The Algarve’s allure as a vacation destination is well-established. Now, with the rise of flexible work arrangements and the continued appeal of Portugal for retirement, more people are seeking extended stays. But with rental costs on the rise, is owning a property in this sunny paradise a smarter move?
For those considering a long-term base in the Algarve through rentals, recent data points to a compelling possibility: investing in Portuguese real estate. In 2024, Algarve rental prices saw a significant jump of 7.7%, reaching an average of €14.3 per square meter by year’s end, surpassing the national average growth rate of 4.7%, according to idealista’s latest price index.
Albufeira and Faro led the surge, experiencing a robust 13.9% increase in rental rates. Vila Real de Santo António followed closely with a substantial 13.2% rise, while Silves also witnessed a notable uptick of 10.3%.
Rental growth was more subdued in Olhão and Portimão, with increases of 2.7%. Lagos recorded a modest 1.8% climb. Interestingly, Lagoa bucked the trend with a decrease of 6.9%.
In terms of cost, Loulé maintains its position as the Algarve’s most expensive municipality to rent in, averaging €16.3/sqm. Albufeira follows at €15/sqm, with Tavira at €14.6/sqm. Faro averages €14.1sqm.
Those seeking budget-friendly options may find Olhão (€11.5/sqm), Vila Real de Santo António (€11.7/sqm), and Lagoa (€12.3/sqm) to be among the more accessible choices.
Given the escalating rental landscape, investing in Algarve property could be a prudent, forward-thinking financial strategy. Not only does real estate ownership offer stability, but it also presents the potential for rental income, benefitting from continues demand regarding a flourishing rental market.
Whether your intention is to generate rental income or establish a permanent residence, purchasing property in the Algarve warrants careful consideration. Algarve Home Sales are ready and willing to assist you. Contact us today to explore your possibilities!
