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Portugal has undoubtedly been a real estate “bright spot” for decades, and even with the recent economic climate, international investors are still drawn to the country and its incredible real estate growth.

So what makes the property market in regions like the Algarve so attractive to today's investors, and what's the potential for high financial returns?

1. Rental appreciation
Prices of property rentals in Portugal have continued to appreciate over the last couple of years, leading experts to estimate that current real estate returns can reach 8-9%. According to the National Institute of Statistics, after dropping during the pandemic, prices have risen significantly from 2022 onward, due to a lack of properties available for rent.

2. Tax incentives
Recent changes in government rates have made the rental market even more attractive, with a significant reduction in taxes charged on income if owners make their properties available for lease for a period of five years.

3. Lack of confidence in the financial system
During these uncertain times, many investors – not only Portuguese, but also the British, French, Americans and Brazilians – have shown distrust in the European financial system and instead channelled their savings to the real estate market as a more secure investment.

4. Safe investment
Unlike the 2008 recession, in which many buyers and developers were burdened in debt, the real estate market today has proven to be safer and more stable, thanks to a restructuring of the sector. With banks lending less and international funds as the country's main developers, Portuguese real estate is still considered a safe investment option.

Before making any decisions, potential investors should first consider what kind of property makes the most financial sense, and in which area they're more likely to see greater returns.

For more information on buying an investment property, speak to the team at Algarve Home Sales about your options.