The Algarve, Portugal’s southernmost region, has rapidly risen to prominence as one of Europe’s most desirable locations for both luxury living and investment opportunities. In 2025, the region’s unique blend of Mediterranean climate, stunning coastal properties and a thriving real estate market continues to captivate high-net-worth individuals (HNWIs), celebrities and investors seeking a secure and rewarding investment.

Golden Visa Programme

The most significant shift in recent years that has affected the Algarve’s real estate market is the end of Portugal’s Golden Visa programme, which was officially discontinued for property investments in Lisbon, Porto, and the Algarve. Although this program previously allowed non-EU nationals to obtain Portuguese residency by investing in real estate, the Portuguese government made changes to encourage investment in less-densely populated areas.

Despite this, affluent buyers from the UK, the US, Germany, and other European countries remain increasingly focused on the Algarve’s coastal properties. The combination of a Mediterranean climate, low taxes and a relaxed pace of life continues to appeal to investors seeking both a refuge and a solid return on their investments. 

Portugal Real Estate Market Trends

The Algarve’s real estate market remains a vibrant one, buoyed by consistent demand and attractive returns. According to a recent report, property prices in the Algarve increased by an average of 9.3% year-on-year as of March 2025, with some areas seeing growth rates as high as 17.7%. This rate of appreciation has been particularly strong in regions such as São Brás de Alportel, Silves, and Tavira, with Loulé (including Vilamoura) leading the pack, with a price of €4,152 per square meter in 2025.

The ongoing price surge is not just the result of the recent boom; there has been a steady increase in demand for high-end properties over the last decade. As the Algarve becomes increasingly recognised as a luxury destination, demand has outpaced supply, particularly in exclusive areas such as Lagos, Vilamoura and Quinta do Lago. Real estate experts predict that demand will remain strong throughout 2025 and beyond due to the region’s growing popularity with both foreign and domestic buyers.

Lagos, Western Algarve 

Lagos, historically known for its charming old town and stunning beaches, has rapidly become one of the Algarve’s premier luxury destinations. Over the past year, properties in Lagos, Algarve have increased in price by 10.9%, and the demand for luxury homes has skyrocketed. Exclusive developments along the cliffside offering panoramic views of the Atlantic Ocean are among the most sought-after in the region. According to local experts, properties in these areas are commanding premium prices, and demand is expected to continue rising through 2025.

Vilamoura, Algarve 

Vilamoura, one of the Algarve’s most established luxury hotspots, remains a top choice for affluent buyers. Known for its world-class marina, exclusive golf courses and luxury resorts, Vilamoura continues to see strong price growth, with properties here experiencing a 14% price increase in 2024 alone.

Vilamoura is home to the Dom Pedro Victoria Golf Course, one of the Algarve’s top golf courses, which hosts the Portugal Masters annually. With the growing popularity of golf tourism, investors are increasingly keen on properties in Vilamoura, where rental yields have remained high due to consistent demand from golfers and affluent tourists. Rental yields in prime properties average 5.9% annually, with investors seeing excellent returns from both short-term rentals and long-term leases.

Sought-After Amenities

Golf and Yachting

One of the Algarve’s biggest draws for wealthy buyers is its golf and yachting culture. The region boasts more than 30 golf courses, many of which are designed by world-renowned architects such as Arnold Palmer and Jack Nicklaus. In addition to the golf scene, the Algarve’s marinas, particularly in Vilamoura and Lagos, accommodate hundreds of luxury yachts. Vilamoura Marina alone boasts over 1,000 berths, making it one of Europe’s most prestigious yachting destinations.

The Algarve’s Gastronomy

The Algarve is also known for its vibrant food scene, particularly its seafood offerings. The region is home to several Michelin-starred restaurants, including Ocean Restaurant in Porches and Vila Joya in Albufeira, which are frequently listed among the best in Portugal. This culinary excellence further enhances the region’s appeal to high-net-worth individuals looking for an all-encompassing luxury experience.

Conclusion

The Algarve’s real estate market presents an incredibly compelling case for investment tbis year. With continued price growth, high rental yields and a high quality of life, the region offers one of the most attractive investment destinations in Europe. The combination of a thriving luxury property market, coupled with world-class amenities, beautiful landscapes and a favourable tax regime, makes it an ideal choice for investors and affluent individuals looking to secure their wealth in a stable and growing market.

As the Algarve continues to grow in popularity, it’s clear that this stunning region will remain one of Europe’s premier destinations for luxury real estate investment.