Portugal. There are also medieval festivals yearly in Silves and Albufeira and the Contraband festival, which celebrates the smuggling tradition on the border between Spain and Portugal. The Algarve also hosts many internationally renowned music festivals during the summer.
Lifestyle in the Algarve
With long, sunny days all throughout the year, it’s easy to lead an active lifestyle in the Algarve. There are some excellent golf courses dotted throughout the region, including the Monte Rei Golf & Country Club, the Amendoeira Faldo Course, and the Clube de Golfe da Quinta do Lago.
The Algarve also certainly isn’t lacking in cuisine, with more than twenty Michelin-star restaurants.
For those who enjoy the great outdoors, there are many activities to enjoy, from hiking to cycling to sailing and surfing.
Expats in the Algarve
The Algarve is known for having one of the largest communities of British expats outside the UK. Several communities from other countries, such as Italy and France, also exist. This pre-existing network can make it easier for new arrivals to adapt and find the necessary support to integrate into Portuguese life.
Many retirees choose to make Portugal their home because Portuguese tax law favors pensioners. While the NHR ended in January 2024 for most applicants, modifications have been implemented, and a transitional period is now in effect. To learn more about the savings you could make under Portuguese law, look at our article on the non-habitual tax regime.
Transport in the Algarve
The main airport in the Algarve, Faro, operates several national and international flights. The smaller Portimão airport also operates very few commercial flights, mostly from within Portugal. Other nearby options include Sevilla airport in Spain and Beja in the Alentejo. Lisbon is around three hours away by car, and there are frequent connections by train and bus.
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Algarve Property Prices 2024
The tourism industry in the Algarve plays a vital role in the region’s economy. As the Algarve grows in popularity, so does the real estate market—with many expatriates purchasing properties to relocate or retire here.
There are several property options available to purchase in the Algarve, such as:
- Luxury properties
- Modern apartment
- Villas
- Restored country home
- Townhouse
- Beachfront properties
Property prices in the Algarve
The Algarve real estate prices vary per area, with the average asking price for homes or apartments in the more popular areas being:
- Albufeira – Apartments €3,461 (€/sqm) House €4,054 (€/sqm)
- Lagos – Apartments €4,444 (€/sqm) House €4,543 (€/sqm)
- Portimão – Apartments €3,044 (€/sqm) House €3,441 (€/sqm)
- Loulé – Apartments €5,548 (€/sqm) House €4,480 (€/sqm)
For instance, if you’re looking for an investment property to generate rental income, you should look into properties with easy access to tourist hotspots to accommodate seasonal visitors.
Best Places to Buy Property in the Algarve
Why buy property in Albufeira, Algarve?
- Stunning beaches
- Good education options
- Cheaper investment opportunities
Albufeira’s golden beaches have long been popular with tourists, especially from the UK. With its fantastic cliffs, lively nightlife, and clear blue water, there are many reasons why this area is one of the best to live and invest in. Albufeira is a popular tourist destination and location for expats to settle down. Therefore, investors seeking a lucrative avenue into the Portuguese real estate market for rentals should speak to local real estate agents about their options here.
Advantages of buying property in Albufeira
There is a large expat community in Albufeira, which means that anyone moving to the area will probably find it easier to adapt, and it also means that you might need many of the local services. Some excellent international schools are nearby, which is convenient for anyone relocating with their family.
In addition, there are restaurants and other local amenities, making real estate purchases here ideal for property buyers looking to own a short or long-term rental property. On average, property prices in Albufeira are also cheaper than the rest of the Algarve.
Disadvantages of buying property in Albufeira
Albufeira is known for being particularly touristy. Property investors seeking a quieter scene to relocate might want to look at a different area. Local real estate agents are area experts and can advise property buyers on whether your preferred regions offer everything you want from your investment.
Why buy property in Lagos, Algarve?
- Lively nightlife
- Beautiful beaches
- Historic
Lagos may be famous for its party scene, but there’s much more to this incredible coastal city. Lagos has a rich history and culture and has something to offer for visitors and residents of all ages.
