Is Buying an Apartment to Rent Out on Madeira Worth It?

Sustained tourist demand and a growing number of visitors have made Madeira an appealing destination for those looking to invest in short-term rental properties. But not every property, and not every area, offers the same return.

Location above all

A property five minutes’ walk from central Funchal or with a sea view typically has much more consistent demand than an equivalent property in a more remote area. Before buying, it’s worth analyzing the average occupancy of similar properties in the area, not just the purchase price.

The impact of legislation

Not every parish allows new Alojamento Local registrations — some have containment areas where the process is limited or suspended. Confirming this with the municipal council before proceeding with a purchase is essential, and it can determine whether the property even serves its intended purpose.

Costs that often get overlooked

Beyond the purchase price, there’s: management commission (if you don’t plan to manage it yourself), maintenance, condo fees, insurance, and the initial investment in furniture and equipment of a quality suitable for Alojamento Local.

New or resale?

New properties tend to need less maintenance in the early years, but well-located resale properties, even ones needing renovation, can offer a more competitive entry price and, after refurbishment, a higher return.

The right question to ask

Rather than “is it worth investing on Madeira,” the right question is “does this specific property, in this specific location, with this specific management, have a positive return.” A case-by-case analysis, supported by people who know the local market, avoids decisions based purely on enthusiasm for the destination.