Second home owners returning to Portugal, particularly the Algarve

Taylor Scott International News

The availability of cheap finance, investment in infrastructure, appealing tax initiatives and a return to sensible pricing has prompted renewed activity in the Algarve’s property market. Overall, the Portuguese property market’s decline since the economic downturn of 2008 is well documented. Prices in some locations popular with overseas buyers have fallen by as much as 50% in peak to trough terms. But sales volumes and prices have responded, albeit in two phases, according to the latest analysis from international real estate firm Knight Frank. In 2013 the firm saw vendors start to adjust their prices, which led to an upturn in transactions. By 2015 the Algarve recorded its first annual increase in prime prices since 2008 and Knight Frank’s west Algarve office reported a 32% increase in sales in 2015 compared to 2014. The report says that what set the Algarve apart during the downturn was the continual investment in infrastructure. The upgrade of the coastal A22 motorway, for example, has opened up the western Algarve while the improvement to the E1 from Lisbon and Porto and the €32 million expansion of Faro Airport have helped boost economic confidence. Further development is planned at Vilamoura and Quinta do Lago. The report points out that British, Irish and German buyers are still evident in the Algarve but French, Scandinavian and non- Europeans, including South Africans and Chinese, are also increasing in number. A surge in French interest has been seen in the last two to three years with many citing Portugal’s Non-Habitual Tax Residency regime (NHR) as a key incentive. Introduced in 2009, the NHR exempts non-residents spending 183 days a year in Portugal, or those with a primary residence in the country, from income tax on non-Portuguese incomes, including pensions, salaries and capital gains for a period of 10 years. Another initiative, Portugal’s Golden Visa, by far the most successful of the European schemes in existence, has seen inward investment focus on the Lisbon area rather than on the Algarve. To date Chinese buyers account for 79% of the 2,853 visas granted since 2012. The report also points out that there is now a greater focus on the Algarve’s investment potential compared with before 2008. The Algarve’s 37 championship golf courses are responsible for over 50,000 rounds of golf a year and their season extends beyond that of the traditional summer rental period, running from February to May and again from September to November. And it adds that new development is evident once more particularly at the eastern end of the Algarve, but prime projects need to be anchored by a 5-star hotel brand or a championship golf course to pull buyers away from the more established locations such as the Golden Triangle area which stretches from Quinta do Lago to Vilamoura and Vale do Lobo. Taylor Scott International

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