Algarve property market back on track

This time last year, Portugal was awaiting the first results of the Golden Visa scheme, there were talks of a general up-turn of the property market and the French were about to pack their bags as President Hollande announced new tax levies later in the year.
The patience and dedication of real estate agents and developers here in the Algarve, however, seem to have paid off, and across the board there have been clear signs of recovery over the past 12 months and a general optimism that hasn’t been felt since the recession set in.
“We have indeed seen an important recovery and we believe it will be even more significant after Portugal leaves the intervention programme in May this year. As such, we are certain that in the last trimester of 2014, the concrete results will be far more evident. The market is definitely progressing,” noted Alda Filipe, sales and marketing director at Vale do Lobo.
Although the British market still represents around 46% of sales, with a notable return of confidence “in the Portugal they know so well”, this luxury resort in the Golden Triangle has welcomed clients from new markets such as France, a result of both the fiscal incentives and their extensive promotional work alongside the Portuguese Tourism Board throughout 2013.
There has certainly been a notable influx of French buyers in the past few months, with many French nationals fleeing the “excessive” taxes imposed by the government last year. Marcella Spee Horta e Costa from Abloom Properties in Almancil put it particularly well: “Thank you Mr President!” she said, adding that there has been a welcome return of trust in the property market. “The phrase ‘end of the crisis’ is no longer wishful thinking or a shallow phrase used by politicians. It is actually proven with facts/results instead.”
Also registering huge interest from French buyers “looking to protect their earnings and have a more diverse portfolio” is Quinta do Lago, with marketing executive Joana Oliveira pointing to a continuing improvement overall in the high-end segment of the markets and a strong UK market.
Chris Garveigh of Fine & Country Praia da Luz offers further insight into this improved market: “The UK housing market having picked up allows buyers to re-finance in the UK to buy here; UK buyers are fed up of waiting so long and have decided to go ahead before it’s too late in their lives; the tax regime has become very interesting both for traditional and non-traditional markets; buyers/investors have picked up that the market has bottomed out so are keen to get in for the uplift; and banks have opened up a little to lending, especially when it’s properties they now own.”
Although many of the estate agents agree that the Golden Visa – a programme of Residence Permits for foreigners which was introduced in October 2012 to attract international investment – has given Portugal a clear competitive advantage, markets like the Chinese (who have very different requirements to other buyers) have set their sights on the capital. “We have seen an increase in Golden Visa buyers, but the main issue is working with the very high commission structures that are being promoted by Chinese agents and so it makes it difficult on a resale property,” noted Joana Oliveira at Quinta do Lago.
With a 30% increase in sales over the past 12 months, due to the London property boom, the tax breaks offered under Portugal’s non-habitual resident scheme and the resulting influx of French buyers, Quinta do Lago-based Quinta Properties also credits the Golden Visa for their positive figures. “We are currently in South Africa selling the Golden Visa and it is very popular,” said director Kerstin Buechner. “It is the best European programme and the only one which offers a passport at the end of it. It is especially popular in SA because the Rand is losing its value and people are keen to get some money out. Even if property does not increase in value, they will gain with the currency.”
Whatever nationality, the trend points to buyers aged between 40 and 60 looking for a second home for the family, be it new or perfectly maintained properties, golf-fronted villas, older “knock-down” properties for redevelopment or, as Vale do Lobo has found this year, more buyers purchasing plots “for personalised construction depending on the tastes and preferences of each client”.
Agents, however, are unanimous in agreeing that it is a combination of increased demand and readjustment of pricing levels that are creating movement in the market. Across the Algarve, prices have dropped since the onset of the financial crises and vendors who have refused to accept this will still see their properties languishing on estate agents’ books for some time to come.
By Cristina Alcock