Market ReportBy Kerstin Buechner Dias • Mar 31st, 2015 • Category: Property News & Info
Anyone who has visited the central Algarve recently will probably agree that there is a real sense of energy and rebirth. Businesses which have run on a skeleton staff, or even closed their doors over the past few years, are now back in business. And there are a number of new shops and businesses now starting to open.
This reawakening started gradually during 2014 and now, as we write this in our quieter winter season, the energy and optimism is tangible among the locals as well as visitors looking to invest in property before prices really start to increase.
34% increase in 2014 sales
Over the past four years we have seen a year on year increase in the number of sales, culminating in a 34% increase in 2014 on the previous year. More demand, stoked by a weakening euro and attractive tax and residency programmes have left far fewer properties on the market and in recent months vendors are receiving much higher offers if not their full asking prices.
Global investors from China, the USA and UK want a part of the action. Large dormant developments and existing resorts are being negotiated and awakened from their slumber. The largest contributor to new buyers is the French market. Irresistibly attractive tax benefits have brought literally thousands of French buyers to Portugal who are not only buying, but also moving here lock stock and barrel. Interest in the Non-Habitual Tax Residency programme has grown substantially and more and more northern Europeans are discovering that the Algarve has a lot to offer besides easy access, sun, beach and golf!
The Golden Visa programme continues to bring a good number of non-European investors to Portugal mainly investing in properties between EUR 500k and 750k. At the current time, there have been 2,203 applications and the momentum is not slowing.
Families looking for holiday homes and investors are back! Confidence has returned to the market and we are seeing a good number of wealthy, sophisticated British, Irish, Belgian and other Europeans coming to Quinta do Lago and Vale do Lobo in much greater numbers all looking to invest in property. Encouraged by a stronger Pound and Swiss Franc and weakening Euro, many investors now have greater buying power.
Buyers generally visit the area a number of times and do their research before but once negotiating starts, deals are agreed quickly and the vast majority of buyers have cash. Even though banks are lending again, we can hardly remember the last time a buyer required a mortgage.
The properties that are selling continue to be well presented and ‘ready to move into’. New, big and beautiful ‘Supervillas’ will sell for EUR 4m and 5m and those in the best locations with water views may fetch twice this amount. If only we had more of these to sell! Investors are keen to buy projects requiring work and until recently these have changed hands at relatively low prices.
This market is now changing fast with less available and fewer older properties for sale. Demand is outweighing supply and prices are increasing. One need only look around Quinta do Lago, no less than 48 properties are under construction or serious renovation. Money is pouring into the area and new Supervillas are emerging.
Mainly for wealthy European families who desire bigger, better and technologically advanced properties – only the very best will do and they feel this is the right location. They build for themselves, so very few construction sites are for re-sale. Smaller properties are also in demand.
The area lacks good accommodation for an ageing population. Many long-time residents in Quinta do Lago and Vale do Lobo are thinking of downsizing from larger villas and there’s a lack of availability of these properties. The limited supply of property in the area undoubtedly contributes to the overall success of the property market so, no complaints, but this surely creates an opportunity for developers! There are still some undeveloped areas of land within the two main resorts and with the older population growing, our accessible location and climate is perfectly suited.
Are we out of the recession? Compared to other markets, were we ever in one? Debatable but we would much rather be in property in our area than in many others. Prices never plummeted and bank repossessions commonplace in Spain are relatively rare here. The local clientele is perhaps more recession proof than in other markets.
It is no coincidence that Savills use Quinta do Lago as a template for success when advising developers worldwide.
Quinta do Lago and Vale do Lobo offer a set of ingredients which are hard to beat. Apart from sun, beach and golf, the area allows wealthy Europeans incredibly easy access to a lifestyle they will always strive for themselves and their families. In a crazy world of fear and danger, the Algarve is a quiet, safe haven. It has learnt from Spain and others that oversupply and cheap is not enduring. Quality in environment, facilities and lifestyle and of course location all contribute to its recipe for success. Where else can you travel to so easily and arrive in a comparable area?
What will 2015 bring?
We fully expect to see the market boom this year. The climate, and we don’t mean the weather, on all fronts points to more demand and less availability. The source and number of buyers has diversified and increased substantially, creating competition for the best properties and for the first time in five years we are actively looking for good instructions again in the Quinta do Lago and Vale do Lobo areas.
We are looking forward to a great year and being of service to all our clients.
Kerstin Buechner, Alison Buechner Hojbjerg – Directors and Owners
Sharon Beddall – Chief Operating Officer
“©” March 2015 by Kerstin Buechner and Alison Buechner Hojbjerg