Luxury homes in the Algarve continued to increase in value by 12.3 percent in 2023 compared to the previous year, this being the fourth biggest increase among the 100 cities around the world analysed by Knight Frank. In Porto and Lisbon, there was also an increase in the prices of luxury homes of 5 percent and 2.2 percent, respectively.

Contrary to what analysts expected, “luxury residential markets proved to be resilient in the face of successive increases in interest rates in 2023”, concludes ‘The Wealth Report 2024’ from real estate consultancy Knight Frank. This is because in 80 of the 100 cities analysed there was an increase or stabilisation in the prices of luxury homes between 2023 and the previous year. This is exactly what the Residencial Prime Internacional Index (PIRI 100) - which analyses 100 cities, and sun and snow destinations from around the world - shows, indicating that, on average, there was an appreciation of 3.1 percent across all luxury markets.

One of the destinations where the biggest increase in luxury house prices was observed in 2023 was the Algarve (+12.3 percent), being in fourth position in the table, equalling the evolution recorded in Cape Town, the capital of South Africa. Only Manila (+26.3 percent), Dubai (+15.9 percent) and the Bahamas (+15 percent) surpassed the appreciation of luxury housing recorded in the Algarve region.

Among the Portuguese destinations analysed is also Porto, where luxury home prices increased by 5 percent in 2023 compared to the previous year. This appreciation placed the city in 29th position in the table. Further down, in 60th place, is Lisbon, where luxury homes became 2.2 percent more expensive.

“The Iberian peninsula proved to be a hotspot, occupying five of the top 20 destinations with the Algarve and Ibiza (both 12 percent) leading the way”, highlights the study. Among the cities in southern Europe that have seen an increase in the value of luxury homes are, for example, Marbella (7.2 percent), Mallorca (7 percent), Madrid (6.4 percent) and Barcelona (2.7 percent) in Spain; and Rome (4.5 percent), Milan (3.5 percent) or Lucca (2.0 percent) in Italy. In Sardinia, the prices of luxury homes have not changed.