Foreign Buyers Now Account for 80% of Property Purchases In the Algarve
The Algarve, a region in southern Portugal, is a popular destination for foreign property buyers. There are several reasons why foreigners are drawn to the Algarve. The region has a mild climate, beautiful beaches, and a relaxed lifestyle. It is also relatively affordable compared to other popular European destinations.
Recent Study Shows Second Home Investments
In fact, according to a study by a German real estate company, foreigners buy four out of five properties in the Algarve.
According to the study, most investors in the Algarve region are foreign citizens, with less than 20% of home investors being Portuguese.
Specifically, 80% of buyers are foreigners, predominantly British nationals, but also Germans, French, Swedes, Swiss, Dutch, and an increasing number of Americans.
These foreign buyers primarily purchase second homes in the region, with around 90% of investors buying properties for this purpose.
Professional Younger Families
The study further reveals that most buyers are under 55 years old, have active professional lives, and have children.
Additionally, they tend to prefer properties located within ten minutes’ driving distance of the nearest main city and close to the beach and have a good school system.
The Algarve’s luxury segment has proven especially attractive to foreign investors due to the relatively low prices per square meter, which range from five to nine thousand euros on average.
The majority of foreign buyers in the Algarve are British. However, there are also significant buyers from other countries, including Germany, France, Sweden, Switzerland, and the Netherlands. The study also found that the number of US investors in the Algarve is increasing.
Ex-Pat Retirees are Also on the Increase
Although the typical foreign buyer in the Algarve is under 55, the study also showed an increased number of retirees investing in Algarve property.
Again they are looking for a second home close to the beach. They are also willing to pay a premium for a property with sea views.
Algarve Property Prices
In the luxury segment, prices per square metre in the Algarve range from €4,000 to €8,000. A premium two-bedroom flat in Lagos costs between €400,000 and €550,000, and a three-bedroom villa there costs between €1.5 million and €2 million.
In Albufeira, central 3-bed apartments are cheaper at around €300,000 to €400,000; exclusive villas on the coast can cost around €2 million.
In the most expensive areas, such as Vilamoura, Vale do Lobo, and Quinta do Lago, 3-bed apartments cost around €600,000 – €800,000, and villas are priced at around €2.5 – €3 million.
Top Reasons For Influx of Foreign Investment
The Algarve is a popular destination for foreign property buyers for several reasons. The region has a mild climate, beautiful beaches, and a relaxed lifestyle.
It is also relatively affordable compared to other popular European destinations. As a result, the demand for property in the Algarve is expected to remain strong.
In Algarve, property prices rose by 17.5% (7-8% in real terms) y-o-y to approximately €2,000 per sq. m. Again, indicating that now is the time to invest in Algarve property.
By region, Algarve had the biggest surge in the number of housing transactions across the whole of Portugal, registering a y-o-y increase of approximately 17%, followed by Central (9%), Alentejo (8%), Lisbon (6%) and the North (5%).
Can You Still Find Bargain Property?
However, bargain Algarve property can still be found, with nearly 8,000 bank-repossessed properties going up for auction in 2022.
Sales on the property portals increased to 530 million, with the number of assets up for bid also rising. Bank default payment is the main reason for repossession.
Forecasts for this year are also for growth at a time when the Portuguese economy is facing rising interest rates.
Suppose you are interested in investing in Algarve property for a second home here at Gatehouse International. In that case, we have over 20 years of experience in the Portuguese property market, expertly advising our clients on the best options for their current standing and situation.
I have lived in the Algarve for over 20 years and love the experience. Now writing about and photographing the Algarve experience to share with others.
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Level 10 Google Local Guide for the Algarve – https://maps.app.goo.gl/QRC1qeLiWUc9wmQj6