How Portugal’s Real Estate Market Is Fuelling Economic Growth

Portugal's luxury property market is booming. This is having a knock-on economic effect, driving billions of Euros in output, thousands of jobs and growth in new regions.

By LiveAlgarve on 14th June 2025 - 3-4 m. reading time 

Behind the Algarve charm lies a serious economic engine, the country’s high-end residential property market. A recent study has highlighted just how significant this sector has become, not only for buyers and sellers, but for Portugal’s broader economy.

A Multi-Billion Euro Industry

Between 2022 and 2024, Portugal’s premium residential market, defined as the top 10% of property values generated over €7.2 billion in national production and supported more than 94,000 full-time jobs. These figures come from the first edition of the Realty Premium Market study by NOVA for the School of Business & Economics.

In the wake of global instability and the lingering effects of the pandemic, the study’s findings confirm what industry professionals have long observed: Portugal’s luxury property market is both resilient and increasingly essential to the national economy.

Key Hubs for Luxury Real Estate

Unsurprisingly, Lisbon, the Algarve and Porto remain the most active regions for high-end property activity. Lisbon alone accounts for around 60% of the country’s supply of premium homes, with sought-after areas like Cascais and Estoril continuing to attract both domestic and international buyers.

In the Algarve, prime coastal areas such as Lagos and Quinta do Lago remain hotbeds for luxury living. But interestingly, the study also shows that high-end demand is no longer limited to these well-known hubs.

Emerging regions like Comporta, Melides, Setúbal and even Beja and Madeira have seen a surge in interest particularly in the "Affluent" segment (properties between the 90th and 95th price percentiles). This geographic expansion highlights a growing appetite for premium properties in quieter, less saturated areas.

Rising Prices and Lasting Appeal

From 2021 to mid-2024, prices in the luxury segment rose by 23% in nominal terms, largely driven by limited supply, rising demand and significant increases in construction costs (up by approximately 30%). While inflation softened the real growth rate to about 3%, the underlying trend remains strong.

What’s particularly noteworthy is that demand has held firm despite policy changes. The end of Portugal’s Golden Visa for residential properties and the Non-Habitual Resident (NHR) tax regime might have shifted the profile of international buyers, but it hasn't reduced interest. In fact, online buyer activity doubled between 2022 and 2024, a clear sign that Portugal remains an attractive and competitive destination.

More Than Just Property Sales

Luxury real estate isn't just about prestigious homes, it's a comprehensive economic ecosystem. It supports a wide range of industries, from construction, architecture and interior design to legal services, local trades and hospitality. These sectors benefit directly from high-end transactions and from the presence of affluent homeowners who tend to spend and invest locally.

This premium market also contributes significantly to urban regeneration, tax revenues, and job creation, often in areas where long-term economic development is needed most.

Stability in a Shifting World

While many international markets are slowing or facing uncertainty, Portugal’s high-end housing market continues to perform. Lisbon was recently ranked the 10th most attractive European city for real estate investment in 2025. The ranking reflects Portugal’s ongoing appeal.

Looking Ahead

With interest rates stabilising and financing conditions set to improve, the outlook for the luxury sector remains positive. Developers, investors and high-net-worth individuals are likely to continue viewing Portugal as a smart long-term investment.

Final Thoughts

Luxury real estate is a pillar of Portugal’s economic future. As the market evolves, opportunities are opening up not just in traditional hubs like Lisbon and the Algarve, but in new, under-the-radar destinations that offer exclusivity, privacy and long-term value.

If you’re considering investing in Portugal’s high-end property market, there’s never been a better time to explore the possibilities and to become part of the country’s ongoing transformation. Get in touch with our team today.