Advantages of buying property in Lagos
Lagos is known for its nightlife, but that isn’t all there is to this incredible town in the western Algarve. The historic town is also popular with surfers due to its proximity to Sagres, and there are also many incredible beaches nearby, such as the Praia Dona Ana, Pinhao, Praia do Camilo, and Ponta da Piedade. For those looking to move to the area with children, two international schools are nearby, the Nobel International School and the Vale Verde International School.
Disadvantages of buying property in Lagos
Lagos’s climate and beaches are almost too good—meaning that it can be very busy in the summer months. However, if you want to invest in real estate in the Algarve, Lagos, for holiday rental, this can also be an advantage.
Why buy property in Portimão, Algarve?
- Lively nightlife
- Some inexpensive investment options
- Good for sailing
Portimão is one of the most-visited towns in the Algarve, with tourists from the UK, Ireland, and Portugal making up the vast majority of visitors each year. The port town is also popular for sailing and watersports such as kitesurfing and scuba diving.
Advantages of buying property in Portimão
Portimão has a lively cultural scene throughout the year if you’re looking for excitement. With many options to eat out, drink, and party in the evening, there are many reasons why it attracts so many tourists each year. The mild climate also means that it can be suitable beach weather in almost every month of the year.
Disadvantages of buying property in Portimão
Portimão might be a bit too lively for some, and if you’re looking for a place that is quieter and more traditionally Portuguese, then it is probably better to invest in towns such as Tavira.
Why buy property in Loulé, Algarve?
- Relaxed atmosphere
- Fewer tourists
- Historic
The picturesque and historic town of Loulé in the Algarve offers something quite different to the coastal municipalities of the Algarve. The traditional market town attracts many visitors who come for the quaint architecture and relaxed atmosphere.
Advantages of buying property in Loulé
Loulé’s relaxed and traditionally Portuguese atmosphere can feel like a breath of fresh air when coming from the coast. For those looking to make an investment in a more tranquil area of the Algarve, then Loulé could be a perfect choice. There are also direct transport connections to Lagos, Faro, and Lisbon.
Disadvantages of buying property in Loulé
Loulé is not on the coast, and it takes around 25 minutes to reach the nearest beach by car.
Why buy property in Vilamoura, Algarve?
- Upmarket
- Excellent selection of golf courses
- Fine dining
The upmarket resort town of Vilamoura offers a lot in terms of luxury amenities. The flash seaside town boasts a marina, as well as a number of fantastic golf courses in the immediate vicinity. There is also much fine dining on offer, as well as chic bars to enjoy the long summer evenings.
Advantages of buying property in Vilamoura
For those looking for luxury, upmarket Vilamoura is the right choice. The Dom Pedro Golf Course is a short distance outside of the town, and the San Lorenzo and Vale do Lobo golf courses are also nearby. Among the many dining options is Michelin-star Willie’s restaurant. Vilamoura is also just a half an hour’s drive from Faro airport.
Disadvantages of buying property in Vilamoura
Anyone looking for a more traditional experience of the Algarve is likely to be disappointed with Vilamoura, as the town is incredibly modern.
Take a look at out How to buy property in Portugal article for more info
Why buy property in Tavira, Algarve?
- Relaxed atmosphere
- International education options
- Good transport links
The medieval city of Tavira has a very different feel to the other areas of the Algarve’s coast. Small white houses line its cobbled streets, and the city has clear Moorish influences in its history and architecture.
Advantages of buying property in Tavira
While being more relaxed and laid-back than the other popular destinations in the Algarve, Tavira still has just as much to offer. Its beach lies on a sandbank which can be reached by boat, and the historic center has many dining and drinking options. It also has an international school, Colegio Santiago Internacional. It is just over half an hour by car from Faro airport and is also close to one of the most beautiful waterfalls in the Algarve; the Pego do Inferno.
