Central Algarve’s prime market remains robust, growing 61% in decade to 2022

Prime prices continue to rise in the Central Algarve, as inventory levels are depleted by strong sales activity during the pandemic.

Written By:

Kate Everett-Allen, Knight Frank

21 Feb 2023

1 minute to read

Prime prices in the golden triangle of the Central Algarve, which stretches from Almancil at the top of Quinta do Lago and along the coast to Vilamoura, increased 15% in the 12 months to September 2022.

The number of homes for sale is falling and construction rates are struggling to keep pace with demand. After reaching a high of 5,938 in 2005, residential completions have fallen 89% across the Algarve, totaling just 632 residential units in 2022, according to the Portuguese National Statistics Office.

Residential sales in the Central Algarve region remain robust. Transactions increased by 21% in the year to Q2 2022 according to the Portuguese National Statistics Office. As travel restrictions eased, the region saw overseas demand strengthen as buyers, many of which were cash purchasers, targeted lifestyle locations.

Tax appeal

The Non-Habitual Residents (NHR) tax, introduced in 2009, allows qualifying foreign residents to take advantage of significant tax savings. Successful applicants benefit from a special personal income tax treatment over a 10-year period, including a 20% flat rate of income tax and exemptions for some private sector pensions.

Whilst second home purchases dominate sales activity, permanent residents account for around 37% of Knight Frank’s enquiries. The rise of hybrid working, in part due to the pandemic, is allowing more foreign nationals to relocate for longer periods.