Opinion: Real Estate Market Booming in Madeira!

21 July 2018

In 2017, housing prices reached a four-year high in Madeira, with prices increasing by 10.4% in the first quarter of 2018, reaching 1,493 euros/m2.

In the third quarter of last year, property sales in Madeira rose by 23.1%, while the value of the sales increased by 25.7%.

The real estate market in Madeira is on the rise, already exceeding double-digit growth in the first quarter of the year. The average cost per square meter of land stood at €1,253 at the end of 2017, a four-year high and already very close to returning to 2013 prices (€1,255 m2). The first three months of the year have witnessed a continuation of the trend.

Madeira was the Portuguese region that saw the highest growth, at 10.4%, followed by the North with 6% and Lisbon with 5.6%. Funchal, the capital of Madeira, saw an increase of 7.3%, the second highest quarterly increase in the country, and is the third most expensive city in Portugal.

However, the number of real estate transactions in Madeira declined slightly in the first quarter, while the average sales price rose. 716 properties were traded in Madeira, representing a quarterly decrease of 1.8% and a year-on-year increase of 3.3%.

Of the 716 properties sold in the first three months of the year, 579 were existing properties (81%), and 137 were new homes. The value of properties transacted in this quarter stood at 92.1 million euros, 0.3% more than in the previous quarter, and 8.2% more than in the same quarter of the previous year. Of that amount, around 22.7 million euros were related to new builds, while the remaining 69.4 million euros related to existing properties.

Prices per square meter for existing properties have been increasing since the first quarter of 2016, from 941 euros to the current 1,088 euros. New properties also saw an increase of 124 euros/m2, reaching a total of 1,212 euros/m2.

Analysing the data, we can see that Madeira suffers from a lack of new construction, new developments, which are needed to meet the increased demand on the regional market. Our market is still largely limited to the acquisition of permanent housing for own use, but in recent times there has been growing demand on the part of investors, many of them private individuals, who are looking to the real estate market as an alternative investment. On the other hand, the strong growth of tourism in the region, and the increasing arrival of foreigners looking to acquire housing in Madeira have led to an increase in the number of new developments in Funchal, the capital, to meet the market’s current needs.

Funchal continues to be the municipality with the highest prices per square meter, followed by Porto Santo and Ponta do Sol, with the lowest prices registered in Santana and Porto Moniz.

Original Story: JM Madeira – Fábio Bastos

Translation: Richard Turner