The Statistics: Investment Turnover
Official statistics collected from the Portuguese National Statistic Institute and the Directorate of Statistics of the Madeira Regional Government showed that already in 2018, the median value of rents for new leases of family accommodation in Madeira was EUR 5.15 / m2, which is higher than the value registered for Portugal (EUR 4.39 / m2). These numbers positioned Madeira as the second region among the seven regions with the highest median of rental income, behind the Lisbon Metropolitan Area (EUR 6.06 / m2) and ahead of the Algarve (EUR 5.00 / m2), which came in the third position.
According to the same authorities, the median housing prices in Madeira remained among Portugal Top 3 regions. In 2018 the Algarve (EUR 1,500 / m2), the Lisbon Metropolitan Area (EUR 1,318 / m2) and the Autonomous Region of Madeira (EUR 1,203 / m2) were all above the national average of EUR 984 /m2.
The above-mentioned values are sustained by the fact that the Autonomous Region of Madeira is the solely year-round tourism destination in Portugal due not only to its permanent spring-like weather climate but also because of its tourism history that dates back to the 19th century when it was a coveted destination among European royalty and nobility.
In Funchal’s civil parishes of Sé and São Martinho apartment rents can yield a monthly rental income (long-term rental) between EUR 1,800 to EUR 2,000 for a EUR 270,000 investment in 196 m2 apartment. Should you opt for short-term rentals, in the likeness of AirBnB, the same well-located apartment can yield between EUR 500 and EUR 1,000 per week.
Outside the municipality of Funchal, the long term rental income decreases per square meter decreases, namely in the municipalities of Santa Cruz (4.46 € / m2), Câmara de Lobos (3.81 € / m2) and Machico (3.68 € / m2).
However, just like the Madeiran capital, the city of Santa Cruz, especially in the civil parish of Caniço, can yield a good short-term rental income (EUR 1,200/week) due to the fact that this area of Madeira is popular with the Germanic market. The trick here is to invest in a villa with a good view over the Atlantic Ocean. In the Caniço civil parish, villas start at EUR 250,000 and depending on the view you have over the ocean they can go up half a million or more euros, especially in the highly coveted Garajau area.
Apart from the existing houses and apartments already available for sale, some stakeholders in the Madeiran real estate market are offering once in a lifetime investment opportunities that can turn into great short-term rental income sources: bespoke modern villas and traditional Madeiran manorial houses are known locally as Madeiran Quintas.
While those offering bespoke villas usually require an initial investment of at least EUR 295,000 for a fully personalized villa built from scratch and along the famous banana line, in the municipalities of Ponta do Sol and Ribeira Brava, a Madeiran Quinta will never be sold below EUR 1 Million thresholds.
The advantage of a bespoke villa project is that with a single investment you get the opportunity to build a house the way you like and, depending on the plot you get, you can be built two additional luxury bungalows for short-term renting and with an expected yield of EUR 1.000/week.
Most of the Quintas available for sale in the Madeiran real estate market are superbly preserved and combine history and tradition with modern amenities. Even though few of them are allocated to the rental, the yield regarding such investment options is never below EUR 1000/week, due to the peaceful and romantic scenery that inspires rest and happiness among travellers and owners.
Golden Visa: Why Madeira
Given the statistics above, those looking to obtain residency, and later citizenship, by real estate investment as a way to obtain the Portuguese Golden Visa should look into Madeira as the place to invest.
Under the Golden Visa scheme, qualifying real estate investments are the following:
- Real estate in Portugal with a value of 500 000 Euros or more (this value can be reduced to 400 000 Euros if the property is located in areas of low population density); or
- Construction of at least 30 years of real estate acquired in an area of urban rehabilitation and rehabilitation of real estate acquired in the total amount equal to or greater than 350 000 Euros (acquisition + works) – (this value may be reduced to 280 000 Euros if the property is located in areas of low population density).
Disclaimer: The above statistics are for informative purposes only and refer to the information available for the year 2018. All investors are advised to fully understand all risks associated with any kind of investment they choose to do. Hypothetical, simulated or statistical performance is not indicative of future results.
Our team at MCS, with more than 20 years of experience in the sector, is able to assist in obtaining the Golden Visa in Madeira. For more information click here, for information about our services click here.
Miguel Pinto-Correia holds a Master Degree in International Economics and European Studies from ISEG – Lisbon School of Economics & Management and a Bachelor Degree in Economics from Nova School of Business and Economics. He is a permanent member of the Order of the Economists (Ordem dos Economistas)… Read more