Golf in Madeira

Like a haughty dowager, the island of Madeira remains proud of her pedigree and standoff-ish about mixing with the hoi-polloi. Year after year, she has rebuffed budget airlines' pleas to land on her shores, conscious that part of her allure recalls the era of elegant cruise ships visiting en route to the southern hemisphere and white gloved ladies taking tea on the terrace of Reid's Hotel.

With its dramatic scenery and balmy climate, Madeira offers the charms of mainland Spain and Portugal, but without the hefty price tag, writes Catherine Moye

Hillside haven: while its topography means building space is limited, Madeira is home to properties such as Casa Velha, above

This ritual conservatism has preserved Madeira to this day and the forces of progress shaping its future are correspondingly subtle. The topography of the island and strict planning regulations mean that the growing second homes market will not lead inexorably to the march of the JCB digger, as has happened on the Algarve in its mother country, Portugal. Indeed, Madeira's unfavourable landscape for building and the limitations on development put a very high premium on owning a property there, a premium that is likely to rise.

Why buy in Madeira?

EU grants have revitalised Madeira's infrastructure, especially roads linking the capital Funchal to other parts of the island, and this has attracted a new breed of visitor with cash to invest in second homes and those planning an active early retirement. Old fincas and farmhouses are being rapidly restored and land suitable for development is being snapped up.

Seventy per cent of the island has been designated as a natural park and its dramatic mountainous landscape means there is very little flat land available for development. Much of the property is built on inclines, so the average villa has fabulous views of the Atlantic or overlooking the bay of Funchal and other villages, nestling around the edge of the island. Despite this, prices here remain much cheaper than on mainland Portugal.

Madeira sits just 800 kilometres due west of Casablanca and is blessed with a mild, semi-tropical climate year-round. Average annual temperatures range between 16C and 28C and the island supports an array of lush and exotic flora. The island is short on beaches but criss-crossed by excellent walking and hiking trails, many of which follow the route of the levadas - irrigation channels that carry water to farming areas.

Where to buy?

The south west of the island is warmest and has the least rainfall. Key areas are around the villages of Ribeira Brava, Ponta Sol and Calheta, all of which have great restaurants and amenities and benefit from new highway connections, taking you to Funchal in less than 20 minutes. The neighbouring island of Porto Santo is a popular summer destination for people from Portugal. It has a long sandy beach and an 18-hole golf course.

What to buy

Fincas - generally older, often historic, properties with land attached. Also recently constructed villas and apartments, with modern amenities. Land with building permission is still available but in short supply due to regulations governing the size of the plot in relation to a house's footprint. High on a hillside with spectacular views overlooking Funchal is the historic Palheiro Estate. Dating back to 1804, when Count Carvalhal built a hunting lodge there, the old house has been restored and transformed into Casa Velha do Palherio, a Relais & Chateaux country house hotel. Adjacent to Casa Velha are the world-renowned Palheiro botanical gardens plus a tree-lined 18-hole golf course. Set in lush landscape on the same site is Palheiro Village, a small development comprising 32 one- and two-bedroom apartments and 44 three and four-bedroom villas.

Construction has begun on the apartments, which will be housed in six low-rise buildings. Prices start at £177,000 for one-bedroom, 98sq m apartments with terraces, plus an annual maintenance charge of £1,500. The three-storey villas range from 160 to 335sq m, many with sun decks and south-facing terraces. Prices range from £394,000 to £474,000. Initial completions are due by spring 2006. Plots for individual homes ranging in size from 1,700 to 6,000sq m will also be available for homes of up to 4,000sq m.

Palheiro real estate manager Roger Still reckons the potential for second homebuyers in Madeira is comparable with the Algarve of 20 years ago. "Madeira is only just beginning to take off and the big difference here is that land is limited so prime locations will always be at a premium."

Indeed, Michael Whitehead of Madeira Island Properties, which builds bespoke houses and villas, has seen the price of land on the island double in the three years he's been there. "We're getting four or five times as many enquiries today as we did three years ago," says Whitehead, who reckons that the island's low crime rate, climate and beauty now attracts much younger people, especially families. Whitehead puts the price of land at about £48-£69 per square metre at 600m above sea level, and £137-£205 per square metre closer to the coast, especially near Funchal. The build cost of a quality three-bedroom, three-bathroom house with hardwood floors and doors, study and laundry room, is about £135,000.

Not wishing to miss out on the lucrative property market, the neighbouring island of Porto Santo has just opened the first of two 18-hole golf courses which will anchor a major new residential and resort hotel development.

The Colombo Resort project will include a 100-room luxury hotel and casino plus 68 apartments linked to the hotel complex. In addition there will be 193 apartments ranging in size from 86 to 200sq m and 12 villas, with floor plans from 330 to 750sq m. Apartments are being sold off plan from £182,000 and villas from £675,000. Phase one of the development is due to complete in December next year and the hotel is expected to open in 2008.

My island love affair

As the co-owner of one of London's high-end residential estate agents, Beaney Pearce, Linda Beaney has had much time to judge between myriad houses and settings before making her first overseas purchase. She found herself wowed both by the charms of Madeira and the fantastic setting of Palheiro Estate.

"I'm very busy and I'm not very good at taking long breaks so I wanted something that was both a very good investment and warm enough for long weekends throughout the year," says Beaney, who is a keen golfer.

"In Spain and Portugal there are good golf courses but the density is worse than in the south of England," she explains. "It's too cramped and over-developed and the pockets that are really nice are over-expensive and way out of my budget.

However, Madeira is perfect, she says. "The flight is three hours but the transfer time is only 15 minutes from the airport. I've been out there three times now and totally fallen in love with the island; it's not over-commercialised. As well as golf, I enjoy walking, messing around in boats and the botanical gardens alongside Palheiro Estate are just beautiful."

She also found that at €580,000 (£398,000) for a large three-bedroom house overlooking the bay of Funchal, it was better value than Spain and Portugal. "I might rent it out for seven or eight weeks of the year," she says.

Moreover, she was thrilled to find people there of all ages. "It's just not true that Madeira is for old poops," says Beaney. "It's just that they are determined to keep the lowest form of bucket and spade tourism away and that's something of which I thoroughly approve."

Contacts : Palheiro Estate is available on 00 351 291 794015; www.palheiroestate.com . Madeira Property Finder 00 351291281562 www.madeiraproperty.com ; Colombo's Resort, Porto Santo 020 7491 9791 www.colomboresort.com ; Madeira Island Property 00 351 291 827240; www.madeira-islandproperty.com