Comparing the Algarve Property Market in Portugal to Other European Hotspots

Compare Portugal’s luxury property market to Spain, France & Italy to see why the Algarve offers better value, lifestyle and investment potential.

By LiveAlgarve on 20th June 2025 - 3-4 m. reading time 

Portugal's luxury property market has been on the rise in recent years, attracting buyers from all over the world. Known for its landscapes, amenities and lifestyle, Portugal has become a go-to destination for those seeking high-end real estate. But how does the Portuguese luxury property market stack up against other European hotspots like Spain, France and Italy? Let’s take a closer look.

The Appeal of Portugal’s Luxury Market

Portugal offers an ideal mix of factors that make it a top choice for luxury property buyers. The Algarve region, in particular, has gained significant traction thanks to its Mediterranean climate, beautiful beaches, and renowned golf courses. Cities like Lisbon and Lagos combine rich history and diverse lifestyles whilst also being close to the sea. The relatively low cost of living compared to other European countries adds to the country’s appeal.

The Algarve

The Algarve is the crown jewel of Portugal’s luxury real estate market. The region offers an array of properties from traditional Portuguese villas to contemporary, architecturally designed estates. Carvoeiro, Portimão and Porto de Mós stand out for their exclusive developments and proximity to top-tier beaches and golf courses. The local real estate market is buoyed by the demand from international buyers, particularly from the UK, Germany, and increasingly of late, the U.S..

Portugal’s previous non-habitual resident (NHR) tax scheme has also contributed to the attractiveness of the Algarve, offering significant tax benefits for foreign buyers. In recent years, more investors have started to explore Portugal as an alternative to traditional hotspots.

Spain

Spain, with its long-standing appeal to overseas buyers, remains a strong competitor in the luxury property market. The Costa Brava and Costa del Sol have long been the go-to regions for those seeking luxury properties in Spain. Marbella, in particular, is known for its glamorous lifestyle, luxury boutiques and high-end resorts, making it a prime location for the wealthy. However, while Spain offers similar benefits in terms of climate and beaches, the market is often seen as more expensive, particularly in prime locations like Barcelona and Madrid.

Spain’s recent addition of high taxes on luxury properties, combined with its stricter property laws, can be a deterrent for some buyers, particularly as Spain look to reduce the number of foreign investors creating a pricing crisis for locals.

France

France’s luxury real estate market, particularly in areas like the French Riviera, continues to be a key player in the European market. The Côte d'Azur attracts high-net-worth individuals with its glamorous lifestyle, exceptional gastronomy, and unrivalled natural beauty. Properties in locations like Nice, Cannes, and Saint-Tropez are renowned for their luxury and exclusivity. However, the French property market is often more expensive than both Portugal and Spain, particularly when it comes to properties on the French Riviera.

One downside of buying luxury real estate in France is the high property taxes and capital gains taxes, which can significantly affect the return on investment. This, coupled with the cost of living in certain parts of the country, can make Portugal a more attractive option for those looking for luxury with fewer financial burdens.

Italy

Italy’s luxury real estate market offers something unique, with properties steeped in history. The Italian Riviera, Tuscany, and Lake Como are well-known for their exquisite villas and estates. Like France, Italy is often considered a symbol of luxury, but it also comes with higher maintenance costs and property taxes. The cost of real estate in major cities such as Rome, Milan, and Venice can be prohibitively high, while the countryside properties, though stunning, often come with high renovation costs.

In contrast, Portugal offers a more modern luxury market with sleek, new developments that meet contemporary demands for style and technology. Buyers looking for an elegant, yet modern, luxury home might find Portugal to be a more viable option for their lifestyle.

Why Portugal Stands Out

While Spain, France, and Italy all offer attractive properties, Portugal’s combination of factors makes it an increasingly compelling choice for luxury property buyers. The relatively lower cost of living, tax benefits through the NHR 2.0 scheme and high-quality properties appeal to international buyers. Portugal also benefits from stable property prices and a strong economy, which adds to the investment potential.

Moreover, Portugal’s proximity to the rest of Europe makes it an ideal base for those looking for a second home or investment property. The ease of access via flights to major European capitals means that it is an appealing option for those who enjoy travelling around the continent.

Conclusion

Portugal’s luxury property market holds its own against other well-established European hotspots. While destinations like Spain, France, and Italy continue to attract luxury buyers, Portugal’s unique blend of tax incentives, more affordable pricing, and high quality of life make it a growing contender in the European luxury real estate scene. For those considering a luxury home in a beautiful and vibrant country, Portugal presents an appealing and competitive option.

If you’re looking to explore luxury properties in the Algarve, get in touch with a local expert who can guide you through the market and help you find your perfect home.