According to Knight Frank's latest report, prime prices in the so-called 'golden triangle' of the Central Algarve (which includes Almancil, Quinta do Lago, Vale do Lobo and the coast to Vilamoura) have increased by 15 percent in the last 12 months to September 2022.
Despite the rise in prices, new construction is struggling to keep pace with demand. After reaching a high of 5,938 in 2005, residential completions have fallen 89 percent across the Algarve, totaling just 632 houses in 2022 due to tight planning rules, along with supply chain issues and labour shortages.
However, residential property sales in the Central Algarve remain solid. In 2022, transactions increased by 21 percent up to the second quarter, according to the National Institute of Statistics.
In the same period the increase in sales in Lisbon was around 3 percent and in the whole country was no more than 4,5 percent. As post-pandemic travel restrictions were eased, the Central Algarve have received increasing demand from foreign buyers.
Regarding the results of this report, Jorge Costa, COO of Quintela e Penalva | Knight Frank, believes that "affordable prices in the Algarve are fundamental to the lifestyle sought by buyers from northern Europe and countries such as Brazil, China and the United States".
Golden Visas
A large amount of these results is due to the contribution of the Golden Visa. Since the introduction of the programme in Portugal in 2012, more than €5.9 billion have been invested in the Portuguese property market, representing 90 percent of the total investment through this scheme.
Non-Habitual Residents
The Non-Habitual Residents (NHR) tax scheme, introduced in 2009, allows qualifying foreign residents to take advantage of tax savings. Successful applicants benefit from a special personal income tax treatment over a 10-year period, including a 20 percent flat rate of income tax and exemptions for some private sector pensions. According to Knight Frank, there are over 10,000 Non-Habitual Residents in Portugal benefiting from the tax regime.
Who is buying?
Although the purchase of a second home dominates property sales in the Central Algarve region, permanent residents make up around 37 percent of those surveyed by Knight Frank. Internationally renowned schools located in the Algarve are increasingly receiving applications from new students. In addition, the increase of the remote work regime allows an increasing number of foreign citizens to move for longer periods.
Quinta do Lago stands out
In several locations within the "golden triangle" of the Central Algarve, prices per square metre are similar. However, there is one particular area that stands out: Quinta do Lago. It is an exclusive niche which has the highest average price per square metre in the region, €14,000/m2. Famous in Portugal, Quinta do Lago is receiving growing interest from international buyers according to Knight Frank