2025 Market Update Q1

 

Southern Portugal’s Luxury Property Market:

A Strong Start to 2025

 

 

Despite challenging weather conditions in March and into April, the luxury property market in southern Portugal has demonstrated remarkable resilience and further growth in the first quarter of 2025. Our sales volumes have increased by 10% compared to the same period last year, surpassing expectations and underlining the region's enduring appeal to high-end buyers. As always, our focus is on the Quinta do Lago, Vale do Lobo and wider Central Algarve markets, as well as the growing New Homes market in the region.

 

 

Market Dynamics and Buyer Trends
 

January and February (traditionally quieter months) exceeded expectations - strong viewing numbers and multiple offers and agreed sales. This early momentum resulted in targets being surpassed in Q1. However, an unusually wet March resulted in fewer visitors to Portugal, which in turn affected viewings and sales.

External factors such as continued geopolitical tensions, including the conflict in Ukraine, a challenging UK budget introducing new taxes, and global market volatility tied to political developments in the United States, continue to shape buyer sentiment. Nevertheless, Portugal is increasingly seen as a safe haven within the EU - valued for its security, excellent infrastructure and connectivity, quality of life, sunshine, and first-class healthcare system. These attributes continue to attract buyers from around the world and are now also proving attractive to American buyers - many of whom would never have previously considered investing, let alone moving abroad. This trend is further fueled by the introduction of new direct flights from Newark, New York to Faro.

 

Residency and Citizenship Through Investment

The landscape for European residency is shifting rapidly. On 3rd April 2025, Spain formally ended its Golden Visa programme and is considering further measures to make foreign investment in Spain more difficult, citing concerns about housing affordability and real estate speculation. Italy has also tightened its criteria for citizenship by descent. These developments serve as a reminder of the importance of acting promptly and staying informed, as immigration policies across Europe continue to evolve.

Portugal’s Golden Visa remains one of the most flexible and strategically appealing residency-by-investment options within the EU. While recent reforms have removed real estate as a qualifying investment, the scheme continues to attract global interest from those seeking a secure, tax-efficient lifestyle in Europe. Eligible investments now include qualified private equity funds, scientific research, cultural heritage projects, and business ventures that contribute to the Portuguese economy.

 

 

Residential Market Insights

In the prime residential sector, there is a notable shortage of high-quality properties priced between €5 million and €7 million in resorts such as Quinta do Lago and Vale do Lobo to meet demand. We are also seeing some first-time buyers from the US and other young families from Britain and Ireland.

Our New Homes division reports strong activity in the sub-€1.5 million segment, while larger, more expensive new projects are proving more challenging unless they are situated in super-prime areas such as Atlantic Pines. British and Irish buyers make up a large segment of the market and we have witnessed an influx of Portuguese buyers from up north investing in the Algarve.

 

Buyers are increasingly seeking properties that offer strong lifestyle value, prompting heightened interest in areas such as Vilamoura, Lagos, and Tavira. Demand is primarily from second-home owners, with a growing cohort looking to relocate permanently - often prioritising access to international schools.

Sales prices for new developments in the pre-completion phase within the Golden Triangle have largely remained stable. However, we have observed significant price increases in completed stock, across the Algarve. This is primarily due to the limited availability of quality new-build resale properties.
 

 

Buyer Profiles and Decision Timelines

The buyer demographic is broadening, with notable increases in interest from Irish, German, Dutch, Brazilian, and even Japanese nationals. Many consider various parts of Portugal before ultimately settling on the Algarve, drawn by its unrivalled climate and lifestyle offering.

There is a distinct shift in buyer intention - from short holiday use to longer stays, full-time relocation, or strategic second-home acquisition with a view to future residency. Some buyers make offers within just a few days of enquiry. Generally, buyers are well-informed and efficient in their decision-making. We believe that buyers are confident that demand for property in the Algarve will only continue to strengthen - and with it, property values.

Over the past 12 to 18 months, we have also observed a marked increase in demand for long-term rental properties, as some buyers relocate even before finding the right property to purchase. This has pushed rental prices to new levels.

 

Vendor Motivations

Sellers are largely motivated by favourable market conditions and are seeking to realise the capital growth of their properties. Other reasons for selling include downsizing, returning home following the end of their Non-Habitual Resident (NHR) status, or moving closer to family. Interestingly, a large number of vendors remain in the region, often reinvesting locally in homes that better suit their evolving lifestyles.

 

In Conclusion

The luxury property market in southern Portugal has shown impressive strength in the first quarter of 2025, with a 10% increase in sales volume despite inclement weather. The region continues to draw a diverse and sophisticated international audience, attracted by its safety, lifestyle benefits, and long-term investment potential. As Portugal’s Golden Visa programme adapts to changing global trends, it remains a compelling option for those seeking flexibility and security within the EU. Southern Portugal continues to affirm its position as one of Europe’s most desirable destinations for luxury real estate.

 

Everyone enjoys the Fun Facts!

• National Price Increase: Property prices across Portugal rose by 4.2% in January 2025 compared to the same period in 2024.

• Algarve's Exceptional Growth: In 2024, Algarve real estate prices increased by an average of 15.3%, outperforming the wider market.

• Quinta do Lago & Vale do Lobo: Due to unprecedented demand and limited land available for development in these prime Algarve resorts, property values are forecast to continue to rise in 2025.

• International Buyer Interest: British buyers accounted for the largest share at 43%, followed by Irish buyers at 17% and Portuguese at 13%. The remaining buyers comprised a diverse mix of both European and non-European nationalities.

• Economic Contribution: Between 2021 and 2023, Portugal’s premium residential market generated over €7.2 billion in national production and sustained more than 94,000 full-time jobs.

• Lisbon's Global Standing: Lisbon was recently ranked as the 10th most attractive European city for real estate investment in 2025 - reflecting its growing global appeal.

• Eco-Friendly Developments: The Algarve experienced a 12% increase in eco-friendly property developments in 2024, driven by a growing emphasis on sustainability and government incentives.

• March and April Unusually Wet: March saw a very welcome 176mm of rainfall—up 221% on historical averages—while April saw 43mm, up 54%. The country is now officially out of drought in all regions, making Portugal unusually green (but perhaps less sunny for outdoor activities and property viewings).

• World Travel Awards 2025: Portugal secured 19 awards in the latest edition, surpassing its previous tally by seven. These accolades highlight the nation’s excellence in various tourism sectors.

• Sardine Fishing Insights – 2025 Quota Increase: Portugal’s sardine fishing quota for 2025 has been set at 34,406 tonnes, marking a 16% increase from the previous year.

 

Stay tuned for the latest updates in our News & Events section!

Alison & Kerstin
Co-Owners, Directors and Sisters
info@qp.pt | +351 289 396 073 | qp.pt