Tourism Boom: What It Means for Lagos, Portugal’s Real Estate in 2025

With Portugal’s tourism revenue surpassing €26B in early 2025, Lagos is emerging as a prime hotspot for real estate investment. Rising demand for premium short-lets, limited coastal supply, and strong international interest are driving property values and yields upward, making now a smart time for buyers to act.

By LiveAlgarve on 25th July 2025 - 4-5 m. reading time

Tourism in Portugal Hits €26 Billion: Why Lagos Property Investors Should Take Note

According to the Portugal News, Portugal generated over €26 billion from tourism in the first half of 2025, setting a record pace towards exceeding €62 billion by year-end. For coastal towns like Lagos, a clear opportunity emerges for real estate stakeholders, particularly in the hospitality, short-let, and residential sectors.

The Algarve, accounting for around 30% of Portugal’s total overnight stays in 2024 (INE Portugal), continues to attract strong demand from both foreign tourists and lifestyle buyers, especially British, German, and increasingly North American investors. 

2025 Trends Supporting Lagos’ Real Estate Market

1. Shift Towards Premium Short-Term Rentals

With higher tourist spending, demand is rising for quality villas, modern apartments, and serviced short-lets over traditional hotels. In Lagos, occupancy rates in short-let units have risen 14% year-on-year in H1 2025 (AirDNA Report Algarve 2025).

2. Golden Visa Phase-Out and Long-Term Residency Demand

Portugal’s Golden Visa program officially ended in early 2024, yet foreign demand remains high. Buyers now target properties as personal residences or long-term rentals, particularly in the Algarve where lifestyle remains the key driver.

3. Limited Supply in Coastal Towns

Construction licensing restrictions in protected areas, combined with rising land prices, have tightened supply in Lagos and neighbouring towns like Alvor and Carvoeiro. This supports stable-to-rising property values, especially for new-builds and renovated properties.

4. Strong Eurozone Consumer Confidence

The EU Consumer Confidence Index shows steady recovery in 2025, fueling sustained travel demand from key European markets (Eurostat).

Real Estate Opportunities in Lagos, Portugal

Risks to Consider

• Regulatory tightening on holiday rentals (Alojamento Local) - new 2025 updates in Lisbon, Porto and the Algarve. 
• Affordability pushbacks - rising local discontent over housing shortages could result in further restrictions, though Lagos currently faces comparatively less political pressure than Lisbon, for example.

Summary

Tourism’s surge in Portugal is certainly quantifiable. For investors and property buyers in Lagos, Portugal, this translates into:

• Solid short-term rental demand,
• Stable property appreciation,
• Tight supply reinforcing long-term value,
• Lower volatility than urban Lisbon or Porto.

Avoid speculative purchases, focus on well-located, quality properties and stay attentive to regulatory developments.

For precise guidance on investing in Lagos real estate, get in touch with our helpful and experienced team at Live Algarve Realty.