2025 H1 Market Report – Algarve Luxury Property

For those who don’t know us, Quinta Properties, trading as QP Savills, is the leading name in luxury real estate in the Algarve. We have been operating in Quinta do Lago, Vale do Lobo, and the wider Central Algarve for over 25 years and have built a reputation for deep local knowledge, professionalism, and complete dedication to providing excellent service to our clients. With 3 offices focusing on residential real estate, we also have a commercial branch as well as a team specialising in New Homes. As long-standing associates of Savills, our international reach ensures that we can market our listings to a truly global audience while providing a very personal, bespoke service on the ground right here in the Algarve.

Our Reports are published quarterly and are a well-respected guide for anyone interested in the Portuguese property market. We hope you find this useful, and we welcome all feedback.

2025 H1
Tourism continues to thrive, with high occupancy rates and record numbers of visitors expected again this summer. This boosts confidence among investors, particularly those purchasing properties with rental potential. Meanwhile, infrastructure projects across the region – including road improvements, healthcare expansion, schooling, and investment in technology – are quietly strengthening the Algarve’s long-term appeal.

The first half of 2025 has been marked by strong and steady market activity, despite global uncertainties and unusual changes in the climate. February through to April were unusually wet, and while bringing the whole of the country out of drought conditions, did not help property sales. As soon as the sun came out again, it was business as usual and, on the whole, enquiries are up, sales volumes have risen, and we’re seeing an increasingly diverse and international buyer base.

Enquiries and transaction volumes recovered fast in May. Demand remains robust, with a 21% increase in leads compared to the same period last year. Sales volume achieved for our clients is up 30.4% at €75m. Increased demand and the continued appreciation of property values continue despite global unrest.

Average prices hover around €2M for luxury villas outside of the resorts. Our Country Homes office in Loule has had a tremendous year so far with more demand and sales and new pricing levels achieved pushing that average price up all the time. Within Quinta do Lago and Vale do Lobo, our core business, average luxury villa prices are around €5M but can well exceed €20M. This is testament to the strength and maturity of the Algarve’s luxury property market, which is now firmly established as one of Europe’s most desirable luxury destinations.

One trend we’ve noted this year is that there are an increasing number of new buyers to the area. Historically, the larger proportion of our buyers were repeat buyers often upsizing or downsizing within the area rather than wishing to leave Portugal post-sale. Today there is an increasing number of new wealthy younger buyers who are well-informed and more value-conscious. They understand the market, are clear on their priorities, and act decisively when the right property becomes available. Often, these buyers are investing in property to relocate their families and to settle in Portugal. In the face of global unrest, many of our buyers see the Algarve and Portugal as a safe haven.

Sellers are increasingly confident, even bullish, and with good reason. The scarcity of quality stock means that well-presented properties in prime locations are achieving excellent prices, often with competitive bidding. However, buyers will not overpay for properties, especially those which require work or are priced above market value. This makes accurate valuation and professional guidance more important than ever to achieve the desired results for both sellers and buyers.

We have also observed a further shift in the composition of our client base. While British and Irish buyers remain a strong presence and in terms of numbers of buyers remain the same, percentage-wise, they make up only 46% of our buyers – way down from where it was years ago at over 80%. There has been a noticeable uptick in interest from across the world.

While Portugal’s appeal is well established — with its sunshine, lifestyle, and favourable tax regime — some lesser-known factors are now also playing to its advantage. Spain has begun to implement more restrictive measures and punitive taxation on non-EU property investors, prompting many to look further west. Meanwhile, although Dubai’s property market is booming and remains a formidable competitor, ongoing instability in the Middle East, combined with Portugal’s proximity to the rest of Europe and the UK and Ireland, is causing a noticeable shift in buyer interest toward the Algarve.

Many of these new buyers are seeking either a permanent home to relocate to, or a semi-permanent base, attracted by the Algarve’s safety, excellent international schools, modern infrastructure, and seamless travel connections to the rest of Europe and the United States. And, of course, the growing ability to work remotely continues to fuel demand for high-quality homes in the region.

Why Portugal Appeals to the Super Wealthy Now
Recent changes to UK taxation, particularly targeting non-doms and the super wealthy, are prompting many high-net-worth individuals (HNWIs) to reassess their options. Indeed, for wealthy families from across the globe, Portugal remains one of the most attractive alternatives in Europe, offering a stable, welcoming environment with fiscal and lifestyle advantages. Many choose Portugal as a strategic base for post-exit planning, especially those selling businesses or looking to preserve multi-generational wealth. Here’s how Portugal may benefit those affected by the UK’s tightening tax regime:

Tax-Friendly Climate (Even Post-NHR) – While Portugal’s original Non-Habitual Residency (NHR1) regime officially closed to new applicants at the end of 2024, Portugal still offers attractive benefits:
The new regime, NHR2, offers reduced taxation for certain professionals and sectors (mainly science, technology, innovation, and start-ups). Though it's more limited than the previous NHR offering, it does offer some advantages too. It still demonstrates Portugal’s continued commitment to attracting skilled and wealthy residents.

No Wealth Tax – Unlike other European countries, Portugal does not impose a general wealth tax. There is a relatively small stamp duty (AIMI) on high-value real estate, but no tax on personal net wealth or financial assets.

Attractive Inheritance & Gift Tax Rules – Portugal has no inheritance or gift tax for close family members. This makes it particularly attractive for wealth planning across generations – a significant contrast to taxation in other countries.

Capital Gains Opportunities – While Portugal does tax capital gains, planning opportunities exist. For example, gains on non-Portuguese assets acquired before residency may not be taxed if structured correctly. And under certain conditions, gains from selling a UK business may be mitigated or deferred when planned alongside Portuguese tax residency. For more information on Portuguese taxation, please refer to Let’s add a link here to the tax page in our property book.

