The expansion will see its capacity increase from six million passengers a year to eight million by 2013, at a cost of around €130m (£114m).

Faro airport authorities report that the work will enable the airport to increase the number of flights possible per hour from the current 22 to 30.

Rising demand

The news could spur the Algarve property market, as increased tourism figures is likely to lead to a rise in demand for property in Algarve to buy and rent.

"This project is part of a team effort between us, the national and regional tourism boards," says Guilhermino Rodrigues, the president of airport management company, Ana Aeroportos. "It is part of our mission to improve the Algarve as a destination, reducing seasonality and diversifying the market."

Construction work, which is due to get underway next month, will be divided into two phases, with completion earmarked for the tail end of 2013.

Jaimie Kanwar