By Eva Krauland on August 24st, 2024 - 3m. reading time

This comprehensive report examines the factors driving this demand, highlighting Portugal's unique cultural richness, heritage, and high-quality construction standards. Additionally, the country's favourable tax incentives have contributed significantly to the boom in the luxury property sector, making Portugal a prime destination for international buyers.

Key Findings from the "Portugal's Property Hotspots Report 2024-2025"

The report identifies several prime locations across Portugal experiencing robust demand for luxury real estate. The Algarve and surrounding regions are particularly attractive for investors. The report ranks the following Portuguese locations as the top property hotspots based on their potential for capital growth, cultural and educational offerings, heritage, investment opportunities, and more:

1. Quinta do Lago, Algarve
2. Vale do Lobo, Algarve
3. Ferragudo/Carvoeiro, Algarve
4. Lagos, Algarve
5. Estoril, near Lisbon
6. Comporta, near Lisbon
7. Lisbon districts: Liberdade, Lapa, and Principe Real
8. Cascais, near Lisbon
9. Silver Coast
10. Sintra, near Lisbon
11. Foz do Douro, near Porto
12. Vilamoura, Algarve

These selected areas are known for their substantial investment potential, excellent infrastructure, and the lifestyle they offer to high-net-worth individuals.

We want to highlight the Algarve's thriving luxury real estate market, driven by an influx of entrepreneurs and wealthy families. Investor confidence is driven, with quality building projects matching and even surpassing international standards in some areas. Property values in Portugal are growing at twice the rate compared to markets in the UK, EU, and North America—a trend expected to continue due to the imbalance between high international demand and limited supply.

While the Portuguese government is working to increase housing availability for locals, the luxury real estate market remains primarily driven by international buyers. Locations such as Lagos, Ferragudo, Carvoeiro, and Benagil in the Algarve are particularly well-positioned for continued growth in property values.

The Growing Popularity of Luxury Living in Portugal

The report underscores the ongoing demand for starter homes and luxury developments for international buyers. With only 20,000 new properties built last year, compared to 200,000 a decade ago, the scarcity of new developments has significantly driven up the value of high-end real estate in Portugal. This trend will likely persist, with the country's attractive tax regimes continuing to draw wealthy expats, even with upcoming changes to the Non-Habitual Residency (NHR) tax incentives in 2025.

Since introducing the NHR scheme in 2009, over 75,000 international expats have benefited from substantial tax savings on non-Portugal-derived passive income. Even with the transition to the new NHR 2.0 regime, Portugal remains a magnet for high-net-worth individuals, especially those with professional qualifications that allow them to qualify for the new scheme. This fact will likely drive inward investment, attract entrepreneurs, and bring new talent and innovation to the country.

Conclusion

Portugal's luxury real estate market shows no signs of slowing down. It is set for sustained growth with continued interest from international buyers, particularly in sought-after locations like the Algarve. Portugal's cultural appeal, high-quality new home specifications, and favourable tax incentives make it an irresistible destination for affluent buyers and investors worldwide. As the demand for luxury properties continues to outpace supply, the value of prime real estate in Portugal is poised to rise, offering significant opportunities for investors in the coming years.