Portugal’s Algarve region has been long associated with rich retirees who while away the days improving their handicap at high end resorts designed around golf courses, wellness spas, tennis clubs and Michelin starred restaurants – typically in the notoriously expensive ‘golden triangle’.
Premier League football teams often land here too at the end of the domestic season for training camps in the sunshine – West Ham spent three days at Quinta Do Lago last month.
However, the traditional British buyer is changing and a younger crowd is fanning out along the Algarve. Remote working, visas for digital nomads and the cost-of-living crisis in the UK are all factors contributing to rising demand from families and those working-from-their-villa across Portugal’s southerly most region.
"The area is known for its enviable quality of life, attracting not only pensioners and golfers but also, now, nomadic workers," says Cristina Santos of Engel & Volkers. "The majority of buyers are under 55, have an active working life and have children.
Compared to major cities like London or Lisbon, young people in the Algarve can afford a house with a larger plot and enjoy a host of outdoor activities after work, she continues. "Drawn by these benefits we are seeing more and more young people choosing to settle permanently in the Algarve," Santos adds.
The golden triangle
The most expensive properties in the Algarve tend to sit within the golden triangle of resort town Vilamoura, the town of Almancil and the resorts of Quinta Do Lago and Quinta Do Labo.
The towns have four Michelin-starred restaurants between them while Quinta do Lago and Quinta Do Lobo have both hosted the Portuguese Open. Quinta Do Lago is the most easterly point of the triangle and only 20 minutes from Faro airport by car.
Vilamoura is an all-year-round town with an international school, golf school, tennis academy, sailing school and a riding school and a marina that attracts wealthy tourists.
Property prices in Quinta do Labo range from more than around £450,000 to £12,385,269, according to the international luxury marketplace James Edition.
In fact, the most expensive property that Engel & Volkers has sold in the Algarve over the past 12 months was in the centre of the resort on a 7,000 sq ft plot (with a pool and temperature-controlled wine cellar) for US€7.9m.
There are 18 parcels of beach fronted land for sale on the neighbouring resort of Vale do Lobo, starting from $1,100,000, with the build project potentially handled by the resort itself.
For many, this part of the Algarve has been built to British and American tastes but away from the golf resorts and fashion boutiques, the craggy coastline hides many delightful nooks and crannies: fishing villages, restaurants that can only be accessed by boat and deserted islands.
Where does your money go furthest?
Armacao de Pera
The fishing village of Armacao de Pera, named after the structure or traps used to fish for tuna, dates to the 16th century. After a devastating tsunami in 1755 destroyed all but one house it grew again, and fishing remains its main source of income.
The wide beach stretches four kilometres to Praia da Gale in Albuferia and is lined with hotels, beach bars and dotted with colourful fishing boats.
A 40-minute drive from Faro, Armacao de Pera is bustling with a lively strip and a range of restaurants, but it’s overlooked by the hordes of Brits who stop at the larger and more popular port of Albuferia.
Prices range from $275,000 for a two-bedroom apartment in a private complex called Vale de Olival (with air con, gardens and a communal swimming pool) and available through Distinct Real Estate, to a detached house on the hillside with four bedrooms and four bathrooms and a private pool (comes equipped and furnished) for $988,000, sold by Sortamis. Holiday home company Kyero puts the average property price at about £285,000 (€332,000).
The Red Chalet
One of the most treasured landmarks in Armacao de Pera is a once-family-owned palatial summer residence turned luxury villa. The Red Chalet sits behind electric gates in the centre of the town opposite the peaceful church square.
Perched on the ancient sea wall (with a secret gate down to the beach), it was built at the turn of the 20th century inspired by the opulent villas in the south of France of the Belle Epoque era.
It reflects a period when wealthy urban families spent half the year by the sea. With high ceilings and interiors that are finished with a flourish, there’s a large, flagstone terrace facing out over the sea. Perfect for yoga at sunrise.
The unusual, red brick offering breaks rank with the tall apartment blocks, whitewashed villas and the glossy sporting resorts of the Algarve.
It is the latest holiday venue from the Vila Vita Collection, the leading Vila Vita resort in the nearby town of Porches. It’s an extravagant way of trying the area out before buying but comes with access to Vila Vita Michelin-starred catering and the hotel’s yacht.
With four double bedrooms, two the main house and two in the accompanying Ibiza-style White House, it is £1,933 (€2,250) per night in the low season.
Alcoutim
On the Spanish river border and 25 miles inland from the coast is the small town of Alcoutim on the banks of the Guadiana.
Narrow cobbled streets are lined with low rise white houses and pop with colour in the spring when Alcoutim is in full bloom. It is also known as the hottest place in Portugal.
The economy is completely dependent on agriculture and crafts (such as rugs and pottery) and local fare is fresh fish from the river in dishes such as Caldeirada stew. Restaurants popular with the locals include Casa da Escadaria. There’s a river beach where it’s safe to swim – Praia Fluvial do Guadiana – and a beach bar – Ta-she Beach Bar.
