Portugal’s Growing Economy Boosts Confidence in Holiday Let Investments

While global trade faces headwinds, Portugal is staying firmly on course, thanks to smart public investment, strong fiscal control, and continued demand in key sectors like tourism and real estate. This is especially relevant for those invested in short-term rentals in the Algarve.

Portugal’s Growth Forecast Remains Stable

According to the OECD’s latest Economic Outlook, Portugal’s economy is set to expand by 1.9% in 2025 and 2026, confirming a trajectory of stable, long-term growth. While slightly below government expectations (2.4%), this stability reinforces the country’s appeal for investors seeking lower-risk opportunities.

For property owners and those exploring holiday homes in Lagos or the wider Algarve, steady GDP growth helps underpin tourism demand, rental returns, and long-term property value.

EU Funds Fuel Renewed Investment

Portugal is now accelerating delivery of its €26 billion Recovery and Resilience Plan (PRR) after early delays. Investment growth is forecast to rise from 3% in 2024 to 3.7% by 2026, targeting key areas like:

- Tourism infrastructure

- Green energy and mobility

- Digital transformation

- Urban and regional development

These improvements not only enhance the quality of life for locals but also raise the attractiveness of regions like the Algarve for short-term visitors and long-term renters.

What This Means for Holiday Letting Investors in Lagos

1. Stable Economy = Stronger Confidence
A steady economic outlook gives rental owners peace of mind when it comes to property value, rental income, and guest demand.

2. Infrastructure Boosts Rental Appeal
Improvements driven by EU investment, including upgraded roads and green public transport, make the Algarve even more desirable to tourists and long-stay guests.

3. Tourism and Rentals Remain in Sync
Rising overnight stays, higher ADRs, and strong seasonal performance directly benefit property investors, especially in coastal areas like Lagos, Albufeira, and Portimão.

4. Portugal Still Offers Long-Term Value
Despite global trade tensions in the past few months, Portugal has kept a high trade surplus and is actively diversifying its economic base, making it a strategically smart location for real estate investment.

Ready to Make the Most of Portugal’s Steady Growth?

If you're a current or prospective holiday home investor in the Algarve, now is the time to align your property strategy with Portugal’s economic momentum. Get in touch with Resort Rentals Algarve to learn how to boost your property’s returns.

To browse properties on the market, be sure to look at our offering of properties for sale in the Algarve with B&P Real Estate.