Buying an Apartment in the Algarve: What You Need to Know

Apartments are one of the most popular entry points into the Algarve property market — offering lock-and-leave convenience, rental potential, and low-maintenance living in some of Europe’s most desirable coastal towns.

But choosing the right apartment isn’t just about location and sea views. If you’re buying in 2025, you also need to understand local regulations, AL licensing rules, condo obligations, and how different locations impact pricing, lifestyle, and rental returns.

This guide gives you a practical overview of everything you need to know before buying an apartment in the Algarve.

Why Buy an Apartment in the Algarve?

Apartments are popular with:

• Rental investors: Seeking year-round demand in places like Albufeira, Lagos, and Vilamoura
• Digital nomads and part-timers: Who want central, walkable homes with minimal upkeep
• Retirees and downsizers: Who prefer single-level living and lower maintenance than villas

Compared to villas, apartments usually offer:

• Lower upfront costs
• Proximity to beaches, marinas, and restaurants
• Shared costs for building upkeep, security, and amenities
• Easier management from abroad

🔗 Related: Villas vs Apartments in the Algarve: Which Is Right for You?

What Does It Cost to Buy an Apartment in 2025?

Prices vary significantly by location, building condition, and amenities:

Area	Avg. Price	High-End Price	Notes
Lagos	€350K–€900K	€900K+	Popular with retirees, nomads, families and quiet luxury seekers
Vilamoura	€500K–€1.5M	€1.5M+	Resort-style buildings, rental potential
Albufeira	€250K–€700K	€750K+	Short-term rental hub
Tavira	€300K–€700K	€700K+	Quieter, more traditional market

💡 Luxury sea-view apartments with shared pools, gyms, and garages typically exceed €700K in prime locations.

Can You Rent Out the Apartment Short-Term? (AL Licensing)

To legally rent an apartment for short-term stays (Airbnb, Booking.com), you need an Alojamento Local (AL) license. As of November 2024, national restrictions have been lifted, but each municipality can now define its own Contention Areas or impose zoning-based limits.

In practice:

• AL is now permitted again, except where municipalities have formally declared restrictions (Lisbon area – none in the Algarve)
• Lagos, Portimão, and Faro have not published new AL contention zones yet, but local rules may evolve
• Condominium buildings may still limit AL activity through bylaws or by majority owner vote
• Licenses are once again transferable, and are now valid indefinitely

🔗 Related: Understanding Alojamento Local (AL) in Portugal: 2025 Rules, Licensing & Tax Implications

📌 If AL income is part of your plan, it’s crucial to verify both municipal policies and condominium regulations before making a purchase — especially in high-demand zones.

Investment and Rental Potential

Apartments offer one of the Algarve’s strongest combinations of rental income and ease of management:

Metric	Typical Figures (2025)
Short-term yields	5–8%
Long-term yields	4–6%
Peak season rates	€150–€400/night (2-bed near beaches)

Compared to villas, apartments:

• Rent more easily via portals like Airbnb
• Have shorter void periods in walkable areas
• Cost less to furnish, maintain, and insure

📈 Apartments remain one of the most flexible options for investment-focused buyers, especially when AL licensing is available.

Understanding Condominium Rules and Fees

Most apartments in Portugal are part of a condominium (condomínio). This means:

• You’ll pay a monthly or quarterly condo fee for shared building services
• Major repairs (roofs, elevators, pools) are decided by majority vote among owners
• Rules may limit AL licensing, noise hours, or renovations inside your unit

Condo fees vary depending on building size, facilities, and services:

Building Type	Typical Fees (Monthly)
No pool, no lift	€40–€80
With lift, garden, or garage	€80–€150
Luxury building with amenities	€150–€250+

🔗 Related: What Are Condominium Fees and Rules in Portugal?

What Other Costs Should You Expect?

Type of Cost	Typical Range
Condo fees	€40–€250+/month
Annual property tax (IMI)	0.3–0.5% of tax value
AL taxes	28% flat tax or simplified regime (if renting)
Purchase costs	6–8% incl. IMT, stamp duty, notary, legal fees
Insurance	€150–€500/year (may be bundled with building)

You may also need to factor in accounting fees for rental income or local bank charges.

🔗 Related: IMT & Stamp Duty Calculator – Estimate Property Purchase Taxes in Portugal

New-Build vs Resale Apartments

Factor	New Build	Resale
Condition	Turnkey, modern amenities	May need updates (kitchens, windows)
AL eligibility	Sometimes limited by location/zoning	Some already have AL licenses
Price	Higher per m²	Better deals in older buildings
Timeline	May take 12–24 months to complete	Immediate use or rental

🛠️ Some luxury projects — especially in Lagos and Vilamoura — offer high-end finish options with interior design services and after-sales support.

Best Locations to Buy an Apartment in the Algarve

🏙️ Lagos:

Charming old town + modern marina. Popular with year-round residents, digital nomads and quiet luxury seekers.

🏖️ Vilamoura:

Golf, nightlife, and beaches in a planned resort setting. High rental demand and stable appreciation.

🌆 Albufeira:

Tourism hotspot. Ideal for short-term rentals but AL zones increasingly restricted.

🏛️ Tavira:

More traditional feel, better value, rising interest from French and Belgian buyers.

🔗 Related: Best Areas to Buy an Apartment in the Algarve (By Buyer Type)

So, Is an Apartment Right for You?

✅ Buy an apartment if you want:

• Low-maintenance living with shared amenities
• Easy access to restaurants, cafés, and the beach
• A base for part-time living or digital nomad life
• Strong short-term rental income with AL licensing

❌ But consider a villa if you need:

• Privacy, garden space, or a private pool
• Space for family life or long-term residence
• Customization without shared rules

🔗 Related: Algarve Villas vs. Apartments: Which is Right for You?