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Buyers are ‘investing in the Algarve again’

The average price of a home in the Algarve has increased for the first time since 2008, thanks largely to a surge in second home buyers.

Realistic pricing, the availability of cheap finance, strong investment in infrastructure and tax initiatives have led to renewed confidence in the Algarve property market, driving up property transactions in the process.  

Prime prices increased by 6.9% from December 2014 to December 2015, supported by a 32% jump in sales volumes in 2015 compared to 2014, according to Knight Frank’s west Algarve office.


Alex Koch de Gooreynd, partner and head of Knight Frank’s Portugal Network, said: “In 2013 we saw vendors start to adjust their prices, keen to progress sales which led to an upturn in transactions and by 2015 the Algarve recorded its first annual increase in prime prices since 2008.

“Buyers are investing in the Algarve again. They are buying, extending and improving. Increased liquidity is now returning with good quality stock offered at sensible prices selling quickly.”

UK, Irish and German buyers are still evident along the Algarve but French, Scandinavian, and non-European, including South Africans and Chinese, are increasing in number. The surge in French interest has been notable in the last 2-3 years with many citing Portugal’s Non-Habitual Tax Residency regime as a key incentive.

Non-Habitual Tax Residency regime exempts non-residents spending 183 days in year in Portugal, or those with a primary residency in the country, from income tax on non-Portuguese incomes, including pensions, salaries and capital gains for a period of 10 years (if subject to tax in the country of source).

Another initiative, Portugal’s Golden Visa – by far the most successful of the European schemes in existence – has seen inward investment focus on the Lisbon area rather than on the Algarve. To date Chinese buyers account for 79% of the 2,853 visas granted since 2012.

The Algarve is a second home destination and a luxury purchase. Buyers are drawn to the Algarve for the long rental season it offers. People, who want their holiday home to make money when they are not using it, can reasonably expect to rent out their properties from Easter to late October, while the Algarve’s 37 championship golf courses can often extend the tourist season beyond that of the traditional summer rental period, running from February to May and again from September to November.


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