The latest independent international research from Property Market-Index reveals that Portugal’s luxury real estate market continues to thrive, driven by international investment, affluent expats, and strategic regeneration efforts compared with the rest of Europe, the UK, and North America in particular.

The “Portugal’s Property Hotspots Report 2024-2025” provides a comprehensive overview of the country’s most sought-after locations, underscoring how cultural richness, heritage, quality of new homes specifications and tax incentives are fuelling significant growth.

Portugal’s prime real estate locations are experiencing robust demand, particularly in the Algarve, Lisbon, and surrounding areas. The report highlights the top property hotspots:

1. Quinta do Lago, Algarve
2. Vale do Lobo, Algarve
3. Ferragudo/Carvoeiro, Algarve
4. Lagos, Algarve
5. Estoril, near Lisbon
6. Comporta, near Lisbon
7. Lisbon districts: Liberdade, Lapa, and Principe Real
8. Cascais, near Lisbon
9. Silver Coast
10. Sintra, near Lisbon
11. Foz do Douro, near Porto
12. Vilamoura, Algarve

These areas are rated highly based on regeneration investment, growth trends, culture, education, heritage, investment potential, land availability, infrastructure, connectivity, amenities, health and well-being, sustainability, and security.

Senior researcher and spokesperson for Property Market-Index, Amanda Collison, explains, “The Algarve’s luxury real estate market is also thriving. The continued influx of entrepreneurs and wealthy families choosing the Algarve is delivering for investors, with quality build programs now on par with international standards.

“The demand from wealthy buyers is creating a supply shortage, driving significant capital growth. We are seeing double the growth in value compared to the UK, EU, and North America in terms of property prices. We see this continuing for at least the next three years due to international demand over supply in the luxury end, and the new government’s housing policy for local people and first-time buyers will take a few years to impact that side of the market.”

The market has seen limited new property supply, with only 20,000 properties built last year compared to 200,000 a decade ago. This scarcity, coupled with high demand, has propelled property prices in Portugal to grow at double the pace of the rest of Europe and most of North America.

Portugal’s attractive tax regimes are a significant draw for wealthy expats, even with the changes that will come in early 2025 for new entrants. The Non-Habitual Residency (NHR) tax incentives offered substantial tax savings on non-Portugal-derived passive income for ten years, and over 75,000 international expats had taken advantage of this since 2009, when it was introduced.

Even with the transition to the new NHR 2.0 tax regime in 2025, Portugal will continue to attract high-net-worth individuals with the right professional qualifications to qualify for the new scheme. This is also driving inward investment and entrepreneurs, bringing new talent and innovation to Portugal.

Sarah Thompson, a British expat, shares her experience: “The real estate opportunities here that we have seen in the last two years have surprised us, both in the quality of the architecture and the amazing locations and backdrops that make these opportunities so appealing. Coupled with the quality of life on offer, I’ve never regretted my decision to move here.”

One luxury developer, Brookes Property Group, is launching their Quinta Heights development between Carvoeiro and Ferragudo this summer.

Phil Button, Managing Director from Brookes Property Group, commented, “We are just launching, and we have a 25% sold off-plan already. The demand for central Algarve is very high as it offers such a rich cultural experience and luxury developments, like our Quinta Heights development, which offers a lot more value, with comparable developments in the Golden Triangle, just 30 to 40 minutes up the road.

“The beaches and bays in Ferragudo and Carvoeiro, mean that you can have those stunning sea views and at the same time see the inward mountain views from our soon-to-launch Quinta Heights luxury development, which will have the very highest specifications and amenities including wellness and yoga spa facilities, garden walks and even its own observatory to star gaze from the rooftops and witness the incredible night sky without the light pollution.”

“We have been building international luxury real estate for more than 20 years, originally in Florida, and we are very excited about what’s going on and the opportunities coming up in the Algarve. It is no surprise that it is attracting so many international affluent families.”

Anne Brightman, founder of Brightman Group, a luxury boutique real estate agent, shares her insights on Lisbon and its surroundings: “Lisbon’s districts such as Liberdade, Lapa, and Principe Real are thriving due to their blend of historical charm and modern amenities.

“Areas like Cascais and Sintra offer scenic beauty and strong investment potential, while Estoril and Comporta are increasingly popular for their luxurious coastal living. These regions are doing exceptionally well because they provide a perfect mix of lifestyle, accessibility, and high-quality real estate.”

Significant investments in regeneration and infrastructure are transforming regions like Lisbon, the Algarve, and the Silver Coast. These areas benefit from international investment, enhancing their appeal to buyers and investors.

Portugal’s luxury real estate market is poised for continued growth, driven by strong international demand, strategic regeneration investments, and favourable tax incentives. The country’s blend of cultural richness, safety, and lifestyle advantages solidifies its position as a top destination for affluent expats and investors.

You can access the full Property Market-Index report here for more insight into the latest property hotspots as identified by the research.