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Madeira island Real Estate

Madeira Island is an emerging second home destination.

Traditionally, residential development in Portugal aimed at the northern European market has centred on the Algarve. This trend began in the 1960s when international developers saw the potential of resort development aimed at foreign markets, examples being Sir Richard Costain in Vale do Lobo, and André Jordan in Quinta do Lago.

Components for these developments typically include both hotel and residential build, supported by a range of facilities and services.

Over the last 10 years or so, the Lisbon area has attracted second home development and – continuing this trend – new areas of development activity are emerging, in particular the Alentejo region to the north of the Algarve and the island of Madeira.


Why Madeira?

Madeira Island is an autonomous region of Portugal and part of the European Union.
It has long been known as a safe and secure travel destination, particularly for those arriving by sea. Currently, over 250 cruise ships call into Funchal each year, with a total of over 300,00 0 passengers.

Arrivals by air (domestic and international) have increased significantly – up from approx. 0.5 m. in 1990 to over 1.17 m. in 2006. Around 50% of flight arrivals are international, with passenger arrivals (by country of flight origin) as follows:

Country %
UK 36
Germany 25
Scandinavia 12
Spain 6
France 4
Belgium 3
Holland 4
Others 9

Major investment has been made in new infrastructure, including a dramatic refurbishment of the airport (extended runway and international terminal building) and an improved road network with convenient connections via tunnels and soaring viaducts and overpasses.
Mountainous and scenically dramatic, Madeira Island is a lush, fertile Atlantic outcrop blessed with a semi-tropical climate. These temperate conditions are ideal for horticulture and agriculture, and the island is recognized for its banana harvest and incredible variety of exotic flora. Vineyards are abundant with the grapes used for the production of the world-famous Madeira wine.

The population of Madeira is approximately 270,000, the majority of which live in and around Funchal, the island’s capital.

Most visitors to Madeira tend to base themselves in Funchal, an attractive and historic town known for its colonial-style atmosphere, black basalt architecture and its fine collections of museums and botanical parks and gardens. Funchal also has the best hotels, restaurants and bars, and shopping. Indeed, there is much to see and do here and the town is even served by a cable car that ferries residents and visitors alike high up into the surrounding woodland.

In terms of visitor profile, Madeira is particularly appealing to the “baby boomers” generation, those who are not necessarily looking for beaches and nightlife but instead are attracted by a mild climate and a healthy, outdoor lifestyle.
The island is crisscrossed with a network of excellent walking and hiking trails, many of which follow the paths of levadas, narrow irrigation channels that carry rainfall and mountain water to drier agricultural areas.

The destination is considered one of the best locations in the world for sport fishing, and anglers from around the globe descend on the island hoping to reel in the ‘Big One’. Hooking Atlantic blue marlin in excess of 700 lbs in not uncommon. The waters off the island also provide wonderful opportunities for whale and dolphin watching.
And for lovers of golf, there are two golf courses in Madeira – Palheiro Golf and Santa de Serra. A third golf course is on the neighbouring island of Porto Santo.

Property market

The development of Funchal has been driven by two main factors – the needs of the resident population and the evolution of tourism. 

With regards to tourist accommodation, the hotel offer has expanded significantly in recent years and has seen construction of new four- and five-star hotels and the careful renovation of older properties, including the famous Reid’s Palace Hotel (now owned by the Orient Express Group).

Furthermore, the inauguration of fashionable design-led boutique hotels like The Vine and Choupana Hills has generated considerable international interest and attracted a younger and more cosmopolitan clientele.

Upmarket quintas, or country house properties like Madeira Island Hotel Casa Velha do Palheiro, a member of Relais & Châteaux, represents the more traditional but no less luxurious hotel market segment. 
As far as residential property is concerned, the growth of new development has been driven by demand for primary homes.

The net emigration from Madeira witnessed in previous generations has been replaced by a net gain as people are attracted back, both by improved living standards locally and as a result of political instability in countries that have a large Portuguese immigrant population.

For those wishing to buy, the process of purchasing residential property in Madeira is the same as on mainland Portugal. This includes conveyancing costs (property transfer tax, notary and registration fees).

The size and topography of the island (54 km by 23 km – 34 miles by 14 miles), with the highest peak at 1, 861 m (6,105 ft), leaves very little flat terrain available. In addition, 70% of the island is designated as a national park. The combined effects of this extreme topography – protected zones, strict planning controls and fragmented land ownership – result in a scarcity of sites suitable for property development.

However, at Palheiro Estate, with a land area of over 100 ha, the integration of residential and tourism real estate with an 18-hole Championship golf course, a five-star country house hotel and beautiful and historic botanical gardens, illustrates how these seemingly adverse conditions can be successfully and imaginatively overcome.


The award-winning Palheiro Village comprises 35 luxury freehold one-, two- and three-bedroom apartments and 44 detached three-and four-bedroom villas in a private condominium, with a central Village Forum that includes a large heated outdoor swimming pool, pool bar and a wood deck that affords sweeping views over the coast. It’s even possible to see dolphins and whales in Funchal Bay! From the residents’ reception office a full range of on-site property management services are available.

The properties at Palheiro Village are beautifully integrated into a south-facing hillside with spectacular views over the city. Residents enjoy privileged access to the facilities of the Palheiro Estate including Palheiro Golf and Madeira Island Hotel Casa Velha do Palheiro.

pre-siteSupply and demand

Foreign visitors have been coming to Madeira for trade and leisure purposes for over 200 years. Other than hotel accommodation (and more recently, the arrival of timeshare) a very limited supply of purpose-built apartments and houses have been available for rent or purchase.

Targeted towards the northern European market, Palheiro Village represents one of the most unique real estate projects on the island.
The development team represented a combination of local know-how and international experience. The development manager, architects, engineers, construction managers, landscape designers, interior designers and corporate design consultants were all highly skilled in their chosen fields, having worked together on similar, high-quality real estate development projects in the Algarve over many years.

Property prices at Palheiro Village for the remaining one- and two-bedroom apartments start from €295,000 and €395,000 respectively.

Three-bedroom villas, which are arranged over two or three storeys and feature broad terraces – some with plunge pools – and modest gardens, are priced from €595,000 to €1.215 million, while €1.65 million will secure a four-bedroom villa.
A select number of villa plots are also available for development near Palheiro Golf Clubhouse, and Palheiro Real Estate offers a full turn-key service to assist clients in creating their dream home.

Interest from potential buyers is from the UK, Germany, Austria and Switzerland, Holland, Portugal and more recently from Scandinavia and Eastern European countries, as well as from further afield  – Russia, Venezuela, South Africa and the United States.

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