The changing climate: consequences for the Algarve and the property market

The Algarve, the southernmost region of mainland Portugal, is best known for its beautiful coastal landscape, mild climate and high quality of life. But like many other coastal regions around the world, the Algarve is also facing the challenges of climate change. Rising temperatures, rising sea levels, droughts and the risk of natural disasters such as earthquakes are not only changing the environment globally, but also the real estate market. In this blog post, we'll look at how these factors affect the region and what buyers and investors should consider to make informed decisions.

1. Average temperatures in the Algarve: A comparison

The Algarve is known for its mild winters and warm summers, with average temperatures of around 28–32°C in summer and 8–15°C in winter. But climate change has also left its mark here in recent years. If you compare today's temperatures with those about 10 years ago, you can see a noticeable warming. Average summer temperatures have risen by about 1–2°C, which is forcing the drought in the region. Compared to other southern European countries on the Mediterranean, however, the climate is still relatively moderate even in summer and the pleasant Atlantic wind supports the subjective perception of this.

For the real estate market, this means that buyers should pay more attention to climate-friendly and adaptable measures. For example, new building regulations encourage the use of energy-efficient air conditioners, higher quality insulation and sustainable materials. Architects and builders are increasingly turning to materials and designs that better regulate heat and reduce the need for air conditioning. Renewable energies, especially solar energy and heat pumps, are playing an increasingly important role in reducing dependence on conventional power sources and also increasing the attractiveness of sustainable properties.

2. Rising sea levels: effects on coastal regions

Another important factor is rising sea levels. Scientific studies show that sea levels have been rising steadily in recent decades, and this is also true in the Algarve. In the last 100 years, sea level has risen by about 20 cm worldwide. In the Algarve, increases of an average of 2–3 mm per year have been recorded over the last 10 years. This may seem like little at first glance, but it can have long-term effects such as coastal erosion, flooding and the loss of beach areas.

For property owners and investors, this means that coastal properties directly by the sea or barely above sea level tend to be exposed to higher risk. To address these challenges, the region relies on coastal protection projects, including dune restoration programs, to maintain natural barriers. In addition, local planning policy closes risky areas to new buildings or subjects them to strict building requirements. Investors should therefore carefully examine the location of their properties and take possible risks into account in their decision.

3. Drought and water shortages: a growing challenge

The Algarve has been struggling with water shortages and droughts for years, which are further exacerbated by climate change. In recent years, rainfall in the region has continued to decline, causing water reservoirs and groundwater supplies to sink to all-time lows.
In response, the Algarve is investing in water treatment technologies such as desalination plants and recycling systems. Programmes to promote water-saving measures and efficient irrigation systems for agriculture have also been introduced. In addition, the extent to which water from more northern reservoirs, which have sufficient water resources, could be diverted to the more southern regions is analysed.

Buyers and investors should keep in mind that water availability could be a critical factor for property values in the area. However, in summary, the Algarve is making efforts to proactively address the challenges of water scarcity. While drought remains a challenge due to a lack of rainfall, the measures already taken and the further approaches seem very promising to make the region more resilient and to find long-term solutions to water scarcity for the population, agriculture and tourism alike. Nevertheless, buyers and investors should keep an eye on these developments and consider the potential impact on their real estate strategies.

4. Natural disasters: earthquakes

Although earthquakes are rare in the Algarve, the region is located in a seismically active zone. The last major earthquake occurred in 1969 with a magnitude of 7.9 on the Richter scale. It was the strongest earthquake the region has experienced since the infamous Lisbon earthquake in 1755. In recent years, there has only been minor seismic activity that has not caused any major damage. Nevertheless, buyers should pay attention to earthquake-proof and weatherproof construction methods as much as possible and protect their properties with insurance.

5. Sustainable real estate as a future trend

Despite the challenges, climate change also offers new opportunities for the Algarve property market. There is a growing trend towards sustainable and environmentally friendly construction projects that focus on energy efficiency and the use of renewable energies such as solar thermal energy or photovoltaics, also combined with a heat pump and high-quality insulation. Property buyers and investors who value sustainability are increasingly finding offers in the Algarve that meet these criteria. Government subsidies and tax incentives encourage investment in sustainable construction projects. Such properties could retain their value in the long term and be more attractive for environmentally conscious buyers and tenants.

6. How can buyers and investors prepare?

Buyers and investors should be aware of climate risks and take them into account when making decisions. This includes investing in higher or less vulnerable areas, as well as careful consideration of the construction quality and resilience of properties. Sustainable construction projects also offer a promising opportunity to invest safely and environmentally conscious in the long term.

Working with local experts who understand the specific realities of the Algarve property market is also recommended. These can provide valuable insights into the opportunities and challenges posed by climate change. With a well-thought-out strategy and well-founded planning, buyers and investors can not only minimize risks, but also make the most of the opportunities that arise.