Golden Visa Still Exists – Though real estate investment is no longer eligible for the Golden Visa programme, Portugal continues to allow residency via investment funds, research, culture, or job creation. It's an appealing route for HNWIs seeking EU mobility and a Plan B.

Residency Before Liquidity Events – For Brits planning to sell a business, becoming a Portuguese resident before the sale can offer planning advantages. For example, if the sale happens after tax residency is established and structured with professional guidance, gains from the UK may fall outside Portuguese taxation depending on double tax treaty rules, source of income, and asset location.
Portugal taxes on a residency basis, not citizenship, and with careful planning, global income can be taxed more favourably than in the UK under its new regime.

Favourable Lifestyle and Cost of Living – Beyond tax, Portugal offers a secure, scenic, and high-quality lifestyle. Compared to London, Geneva, or Monaco, it delivers an excellent standard of living at lower cost, making it a desirable base for the globally mobile.

A Growing Trend Among Wealthy Americans and Brits – Savills.com recently reported a spike in traffic from U.S. visitors, with Portugal now ranking high among global property searches by wealthy Americans. The shift is also being driven by geopolitical tension, lifestyle rebalancing, and the search for a better quality of life.

Rental Market Trends
We’ve seen a steady rise in demand for long-term rentals. As more people choose to spend extended periods of time in the region – either while looking for the right property to buy, building a property, working remotely, or enjoying a semi-permanent lifestyle shift – the premium rental segment is booming with monthly rents reaching well over €20k. Savills have also recognised this new trend in their latest edition of Portfolio – The Rise Of The Ultra-Tenant. Scarcity of high-quality property for rent is driving yields higher and boosting investor confidence in the Algarve as a buy-to-let destination.

The Algarve is now a Hotspot for Private Equity and Development Funds
Development activity in the Algarve’s Golden Triangle has surged, with flagship projects like One Green Way and Arcaya leading the charge. Post-COVID momentum continues to attract institutional funds, private equity, and high-net-worth individuals, driving land prices and a sharp rise in planning applications.

A prime example is the Reserva in Quinta do Lago. Launched in 2018 at €11,250/m², properties are now reselling at around €26,600/m² — a clear marker of capital growth and ongoing investor confidence.
Vilamoura is also undergoing a major transformation, driven by Arrow Global, a UK-based asset manager with €110 billion AUM. Arrow is heavily invested in the area, managing assets such as Vilamoura World, the Hilton and Dom Pedro hotels, golf courses, the marina, and key development sites — combining heritage assets with new builds and lifestyle infrastructure.

The newly launched Arcaya development by Bonstone adds to the momentum. This €700 million project spans 68 hectares, with its first phase featuring 48 luxury villas (approx. 240 m² on 1,000–2,000 m² plots) starting from €1.9 million. Designed by Battleiroig, the homes combine sustainable construction with modern architecture and include pools, landscaping, a clubhouse, wellness centre, and full concierge services — all minutes from Vilamoura.
At QP Savills, we are proud to be at the heart of this growth — advising developers, investors, and funds, and providing a pipeline of prime, approved land opportunities, backed by strategic guidance and decades of local expertise.

The Rise of Branded Residences and New-Build Appeal
Another key trend shaping the market is the growing appetite for branded residences. The Algarve is set to deliver over 700 branded units in the next five years, with landmark developments like Marriott’s W and the Viceroy Residences at Ombria Algarve setting new benchmarks in design, amenities, and service. These properties typically carry a 20–25% premium over non-branded counterparts but offer security, management ease, and a lifestyle experience that buyers are increasingly seeking.

New Homes Fun Facts
In Loulé municipality, 97% of residential sales in Q1 2025 were for used properties. This could demonstrate more demand for resales but could also be explained by the fact that many new builds are under construction and, although contracts are exchanged, completions have not taken place and hence are not registered in this stat as a sale yet.

Prime resorts such as One Green Way, Atlantic Pines, and Reserva on average now exceed €11,000–€15,000/sqm with values ranging from €3M–€9.5M. Whilst entry-level premium apartments tend to average between €7,000–€9,000/sqm, putting one- and two-bedroom apartments in luxury developments between €850K–€1.5M, and three-bedroom units around €2.0M–€2.9M, depending on the size and branding.
Benchmark values for ultra-prime villas are now over €14,000/sqm – particularly in resorts with full services and brand association.

Buyer Demographics – New Homes
Americans represent a significantly rising buyer group, now accounting for 37% of international luxury buyer market interest (up from 23% in previous years). This aligns with traffic data from Savills.com, where U.S.-based searches are up 39% year-on-year, with Portugal one of the top destinations searched.
For more information on New Homes in the Algarve, please contact our Director of New Homes, Monika Hanlon, on (+351) 913 901 136. She and her team can expertly guide you through all the options and find the right match for you.

In conclusion

Looking ahead, we remain positive. While there are always challenges – from unusual climate changes to shifting global dynamics – the fundamentals of the Algarve luxury market are solid. Our local expertise, paired with Savills' global reach, allows us to stay ahead of the curve and offer sound advice to both buyers and sellers. We expect continued interest from international clients, especially as awareness grows around the lifestyle and investment opportunities the Algarve uniquely provides.
In conclusion, while 2025 began with a little apprehension, it is fast becoming another successful year. Demand is strong, pricing is stable, and sentiment is strong. The Algarve continues to shine as a safe, beautiful, and rewarding place to live and invest. If you're considering buying, selling, or simply curious about the market, we would be delighted to talk. Our team is here, as always, to guide you with experience, discretion, and care.

For more information on the current property market, click here.

Main image: Charming 4-Bedroom Cottage in Loulé 95472QP