A view on the local property market
The words are on everyone’s lips: how will Brexit affect our market?
It is of course early days and only time will tell. I was lucky enough to attend a Savills conference in Guildford during July where Lucian Cook from Savills Research provided some insight into the subject. He came to the conclusion that the UK is in the grips of a political crisis and not a property crisis. He predicted that the uncertainty and the fluctuation in the currencies will soften the market in the short term, and make it fragile, but was reluctant to predict a full-blown downturn.
Back in the Algarve, the market is still driven by the British and what happens in the UK economy does have an impact here too. However, in 2014, 5,000 French families emigrated to Portugal. In 2015 and 2016, this number increased considerably. Painful taxation is driving the French to sell up in France and establish a life in Portugal where the non habitual residency programme is gaining in popularity every year.
The Scandinavians who play more golf per capita than any other Europeans and often don’t have the weather for it, are also buying in greater numbers as are the Belgians, Germans, Swiss and the Irish.
And Portugal has made itself even more attractive to foreign buyers over recent years. It is not just the ease of access, security, great value for money and, of course, the endless sunshine. The government’s ‘Living in Portugal’ site www.livinginportugal.com offers information on the Golden Visa programme, the non habitual residency programme, and the recent corporate income tax and personal income tax reforms – these are all examples of the Portuguese government’s commitment to attract foreign investment to Portugal.
Over the past two years, demand for Algarvean properties has increased steadily and certainly at the top end of the market prices have far exceeded any pre-recession level. Top prices being achieved, with any regularity, have gone from €5.5 million to €8.5 million in less than three years. Increases in values can be seen across our market with the only exception being properties which are older, not as well maintained and not as well located.
According to recent information released, from October 2012 to April 2016, 3,295 Golden Visas were issued. The Golden Visas are granted to nationals from China (around 80% of visas issued), Russia, Brazil, Lebanon and South Africa.
The regime has already generated an investment in Portugal of over €2 billion.
So now, with the British heading for their independence from the EU, and the rest of Europe watching in shock, we face interesting times ahead. No one can predict what will happen next, but history shows us that northern Europeans have always flown south into the sunshine and when compared to the south of France and Spain, the Algarve continues to tick many boxes. No doubt there will be some careful observation in the coming months to see what happens next.
By Kerstin Buechner
Kerstin Buechner, director of QP Savills, is one of the sisters who own and run QP Savills, the local Savills associate. For the past 20 years, QP has been the market leader and specialist in the Quinta do Lago and Vale do Lobo area. Locally, they are known as the Special Agents.