What happens when a tourism destination doesn’t have enough traditional accommodation? Local owners make their move.


In Costa da Caparica, a sun-drenched sweep of Atlantic coastline just a hop across Lisbon’s Tagus River, 201 new AL licences were granted last year to property owners wanting to rent their properties on a short-term basis.


At first glance, this figure from the National Register of Local Accommodation (RNAL) may seem modest. However, it vividly illustrates the dynamic interplay between supply and demand in hospitality facilities, which in turn stimulates further demand. In 2023, these 201 new licences represented nearly half of Almada county’s total of 459, which itself marks a significant doubling of rental properties compared to pre-pandemic levels.


For a long time, Costa da Caparica was considered a low-key suburb for Lisbon residents. However, about a decade ago, the tide began to turn. Surfers discovered the area’s impressive waves and soon after, a group of bohemian, mostly international trendsetters recognised its potential.


This influx of creative energy sparked a laid-back beach club boom, offering a spectrum of experiences – from beachfront fine dining and laid-back afternoons soaking up the sun to gatherings celebrating the latest music under a canopy of stars.


Ten years later there still aren’t enough hotels


It was arguably Praia Princesa that put Caparica on the map when it opened in 2014. Ten years later it’s still an example of the area’s entrepreneurialism and potential. And ten years later there are still only four hotels in nearby Costa Caparica and only eight in the entire wider Almada country.


We’ll be discussing this supply and demand dynamic in our live webinar this Thursday 18th July at 3pm Lisbon time. It’s a dynamic that even with a lack of accommodation, tourism is still growing and without enough accommodation, the rental revenue being generated is naturally increasing.


Overnight stays across the Setúbal region grew by almost 20% in the first half of 2023 compared to the previous year. For Costa da Caparica, this wider tourism growth is clearly demonstrated by its own growth in rental income.


Revenue per Available Room (RevPAR), a critical measure of hotel profitability, has increased by 30% since the pre-COVID era in Costa da Caparica. On one hand, this surge indicates strong demand and effective pricing, making new hotel projects particularly attractive. On the other hand, is it a surprise at all? With so few hotels available within an area increasingly recognised for a special blend of Portuguese culture and modern beachside allure, prices can only rise.


The owner of the only five-star hotel in the Setúbal region - Casa Palmela - was recently quoted in The Expresso magazine about the area’s demand, and explained that "this summer has gone very well, with occupations always full, above last year, and with tourists from a great diversity of origins.” The Portuguese government will be pleased too. Their hope is that some of the areas surrounding the capital will decentralise city-centric visits and bring more income to these areas.


For domestic and international investors, it’s not only the tourism dynamic that’s appealing. One of the most compelling aspects of Costa da Caparica is its undervalued real estate. Despite being just a short drive from Lisbon, property prices here remain significantly lower—about one-third of those in the capital but also other nearby coastal hotspots such as Comporta.


Costa da Caparica's transformation from a low-key suburb to a dynamic destination showcases its potential as a premier location for hotel investment. With booming tourism, undervalued real estate, rising RevPAR, and favourable supply-demand dynamics, Costa da Caparica’s story is only beginning and it will soon be down to a select few on how its next chapter is shaped...


If you would like to join our webinar about hotel investment in Portugal’s Costa da Caparica, please register here. If you’d like to discuss commercial property in other sectors or areas, please get in touch through athenaadvisers.com or email us at info@athenaadvisers.com.