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Investing in ruins in Madeira:
A golden opportunity in a booming tourist market
Madeira, Portugal's subtropical gem, offers a unique opportunity for investors looking for lucrative real estate opportunities. With its lush nature, mild climate and growing popularity as a tourist destination, the island is a hotspot for investment. In particular, refurbishing ruins - dilapidated properties that have often languished for decades - offers an exceptional opportunity for high returns. In this article, we explain why investing in these ruins is so attractive, why so many dilapidated properties can be found, and how the booming tourism market, rising rents and favorable regulations make these investments extra lucrative.
Why so many ruins in Madeira?
Madeira has a striking number of dilapidated properties, especially in rural areas and smaller villages. There are several reasons for this phenomenon. First, the emigration of younger generations to mainland Portugal or other countries has led to the abandonment of old family houses. These properties, often traditional stone houses or farms, have fallen into disrepair over the years due to lack of maintenance. In addition, the island's geography plays a role: the rugged, mountainous terrain makes some locations less attractive for modern property development, leaving old buildings untouched. Finally, strict regulations around new construction, aimed at preserving Madeira's natural beauty, have led to a limited supply of new housing. This makes the renovation of existing ruins all the more interesting, as it is a way to develop property without the complex procedures of new construction.
A tourism growth market: Figures speak for themselves
Madeira's tourism sector has boomed in recent years, thanks in part to the arrival of budget airlines such as Ryanair and Wizz Air. These airlines have made the island more accessible to a wider audience, which has a direct impact on the demand for accommodation. According to recent figures from Portugal's National Institute of Statistics (INE), Madeira welcomed more than 2.1 million tourists in 2024, up 12% from 2023. This growth is further driven by improved connectivity: Ryanair now offers more than 20 weekly flights to Madeira from several European cities, while Wizz Air has added new routes from cities such as London and Warsaw in 2024. This accessibility has led to a longer tourist season, which has significantly increased demand for both short-term and long-term rentals.
Rising rents:
An opportunity for investors
The increase in tourism has a direct impact on rental prices, both for regular and holiday homes. According to data from Idealista, a leading Portuguese real estate platform, rental prices in Madeira rose by an average of 18% between 2021 and 2024. For holiday homes in popular areas such as Funchal and Porto Moniz, average rents are now around €100-€150 per night, with peaks of up to €200 in high season. The regular rental market is also seeing a sharp rise: in Funchal, the average rent for a flat is now €12-€15 per square meter per month, up 15% since 2022. These price increases make investment in real estate, and especially in renovated ruins, particularly attractive. By turning a dilapidated property into a modern holiday home or long-term rental, investors can benefit from high rental yields and increases in the value of the property itself. In 2024, the median price per square meter on Madeira was €3,003, up 49% on 2019, underlining the potential for capital growth.
Advantages of renovation
One of the biggest advantages of investing in ruins is that renovation projects usually do not require planning permission, provided the original structure is preserved. In Portugal, and especially in Madeira, obtaining planning permission for new construction can be a lengthy and costly process, sometimes taking up to two years due to strict environmental regulations and restrictions on coastal areas. By choosing to renovate an existing ruin, investors bypass this bureaucracy. This means that a property can be refurbished and put on the market faster, significantly reducing the time-to-market and making the investment profitable faster. Moreover, renovated properties, especially in sought-after areas, can fetch higher rents or sale prices, further increasing the financial benefit.
Local market knowledge:
The key to success
Another crucial aspect of investing in ruins in Madeira is access to local market knowledge. Many dilapidated properties are not offered through traditional estate agents, but through local networks, such as family contacts or word of mouth. By working with local experts, such as lawyers or property consultants with in-depth knowledge of the region, investors can gain access to these hidden gems. These properties are often offered at more favorable prices than properties sold through estate agents, as sellers - often heirs to old family homes - want to sell faster without intermediaries.
Conclusion: Seize the opportunity in Madeira
Investing in ruins in Madeira is a unique opportunity to benefit from a booming tourism market, rising rents and favorable regulations. The combination of growing tourist numbers, improved accessibility by budget airlines, and the ability to renovate existing structures without lengthy licensing procedures makes this a very attractive investment. With the right local knowledge, investors can also gain access to affordable properties not offered through traditional channels, further increasing the profit margins. Madeira offers not only an idyllic lifestyle, but also a smart financial opportunity for those who dare to invest in its hidden treasures. Don't wait any longer and discover the possibilities of this Portuguese paradise!