Kyero has identified Alcoutim as an "up and coming destination" with enquiries for villas or land up 17 per cent from 2021 to 2022. Kyero is selling a two-bedroom, three-bathroom house with views over the river for £284,000 (€330,000).
Alcoutim is considered low density and inland and therefore property buyers in the area are still eligible for a golden visa until the scheme expires. This is the 13 year long scheme which awards residency and the ability to travel freely across the Schengen zone (27 countries in Europe) in exchange for property investment of more than €500,000, but is in the process of being wound up.
Tavira
30km east of Faro and 25km west of the Spanish border is the town of Tavira which sits between the lagoons of the Ria Formosa natural park and on the slow flowing Gilao River. A sandbank separates the town from an island and the beaches which can be accessed by ferry.
"Those who buy in Tavira are drawn by the town’s culture, relaxed lifestyle and architecture. Dubbed the Venice of the Algarve, there’s the seven-arched Roman bridge, medieval and gothic houses, plenty of churches and tree-lined squares, with renaissance and Moorish influences, including the ruins of a Moorish castle," says Santos.
Again, considered low-density, golden visas are – for now – available, and the average property price is £357,000 (€415,000).
There’s a two-bedroom, two-bathroom apartment for sale in a new development called Royal Cabanas Beach II which comes with two verandas and a communal pool. It has an energy rating of A. The asking price is £382,000 (€445,000) through Kyero. The development is due to complete in 2024.
Olhao
Between Faro and Tavira, this coastal fishing town (the location of the first canning factory for exporting tuna in 1832) is famed for its fish, seafood and fruit and vegetable market on the waterfront.
With a Moorish quarter of white-washed square buildings, there are no beaches at Olhao. Instead, it is the gateway to some of the most beautiful beaches in Portugal on the lagoon islands, and the starting point of the Ria Formosa park.
Andre Phillips is a Portuguese entrepreneur who runs a brand agency (Atelier do Sul) and a small business called Boat for a Day.
Rather than head for the busiest islands Phillips takes his guests to a hidden inlet off Ilha da Culatra – a large sandbar island.
The boat slips in between oyster crates piled high and the fishermen hand out cleaned oysters straight from the ocean floor. "This is not the day job," says Phillips, (born and bred in the area but with an English father). He started it to share the less well-trodden bits of the Algarve.
Another destination on the bespoke boat trip is the deserted island (Ilha Deserta) inhabited by one fisherman who sells fish to those tourists who venture across to see him, eat at the lone restaurant (O Estamine) or enjoy the 7km-long stretch of beach, generally empty apart from the odd naked sunbather – it is one of the few naturist beaches in Portugal.
There’s a two-bedroom apartment in a new development in the centre of town with a pool and garage for €320,000 on Rightmove.
Ponte De Lima
One of the oldest towns in Portugal, Ponte de Lima sits on the Lima River and the original Roman crossing still stands, built in 1AD. It was the only crossing point for the pilgrimage from Braga in northern Portugal to Santiago de Compostela in Spain.
The ancient town is littered with medieval houses, plazas and old churches. It is the centre for the production of Vinha Verde (green wine) and attracts visitors and residents who love kayaking on the river and climbing, hiking and mountain biking in the Serra d’Arga Hills.
Ponte De Lima is on Kyero’s list of ‘up and coming’ destinations too with a rise in enquiries from British buyers. "The general trend we’re seeing is that the more popular tourist destinations have a price premium on all property types. There are very few apartments on offer in the up-and-coming areas, instead the Ponte De Lima market is dominated by rustic land for sale and rural villas," the research reads.
The average asking price is €130,000 and Kyero is selling a €299,000 single-storey house with two bedrooms, fully equipped and ready to move into.
How easy is it to buy on the Algarve?
Portugal’s golden visa scheme, that rescued the country’s real estate market devastated by the Global Financial Crisis, could close by the end of June.
The government is calling time on the decade-long investment-for-residency scheme because it fuelled property speculation, price inflation and inequality in the housing market.
Last year, the state finally started to wind it down, limiting the areas where foreigners could buy a property and qualify for the residency to try and entice them into less dense parts of the country, such as the east of the Algarve.
There are other enticements though. With the aim of attracting foreign investment to Portugal there are two visas available for homeowners or renters, the D2 and D7 visas, as explained by the international real estate firm Astons.
They are part of the long-stay visa programme and are issued to enable foreigners to apply for a residence permit as long as they stay in the country for more than six consecutive months. They are also granted visa-free access to the Schengen zone.
When it comes to buying, property hunters should be aware that if you spend more than 183 days in Portugal then you qualify as a resident and your income (albeit earned overseas) would be taxed in Portugal as well as in Britain.
Capital gains tax when you sell a property is 28 per cent but if you reinvest the money into property in Portugal this falls.
Stamp duty applies in Portugal too, but it is at one of the lowest rates international at 0.8 per cent of the property price.
The portugalpropertyhub.com advises setting 10 per cent of the purchase price aside to pay fees and taxes such as lawyer fees and surveyor costs.
