Portugal’s Algarve region checks every box on the would-be retiree’s list: great weather, high-quality health care, turn-key residency options, beautiful beaches, welcoming expat community, and low cost of living… What more could you want?
We have trouble finding an answer to that question, which is why we continue to rank the Algarve as the world’s number-one place to live or retire overseas. But it’s not the only sunny, sandy option in Europe…
Another much better-known choice is Spain’s Costa del Sol, the southern coastal area of Spain’s Andalucía region, sandwiched between Nerja and Marbella, with Málaga as its centerpiece.
How do these two regions compare? Let’s take a look…
It’s easier to access the Costa del Sol than the Algarve through Málaga Airport. It has flight connections to 60 countries (including one direct flight to North America by way of Montreal, Canada) whereas the main airport in the Algarve, Faro International Airport, only connects to 16 countries.
Cost Of Living
The Algarve and the Costa del Sol have been transformed over the past 20 to 30 years. No longer rustic seaports and fishing villages, towns in these regions have seen major growth and development, with infrastructure upgrades to support the changes. With this has come an increased cost of living, as well.
The Costa del Sol is touristy, so it can be more expensive than parts of the Algarve, but generally speaking, life in Spain comes at a lower cost than life in Portugal.
Cost Of Real Estate
Property markets in both the Costa del Sol and the Algarve are hot. A recent spike in foreigner buyers has led to a severe lack of inventory in both markets.
What qualifies as perfect weather is subjective, so it’s impossible to pick a winner in this category…
The southern tip of the Iberian Peninsula boasts the best weather in Europe, and the climate in these two regions is very similar. Both get 300-plus days of sunshine a year and minimal precipitation. Summers are dry and hot, and winters are mild and wet in both.
If you want higher temperatures and more sunshine year-round, go to the Costa del Sol. It’s warmer, influenced by the Med instead of the Atlantic. In July-August, the daily mean is over 78°F (26°C) versus the Algarve’s 73°F (23°C).
Winters are proportionately cooler in the Algarve as well… This might be a good thing or a bad thing, depending on your preferences.
Quality Of Life
Again, it’s impossible to pick a winner…
Expat offerings in the Algarve versus the Costa del Sol are neck and neck. Both offer stunning coastlines with world-class beaches, welcoming expat communities, golf courses, hospitals, charming historical villages, and more…
Both cultures are strongly family oriented, and in the small towns that dot the hillsides, a simple, traditional village lifestyle dominates. Both destinations offer laid-back lifestyles—the opportunity to take your foot off the pedal when it comes to pace of life.
Ease Of Residency
Portugal is the easy winner here… It offers the D7 or Passive Income Earner visa, which you can qualify for quickly and easily with about 1,200 euros of monthly income.
Spain’s equivalent to this program, the Non-Lucrative Visa, has more onerous requirements, including a higher qualifying amount for income (about 2,150 euros per month).
Spain and Portugal both offer Golden Visas programs. For Spain’s, you need to buy property worth 500,000 euros. For Portugal’s, the qualifying amounts range between 280,000 euros and 500,000 euros, but you’re required to purchase in low-density (potentially undesirable) areas of the country.
Infrastructure is about on par in the Algarve and the Costa del Sol… If you settle on the coast of either country, you will most likely need a car to get around. Public transportation is not well appointed, but the roads and highways are well-marked and high-standard in both places.
Likewise, things like electricity, internet, garbage collection, etc. are on par in both places.
Portugal is more welcoming to foreign retirees than Spain from a tax point of view. Under its nonhabitual resident (NHR) scheme, pension from foreign sources is taxed at a flat rate of 10%. Spain has no such scheme.
Both Spain and Portugal have tax treaties with the United States and Canada, so double taxation isn’t a concern.
Spain has the seventh-best health care in the world according to the World Health Organization’s rankings. Portugal comes in at #12, so it’s not far off of Spain’s lead… However, expats across Portugal complain of long wait times to receive care in the public health care system.
Ease Of Settling In
Both the Costa del Sol and the Algarve have big, well-established expat communities, mostly made up of retirees from the U.K. That said, English is widely spoken in Portugal. Not so much in Spain…
Editorial Director, Overseas Living Letter