What is changing?
The regulatory pressure on Short-Term Rentals (Alojamento Local) from mainland Portugal has been gradually reaching Madeira. Funchal, as the island's main tourist destination, is at the centre of this debate: with new licences being suspended, property owners operating AL's are facing an increasingly uncertain horizon.

The question many investors are asking is simple: what happens to my property now?

More supply in the market in the short term
With AL returns potentially impacted by the new rules, it is natural that some owners will decide to sell properties that were meant for AL but couldn't get a license in time. This dynamic could lead to an increase in available supply in the short term, that being, a window of opportunity for attentive buyers.

More people may put the property they bought for AL up for sale, creating room to negotiate prices that would otherwise be hard to find under normal market conditions.

But prices will continue to rise
Despite this temporary increase in supply, the structural trend of the Madeiran market is clear: property prices are expected to continue rising in the long term. Demand for properties on the island remains strong, whether from local residents, buyers from mainland Portugal, or foreigners drawn by the quality of life, climate and competitive tax environment Madeira offers.

AL may carry less weight in the future market, but the intrinsic value of properties on the island does not disappear. In fact, with less tourism-driven speculation, the market could become more stable and healthier for those buying to live in or invest long term.

The advantage of municipalities with less AL pressure
One of the most relevant insights for investors is the growing interest in municipalities outside the containment zones. Areas such as Ponta do Sol, Ribeira Brava, Santana or São Vicente, where regulatory pressure on AL is significantly lower, may represent opportunities for more predictable returns, both for tourist rental and asset appreciation.

Buying outside Funchal may increasingly become the smartest decision for those looking to balance profitability and legal security.

Our recommendation
If you own a property in AL in Funchal, it is worth reviewing your strategy calmly, without hasty decisions, but with a close eye on the changes ahead. If you are considering buying as an investment, this could be a favourable moment to find good opportunities in a market in transition.

In any case, Madeira remains one of Portugal's most resilient property markets. The future of AL brings challenges, but also opens new paths for those who know how to anticipate the trends.