Disadvantages of buying property in Tavira
Tavira is a more relaxed destination than most others in the Algarve, so for is not an ideal choice for those looking for lively nightlife.
Why buy property in Carvoeiro, Algarve?
- Beautiful coastline
- Family-friendly
- Cheaper investment options
Carvoeiro’s beautiful cliffs and caves never fail to impress. The holiday town has a lot to offer, especially for families, as it has not only an incredible coastline to explore but there are also many exciting day trips to do in the surrounding region.
Advantages of buying property in Carvoeiro
Carvoeiro is incredibly popular with tourists during the summer for all the right reasons. It is a popular hiking spot as it is situated in the middle of a beautiful stretch of coastline. It is also conveniently located less than an hour from Faro airport and is a slightly cheaper investment option than other towns in the Algarve.
Disadvantages of buying property in Carvoeiro
Carvoeiro is more family—and activity-orientated, so those looking for more in terms of nightlife and luxury amenities may want to choose somewhere else.
Other areas to consider buying in the Algarve region
Those looking for quieter spots that are off-the-beaten-track might want to take a look at the picturesque inland towns of Alcoutim, Castro Marim, and São Brás de Alportel. The historic town of Silves is also a popular spot, away from the crowds along the coast.
The wilder western coast is also an option, with the pretty white town of Aljezur being an excellent choice for those looking for less touristic spots along the coast. Bordeira is popular with surfers owing to its proximity to the Praia do Amado. Vila do Bispo and Sagres are both situated close to dramatic coastlines.
Other larger urban centers include Olhão and Faro, which have excellent transport links and perhaps offer more services than most other smaller towns.
Vila Real de Santo Antonio is another option, located on the Guadiana River, although it is not close to any beaches.
Portuguese Property Taxes
Ensure to cover all the Portuguese property tax requirements with your real estate agent, before proceeding with any sale.
Property Transfer Tax (IMT)
IMT (Municipal Tax on Onerous Property Transfers) is a tax that applies when ownership of a property is transferred. The tax rate is determined by factors such as the property’s location, type, and value. Typically, primary residences enjoy a more favorable tax rate in comparison to secondary homes or investment properties.
Stamp Duty (IS)
Stamp duty, also known as Imposto do Selo, is a tax on various legal documents, including property transactions. When purchasing a property, the stamp duty rate is usually a small percentage of the property’s declared value.
Annual Property Tax (IMI)
IMI (Imposto Municipal sobre Imóveis) is an annual municipal tax on property ownership. The rate is determined by the property’s value and location, with urban properties usually facing higher rates than rural ones.
Wealth Tax (AIMI)
AIMI (Adicional Imposto Municipal sobre Imóveis) is an additional annual tax on real estate holdings that applies to higher-value properties. Residential properties valued over €600,000 are subject to this tax, which has different rates for individual and corporate ownership.
Capital Gains Tax
Capital gains tax is applicable when selling a property. The tax is levied on the profit made from the sale. Residents are taxed 50% of the gain at their income tax rate, while non-residents face a flat rate of 28%.
Rental Income Tax
Income generated from renting out a property in Portugal is taxable. Residents are taxed based on their income tax bracket, while non-residents are subject to a flat rate of 28%.
VAT on New Properties
Value Added Tax (VAT) applies to new property purchases from developers. The standard VAT rate is 23%, with reduced rates applicable under certain conditions.
Each of these taxes has specific rules and exemptions, making it crucial for property buyers to understand the tax implications thoroughly before proceeding with a purchase.
Buy or rent Algarve property?
The low cost of living and exceptional quality of life in the Algarve make this European city appealing.
Whether you’re looking to buy or rent depends entirely on your needs and circumstances.
Renting is an affordable means of living in Europe. It allows you the freedom to choose where you want to live without worrying about making a large investment, maintaining the property financially, or paying taxes on it.
However, buying a property means making a lucrative investment for yourself or earning passive income as a rental property. While it does require substantial financial resources, the Algarve is an affordable property market in Europe.
