Portugal continues to be a sought-after destination for millions of travellers each year, making it an ideal market for holiday rental properties. If your holiday home is sitting idle for part of the year, you could be missing out on a valuable income opportunity. Here’s our view on why renting out your holiday home in Algarve, Portugal makes sense as we head into 2025.
1. Tap into Portugal’s Thriving Tourism Market
Tourism in Portugal remains strong and ever-increasing, with 13.1 million foreign visitors arriving in the first eight months of 2024, a 6.7% increase compared to the same period in 2023. In August 2024 alone, the country set a new record with 10.5 million overnight stays, demonstrating the high demand for accommodations during peak seasons. Renting out your holiday home allows you to capitalise on this growing influx of tourists who prefer private rentals over traditional hotels (Source: Reuters).
2. Benefit from Increasing Rental Prices
Portugal’s rental market has seen consistent growth. In the second quarter of 2024, the median rental value for new leases increased by 11.1% year-over-year, reaching €8.08 per square metre. This trend highlights the potential for strong returns, especially in high-demand areas such as the Algarve and Lisbon (Source: Roca Estate).
3. High Occupancy Rates and Earnings
Properties in popular areas like Lagos are achieving impressive results. In September 2024, short-term rental listings in Lagos had a median occupancy rate of 75%, with annual earnings averaging €24,983 per property. (Source: Airbtics). Other areas within the Algarve and Lisbon saw similar numbers; as supply struggles to keep up with increasing demand for holidays to Portugal.
4. A Supportive Framework
Recent updates to Portugal’s short-term rental laws have made the market more stable for property owners. A new decree-law effective in November 2024 removed the automatic expiry of inactive rental licenses and now allows license transfers when properties are sold. These changes provide greater legal certainty and flexibility for property owners looking to rent their homes (Source: Portugal Property).
5. Professional Property Management Solutions
Renting out your holiday home doesn’t have to be time-consuming or stressful. With professional property management services available, you can delegate everything from guest bookings and communication to cleaning and maintenance. This ensures a seamless rental experience while maximising your income.
6. Contribute to Sustainable Tourism
By renting out your property, you make efficient use of existing housing stock and support sustainable tourism practices. Travellers are increasingly drawn to private accommodations that provide a local experience, making your holiday home an attractive option.
Conclusion
In summary, the market conditions for holiday rentals in Portugal couldn’t be better. With growing tourist numbers, increasing rental values, and a more supportive regulatory environment, renting out your holiday home is both profitable and practical. If you’re looking to cover expenses or generate passive income, now is a great time to act.
If you’re ready to explore the potential of renting out your holiday home in Lagos or the surrounding Algarve region, Resort Rentals is here to help.
