Algarve set for Golden Visa boom

Brits remain top buyers of resort properties in Portugal

Not even a pandemic is able to keep the Brits away from Portugal. A new study has now revealed that the British continue to be the main buyers of resort properties in Portugal in the second half of 2020.

The ‘Resorts Market in Portugal’ study carried out by Confidencial Imobiliário magazine in partnership with the APR (Portuguese Resorts Association) found that Brits accounted for 56% of all property purchases at resorts made by foreign buyers in the Albufeira-Loulé area and 35% of purchases by foreign buyers in the Barlavento (Western Algarve).

On average, Brits invested €6,600 per square metre in properties purchased in the Albufeira-Loulé areas, according to the magazine’s Resorts Information System (SIR-Resorts).

But the second half of 2020 also saw the “return” of other European buyers, after a slowdown in investment in the first half of the year. In fact, European buyers account for 90% of resort property purchases in the Algarve and 66% in the Lisbon region. Among the main buyers, apart from the Brits, are the Irish, Dutch and German.

Further data shows that prices have dropped slightly in Portugal, with a square metre of resort property costing an average of €4,273 in the second half of 2020, compared to €4,513 in the first half of the year, which was the highest value since data started being collected in 2016.

Meanwhile, in the Albufeira-Loulé axis, where nearly half of Portugal’s resorts can be found, the average cost per square metre remained stable throughout the year (€5,325). Among higher-end properties, the average cost dropped from €9,762 per sqm to €9,209.

“This area continues to stand out significantly from the others, with its average cost being 40-62% higher than other areas, such as the Atlantic Coast or the Barlavento (western Algarve) and Sotavento (eastern Algarve),” said Confidencial Imobiliário.

On a national level, resort property prices increased 5.8% from the first to the second half of 2020 – a positive sign for the sector after prices in the first half of the year had dropped 0.4% and 12.7% in the last half of 2019, a period “marked by the strong feeling of uncertainty surrounding Brexit”.

Meanwhile, the study adds that the residential tourism sector is now more optimistic about the future.

Representatives from the sector believe there will be a positive evolution of prices this year, albeit a very small one (+0.4%). Expectations regarding sales are also up, but, as the study points out, their confidence is not “immune to the pandemic”.

Generally, resort bosses are naturally less optimistic than last year, although there is a “consensus” among them that the lifting of travel restrictions, especially with the UK, will play a large role in how the year will play out.

Rising pound fuels “sense of urgency” for Britons buying property in Portugal
Meanwhile, the pound’s stellar performance so far in 2021 and growing frustration with lockdown is creating a palpable sense of urgency amongst British buyers of Portuguese property, according to the Portuguese Chamber of Commerce in the UK.

General Manager Christina Hippisley reports that buyers are realising they can secure significantly lower prices now as a result of the current exchange rate.

“We’ve seen sterling hit a nine-month high against the euro this month, as well as a two-and-a-half-year high against the dollar. This is leading to some serious savings for families from the UK who are buying homes in Portugal. There’s a definite sense of buyers being keen to take advantage of this as quickly as they can,” she said.

According to the chamber of commerce, during the latter half of February, the pound has been continuing to climb “even on days when there aren’t any obvious new causes for it doing so”.

February 18 was an example of this, according to Daragh Maher, Head of Research, Americas at HSBC Securities.

“There were no fresh headlines to drive GBP enthusiasm this morning, so presumably the themes of successful vaccine roll-out, no material dislocation from Brexit so far, and a stronger than expected Q4 2020 GDP print continue to buoy spirits,” he said.

The Bank of England’s signalling on February 4 that it was unlikely to move to negative interest rates in the foreseeable future has also fed into the pound’s strong performance this month, according to the chamber.

It is the scale of the savings that can be made which is particularly fuelling demand, it says. Real estate consultants Knight Frank point out that a GBP-denominated buyer seeking a €1 million home would have needed £936,600 in late March 2020. Now, they would need just £868,600.

Stresses the chamber, the Algarve has “long been one of the most popular areas of Portugal with British holiday home buyers, as well as with those relocating to Portugal on a more permanent basis.”

It adds: “Sun-kissed beaches, stunning golf courses, a relaxed pace of life and superb local cuisine combine to make the Algarve a top choice for many Brits.

“Its strong connectivity, meanwhile, is a key factor underlying the region’s growth potential. Faro Airport provides easy access to multiple international hubs: London in around 2.5 hours (in the normal course of events), Amsterdam in just over three hours and Lisbon in around 47 minutes. Flights also connect to numerous regional UK airports, providing the Algarve with superb connectivity from most of the country.

“Destinations such as the town of Vilamoura, with its beautiful marina, well-regarded international school, supermarkets and health clinics, as well as outstanding sporting facilities, hold particular appeal for British buyers.”

Says Christina Hippisley, “there’s a wonderful sense of having everything you could wish for at your fingertips in some of the Algarve’s larger coastal resort towns – from Vilamoura in the central Algarve down to the smaller resorts from Carvoeiro to Sagres in the western Algarve. We know from our daily postbag and email requests that there is enormous pent-up demand from British buyers for a fresh start and a new life in Portugal after lockdown.”

michael.bruxo@algarveresident.com