Is it a good idea to invest in Algarve property?
Algarve property presents a great investment opportunity. Whether you’re looking for relaxed, family-friendly areas, apartments in luxury resorts, or property near towns with buzzing nightlife, the Algarve has it all. Algarve property is also relatively inexpensive compared to the rest of Europe and remarkably stable.
Should I buy property in the Algarve or in Lisbon?
Both Lisbon and the Algarve are excellent places to invest in property, with different advantages and disadvantages to each one.
Algarve property ownership
There are several pros to entering the Algarve property market; from luxury properties to beachside holiday apartments, the Algarve region is an attractive destination for foreigners buying property. There are many pros to investing in the local market, such as:
- High average rental yield: As a popular tourist destination and retirement haven, there is a high rental demand, especially during the summer.
- Outdoor lifestyle: The Algarve region is known for its stunning beaches, golf courses, and resorts, making it very attractive for travelers and holiday homeowners.
- Low cost of living: Compared to Lisbon, the Algarve has more affordable living costs, from basic needs like food to rental prices.
- Large expat community: Those looking to retire in the area will be pleased to know that there is a thriving expat community here to help them with their transition to Portugal life.
There are some cons to buying property in the Algarve, such as:
- Limited year-round demand: The Algarve comes alive in the summer; however, all activities drop significantly in winter. Therefore, if you’re planning on renting your property out, you may not attract as many long-term tenants when compared to Lisbon.
- Seasonal business opportunities: While the region operates throughout the year, many businesses are seasonal. Real estate agents in the Algarve can advise on any information you need regarding the businesses, their close proximity to properties, and the seasonal implications.
Lisbon property ownership
There are several pros to purchase property in Lisbon. As an economic and cultural hub, owning property in the capital city puts residents close to a thriving infrastructure such as better public transportation, healthcare, and educational institutions than in the Algarve. Some of the benefits include:
- Strong rental market: There is consistent rental demand throughout the year from both locals and expatriates. However, strict regulations must be met before listing your rental property as a business.
- Business opportunities: The area has a vibrant economy, numerous job openings, international companies, and a growing tech scene.
- High appreciation potential: Lisbon has seen significant property value appreciation with ongoing development and gentrification projects.
- Desirable location: Central location with rich cultural heritage, historical sites, and vibrant nightlife.
However, there are some cons to investing in property in Lisbon, such as:
- Higher costs: Property prices in Lisbon are exceptionally higher than outside the city, including the everyday cost of living.
- Dense urban environment: Lisbon is a busy city that operates year-round. Therefore, it’s not ideal for those looking for a quieter setting.
If you would like to know more about investing in property in Lisbon, take a look at our article about the best neighborhoods in Lisbon.
How Can We Help You Find Your Dream Property?
Goldcrest Real Estate is the first buyer’s agent in Portugal, providing you with a tailor-made service to find your ideal property in Portugal. From sourcing to acquisition and aftercare, Goldcrest guides you throughout the buying process.
Here's how Goldcrest stands out in making your property dreams come true:
LOCAL KNOWLEDGE: Goldcrest has offices throughout Portugal, ensuring a strong presence from the mainland to the Azores and Madeira.
INDEPENDENT SERVICE: Goldcrest don’t represent any specific development or project, ensuring their advice remains impartial. By objectively analyzing every opportunity, Goldcrest focuses on maximizing your investment prospects. They partner with various agents, sellers, promoters, and developers, ensuring a broad spectrum of property options. The goal is straightforward: To help you find the best property at the most favorable price, whether you're buying or renting.
STREAMLINED PROCESS: Goldcrest provides a dedicated real estate consultant paired with a top-notch client management system for smooth information exchange. With the aid of advanced technology, like metasearch tools, they guarantee expansive market coverage. Goldcrest's viewing itineraries are tailored to your needs, and they're always ready to assist, be it in-person or on your behalf. When it comes to pricing, they use data-driven analysis to ensure you get the best deal. And, to make your journey smoother, Goldcrest assigns a dedicated onboarding account manager for every client.
