The Algarve property market is hotting up, and for good reasons. This tourism destination, home to many rental properties and expats, is shining among other European countries for investment properties.
With spectacular views and a booming summer season, the perfect home is easy to find since the market varies in budget and architectural property types.
But it isn’t as easy as just diving straight in and buying the first home you see. All successful purchases require research and knowledge, and this article looks at what potential buyers should know.
Why Invest in the Algarve Property Market?
About the Algarve
The Algarve, the southernmost region of Portugal, features beautiful coastlines with dramatic cliffs and golden beaches. This beautiful country and the Mediterranean climate, with dry summers and mild winters, make it a popular destination, often attracting international travellers seeking lush green valleys and traditional white houses and foreigners looking at properties for sale.
The name “Algarve” derives from the Arabic “Al-Gharb,” meaning “the West,” reflecting the Moorish heritage. The 13th-century Reconquista marked a turning point as the region embraced Christianity and developed agriculture and trade. Nowadays, tourism, fishing, real estate, and agriculture drive the economy.
Fantastic Climate and Hot Summers
The mild climate during winter receives occasional rain, but sunshine is still typical. From March to May, days start to warm up, with more sun and less rain. From June to August, summer sees temperatures between 18–30°C (64–86°F), though inland areas are hotter, and coastal areas benefit from cool breezes. September to November is warm and pleasant. Overall, there are 3,000 hours of sunshine annually.
Lifestyle Benefits for Expats and Holiday Home Owners
Outdoor Lifestyle: One popular activity is exploring the famous Benagil Cave by kayak, paddleboard, or boat. The region is also golfing paradise, with 27 world-class courses, and surfing is popular along beaches of the western Algarve, like Praia do Amado and Praia da Arrifana. Hikers and cyclists enjoy scenic trails like the Rota Vicentina or Via Algarvina, while dolphin watching, sailing, and snorkelling in clear Atlantic waters lure in tourists.
Healthcare: The Portuguese Government has a public healthcare system, Serviço Nacional de Saúde (SNS), which provides comprehensive and affordable care, including doctor visits, specialist consultations, and hospital treatment. Expats from the EU or countries with reciprocal agreements often access the SNS with a European Health Insurance Card (EHIC) or equivalent documentation. In contrast, others must contribute to social security or obtain private insurance.
Safety: Portugal is one of the safest countries. The 2024 Global Peace Index ranked Portugal in seventh position. Low crime rates and relaxed lifestyles contribute to strong communities in all walks of life and cultural scenes.
Affordable Living Costs: Coastal towns offer lower costs of living. According to Numbeo, although the UK has a higher purchasing power, Portugal is 41% cheaper if you don’t consider rent. They say living is 37% more affordable than in the United States.
Faro International Airport (FAO): The main international gateway is near Faro city center, the capital of the Algarve. Faro airport has nonstop passenger flights to 89 destinations in 22 countries and features a beautiful European city.
Major Highways: The A22 (Via do Infante de Sagres) toll highway runs east-west, connecting major towns and cities like Lagos, Portimão, Albufeira, Faro, and Tavira. It links to Spain via the Guadiana International Bridge, and the N125 runs parallel to the A22. The EN2, known as Portugal’s version of Route 66, offers a picturesque inland route for exploring rural charm.
Ferry Services: There aren’t extensive ferry routes for long-distance travel, but services run from Tavira and Olhão to the islands of Armona, Culatra, and Farol. A short ferry service connects Portimão with the charming village of Ferragudo.
Beautiful Beaches in Popular Locations
Forget urban environments because the stunning coastline with a pleasant climate features some of Europe’s best beaches. For picturesque beaches during summer months, the Western Algarve (Lagos, Sagres, Portimão) excels with Praia da Marinha (Lagoa), Praia Dona Ana (Lagos), Meia Praia (Lagos), Praia do Amado (Carrapateira), and Praia de Beliche (Sagres).
In the Central Algarve (Albufeira, Vilamoura, Quarteira), notable beaches include Praia da Falésia (Albufeira), Praia dos Pescadores (Albufeira), and Praia de Vilamoura, a chic beach near the marina, popular for luxury travellers and beach clubs.
In the Eastern Algarve (Faro, Tavira, Olhão), head to Ilha Deserta (Faro), a tranquil, pristine island beach accessible by ferry; Praia do Barril (Tavira): Known for its “Anchor Graveyard” and family-friendly atmosphere, Ilha de Tavira, and Praia de Cacela Velha.
Cultural Highlights and Historical Attractions
Rich in cultural heritage with many tourist attractions, Faro features the Cidade Velha Old Town, with cobbled streets, an 18th-century Arco da Vila, and remnants of Moorish and Roman walls, as well as Sé de Faro Cathedral. Tavira earns fame for historic churches, Roman bridges, and well-preserved architecture. Lagos is prosperous in maritime history and was a key location during Portugal’s Age of Discoveries. The Slave Market Museum highlights the history of the slave trade in Europe, while Forte da Ponta da Bandeira is a 17th-century fortress.
Silves medieval town features a well-preserved Moorish castle with fantastic views and a Cathedral, built on the site of a former mosque, showcasing Gothic and Manueline styles. Other attractions throughout the region include the Castle of Aljezur, Fortaleza de Sagres, Castle of Loulé, which offers insight into medieval history, Igreja de São Lourenço church (Almancil), Capela dos Ossos, known as the Chapel of Bones, and the Nossa Senhora da Rocha Chapel near Porches. For traditional markets, head to Loule, Olhao, or Silves.
Excellent Golf Courses
Home to over 30 world-class golf courses, players of all skill levels feel at home. Monte Rei Golf & Country Club, with the Jack Nicklaus-designed course, is both challenging and breathtaking. Quinta do Lago, a golfing haven boasts three award-winning courses like the Old Course and Victoria, while Dom Pedro courses in Vilamoura host prestigious tournaments. To invest in golfing homes, luxurious developments offer villas, apartments with direct golf course access, and top-tier amenities. Beyond lifestyle benefits, buying a golfing home is a lucrative investment, with high rental demand from golf enthusiasts and holidaymakers.
Expanding Expat Communities
Known as an attractive destination, the region attracts retirees, remote workers, and families seeking a better quality of life and worthy real estate purchases. The Algarve offers a slower pace, ideal for property owners escaping the hustle and bustle of larger cities. Popular expat hubs like Lagos, Albufeira, and Tavira (home to Colégio Santiago Internacional school) balance modern amenities and traditional Portuguese charm, while inland historic towns like Castro Marim provide quieter, off-the-beaten-track locations for suitable property ownership.
The diverse expat community includes British, German, Dutch, French, Brazilian, and Scandinavian residents and foreign investors. British nationals form the largest group, partly thanks to historical ties. Germans and Dutch often choose here for its sunny climate and cycling-friendly environment, while the mix of affordability and natural beauty draws French expatriates. In recent years, Americans, Canadians, and Australians have shown increasing interest, especially those working remotely or seeking early retirement.
Estimates suggest that the Algarve hosts around 50,000 to 60,000 foreign residents, roughly 10-15% of the population. Seasonal fluctuations mean foreigners increase significantly during the warmer months, as many expats are part-time residents.
