The Algarve, Portugal’s premier vacation destination, is experiencing a surge in real estate demand, much like Spain’s Costa del Sol did years ago.
An Influc in Tourists
With its Mediterranean climate and appealing lifestyle, the region has drawn significant foreign investment, particularly from Americans. According to real estate consultancy Savills, housing prices in southern Portugal increased by 30% in 2023 alone.
Although all regions in Portugal saw rising property values last year — except Lisbon, where prices dropped by 3.5% — the Algarve’s real estate market has gained significant attention due to an influx of tourists and a growing interest from American buyers, according to El Economista.
Historically dominated by British investors, the top end of the market is now seeing Americans drive demand.
American Investments Flourish
Kerstin Buechner, co-owner of Quinta Properties, a subsidiary of Savills, reports a significant shift in buyer demographics. Before 2020, only 1% of foreign buyers in the Algarve were American, but that figure has since surged to 10%. Buechner describes this as a substantial change, especially following the COVID-19 pandemic.
The increase in American interest is partly fueled by tourism. In the first half of 2024, nearly 1 million Americans visited Portugal, nearly matching the total for all of 2022. The strong dollar against the euro has further bolstered this trend, allowing American investors to snap up luxury properties.
As demand outpaces supply, especially for high-quality properties, prices have skyrocketed. In 2023, the average price of luxury properties sold by Quinta Properties rose to €3.5 million ($3.7 million), up from €3 million ($3.2 million) in 2022.
Despite the discontinuation of Portugal’s “golden visa” program in 2022, American investments continue to flourish, driven by the region’s climate, lifestyle, and proximity to the U.S. United Airlines has even announced a direct flight route from Faro to Newark, increasing the region’s accessibility.