ALL-ENCOMPASSING SOLUTION: Navigating financial aspects? Goldcrest is here to guide you through finance options and manage the required documentation. If you need property management solutions or connections to builders, architects, designers, and gardeners, they have you covered. Relocating? Their concierge services are designed to assist in everything, from securing accommodations to handling utility connections.
TRANSPARENCY AND PRIVACY: Goldcrest operates with a commitment to GDPR compliance, ensuring your data is protected. Expect a clear and detailed pricing model without any hidden surprises. Plus, they provide independent due diligence services to ensure every decision you make is informed.
Frequently asked questions about buying property in the Algarve
Are there any international schools in the Algarve?
There are a number of international schools in the Algarve, including the Vale Verde International School in Lagos and the Nobel International School in Lagoa. Take a look at our article to find out more about international schools in Portugal.
What is transport like in the Algarve?
Portugal has an excellent transport network, with frequent buses and trains to and from the capital, as well as local transport. There are also buses available to other countries in Europe.
Where do expats live in the Algarve?
Many expats opt for the sunny coastal towns of Lagos, Albufeira, and Carvoeiro. Places such as Lagos offer a good standard of living as well as all the necessary amenities. By purchasing property in any of these areas, puts your property investment in the heart of a thriving expatriate community.
What are the best beaches in the Algarve?
There are many different beaches in the Algarve to choose from, some of the most popular are the Praia de Dona Ana, just outside Lagos, Praia da Marinha near Carvoeiro, Praia da Falesia in between Vilamoura and Albufeira and the Praia da Rocha in Portimão.
How far is the Algarve from Lisbon?
The Algarve is about 250km from Lisbon, and it takes around 2 and a half hours to drive there by car, or just over 3 hours by train and a little less by bus. There are direct flights from Lisbon to Faro, which take just 45 minutes.
Are there any airports in the Algarve?
If you intend for your property investment to act as a holiday rental apartment or home, there are two airports in the Algarve that make the region even more appealing. The Algarve’s main airport is Faro, which serves several continental and international destinations. A smaller airport in Portimao only receives a few domestic flights each day.
This means that tourists that are renting have easy access to flights that allow them to travel to and from their holiday with ease.
What areas to avoid in the Algarve?
When it comes to property investment, there are no specific areas to avoid in the Algarve, but where you should invest depends entirely on what you’re looking for.
If you’re looking to invest in a more tranquil area, Tavira, Silves or Loulé are better options, whereas Lagos, Albufeira, and Portimao have more lively nightlife. Vilamoura is a better choice for those looking for more luxury options.
Is the cost of living in the Algarve expensive?
Property buyers interested in investing in European real estate will be pleased to know that Portugal is one of the most affordable countries. The cost of living in Portugal is one of the lowest in Western Europe, and it is cheaper to live there than in Spain, France, the UK, and Ireland.
Is the Algarve safe?
Purchasing property in the Algarve is an excellent prospective investment for those with safety concerns. Portugal is consistently ranked as one of the safest countries in the world to live in, and the Algarve, in general, has a very low crime rate.
What is the best area of the Algarve to live in?
Expats will find that the standard of living in the Algarve to be generally very high. With good weather, food, wine and many activities to enjoy, the region scores very highly in terms of life satisfaction for the people who move there. The best area to live in depends very much on the preferences and requirements of each individual.
What are the costs associated with buying property in Algarve?
A successful property purchase happens once you have signed the final deed that officially transfers property ownership. However, there are additional costs involved in Portuguese property taxes, such as:
- Notary and property registration expenses
- Legal fees
Outside of the property costs, you’ll also have to pay the following Portuguese property taxes:
- Imposto Municipal sobre as Transmissões Onerosas (IMT) is the property purchase tax.
- Imposto Municipal sobre Imóveis (IMI) is your annual municipal property tax.
- Imposto de Selo – Stamp duty tax.
