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Investing in a Resort in Portugal

Resorts, and the tourism industry in general, are a very prevalent investing option in Portugal. The process of investing in them can prove itself to be much easier than buying an individual property with the intent to invest, since when you buy a fraction of a resort, management is responsible for handling everything. But let’s get into how this investment option works!

Frederik Pohl
Frederik Pohl, CEO
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How do resorts work in Portugal?

Portugal has many resorts, especially in the Algarve, which is the most touristic region of the country. These are called “Empreendimentos turísticos em propriedade plural” in Portuguese, translating to “plural ownership of tourist developments”. These resorts are characterised by separate residential units in the form of houses or apartments and communal areas such as a pool, fitness rooms, spa, reception, golf course and gardens. Their main purpose is commercial tourism. In most cases, you cannot enter these facilities freely – only via a central entrance, a little like a gated community.

How can I invest in a resort in Portugal? 

Buying a property in such a complex is comparable to buying shares in a company. The share is represented by the corresponding residential unit. However, as with a company, you cannot simply say that you want to become independent with your share. The share remains part of the investment or the company.

The “Empreendimentos turísticos em propriedade plural” is therefore a very particular type of real estate ownership. And before deciding to invest in such a property, it’s important to understand its special characteristics.

Special conditions for owning part of a resort 

1. “Propriedades Plurais” are properties that are always part of an overall investment and they cannot be detached. This means that if you are not on site, the property is available for rent.

2. There is always a central management company that is appointed by the owners. Normally these companies have a contract of 5-10 years with the owners. This administrator has the right to access your property in the complex.

3. The annual charges, obligations and rights of the owners etc. are regulated by law. Therefore, a service and purchase contract should always be checked by a specialized lawyer.

4. Own use is always stipulated in the contract. In most cases, the owner receives a fixed quota that can be used in the low season (October-April). However, you can stay indefinitely in some of these facilities.

How do fees work?

5. The fee is usually initially offered as a fixed percentage and then changes to a revenue share, which is calculated using a contractually agreed formula. This should be explained to you in advance.

6. Renovations to the property must usually be borne by the co-owner, since they mostly happen due to wear and tear over time. In this case, it is advisable to hand over such work to the manager as part of the negotiations if the property is often rented out externally.

7. The owners always pay a monthly “house fee” for the operation of the complex and an additional contribution of at least 4% of the property value to a fund for renovations (required by law). The “house fee” is adjusted annually. These charges can usually be negotiated with the manager to the effect that the manager pays the costs (not the fund).

8. Management decides the rental prices, but they can be discussed in general beforehand. Usually, fractions of a resort are sold with business cases that include rather optimistic daily rates.

vilamoura resort invest portugal
Vilamoura, in the Algarve, is one of the biggest resort hubs in Europe

Advantages of investing in tourism accommodation in Portugal

The advantages of such a facility are quickly obvious. The costs for the extras are lower and you don’t have to take care of many things yourself, such as the pool or the garden. Plus, the properties are rented out the rest of the time by a central manager, while you get your share of the income passively. 

These types of investments are particularly suitable for buyers who only come to Portugal occasionally and place great importance on extras (pool, jacuzzi, garden, etc.) during their visits and do not want to invest too much of their own time and energy. In many cases, the investment is also worthwhile from a financial point of view, as guaranteed payments are offered over several years.

The residential units are also usually significantly cheaper than comparable properties on the real estate market and the location is generally quite nice, in touristic areas. 

Disadvantages of investing in Portuguese resorts

The disadvantages of a property in a professional resort lie primarily in owner-occupation. It is not always possible to use the property for yourself all year round or to have a permanent residence in the country. In addition, the exterior design options of the properties are very regulated in order to guarantee the appearance of the complex. If the units are rented out centrally, the interior design is usually also strictly specified. The same applies to the resolutions of the community of owners. The content of the contracts should therefore always be checked by a lawyer before signing a contract.

How Pearls of Portugal can help

“Empreendimentos turísticos em propriedade plural” make perfect sense as an investment and do not require as much paperwork as buying a property yourself. However, a lot of legal work and back and forth still need to happen. That’s when Pearls of Portugal comes in – we introduce you to our trusted lawyer partners and take care of all negotiation, making sure you get the best deal possible when investing in resorts – or any tourism accommodation -, in Portugal.

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