What Buyers and Developers Should Know About New Build Trends
Portugal’s real estate landscape is always moving. With demand outpacing supply in many regions, particularly here in the Algarve, developers and policymakers are rethinking how and where new homes are built. A growing emphasis on rural development and sustainable construction is now reshaping the market, and opening up fresh opportunities for both buyers and developers.
But how do these newer build types compare with traditional urban homes? And what should you consider before investing?
A Policy Shift Driving Rural Builds
Earlier this year (2025), the Portuguese government enacted Decree-Law 117/2024, a major policy allowing residential construction on certain rustic (rural) lands. The law gives municipalities new powers to reclassify rural land as urban, provided that at least 70% of the area is used for affordable or controlled-cost housing. It’s a response to growing pressure on urban housing stock and aims to make more land available for residential development, especially in less densely populated areas.
Reuters reports that this move is part of a broader strategy to tackle rising prices and housing inequality. Although the law has drawn environmental concerns, particularly over protected or ecologically sensitive zones, areas with restrictions remain exempt.
Legal analysis from Dower Law also confirms that this change introduces transparency rules and price ceilings tied to local market averages, ensuring rural development supports moderate-value housing.
For developers, this opens up new opportunities to acquire and build on land that was previously off-limits. For buyers, especially those looking for privacy, space, and more affordable homes, it’s a chance to explore areas beyond the typical urban hubs.
Key advantages of rural builds:
- Lower land acquisition costs
- Potential for larger plots
- Growing appeal among remote workers and retirees
- More flexibility in design and layout
However, rural builds often come with infrastructure challenges, such as limited access to public utilities, transport and varying planning permissions depending on the municipality.
Green Builds Gaining Ground
Alongside rural development, eco-conscious construction is also gaining momentum. Portugal’s commitment to environmental targets, supported by EU programmes like NextGenerationEU, is accelerating the shift towards sustainable, energy-efficient housing.
Developers are increasingly incorporating features such as solar panels, natural insulation, energy-saving appliances and rainwater systems to meet these standards. While some of these improvements may increase upfront costs, they often result in lower utility bills and long-term savings for buyers.
These trends are further supported by EU climate funding and national strategies encouraging builders to reduce emissions and use low-impact materials. Buyers are starting to see the benefits, not just environmentally, but financially.
Why buyers are choosing green homes:
- Lower ongoing costs (electricity, heating, water)
- Higher long-term property value
- Better resale appeal
- Access to potential tax benefits or subsidies (depending on the municipality)
For developers, meeting sustainability benchmarks is becoming not only best practice but a market expectation.
How Do These Compare with Traditional Urban Homes?
Urban properties, especially in locations like Lagos, Portimão, and the surrounding areas, remain in high demand due to their access to amenities, beaches, healthcare and public infrastructure. Many buyers still prefer the walkability and lifestyle offered by established urban neighbourhoods.
However, urban developments are often more expensive per square metre and offer less flexibility in terms of plot size or design. Older city homes may also lack modern energy-efficient features, unless recently renovated.
What This Means for Buyers and Developers in the Algarve
Developers now have more freedom than before, not just in where they build, but how. If it’s smart homes on the outskirts of popular towns or rural clusters that blend sustainability with space, the Algarve is offering increasingly diverse options for investors and end-users alike.
At B&P Real Estate, we’re seeing interest grow in both directions. Some buyers are drawn to traditional town-centre apartments, while others are actively looking for villas in quieter, more inland areas. Get in touch with us today to find a home or project that fits your lifestyle or investment goals.
