By CHRIS GRAEME [email protected]
The devaluation of the British Pound and the financial crisis in Ireland seem to be closing the door to luxury property purchasers from those countries in the Algarve and Lisbon.
Now it is the Portuguese who seem to be reconquering the ‘prime’ segment of the residential property market in both areas as foreign investment dwindles.
According to various estate agents across the Algarve and Lisbon regions, properties worth between €500,000 and €1 million are being bought for cash by Portuguese investors with an eye to medium and long-term investment.
The President of the Portuguese Association of Estate Agent Professionals (Associação dos Profissionais e Empresas de Mediação Imobiliária de Portugal), Luís Lima, told business daily Jornal de Negócios on Monday: “The number of British clients has fallen somewhat, while the Irish have vanished” when it comes to looking for properties.
“We had thought that they had more financial capacity than they actually have. It seems the Irish were living on easy credit made available in their own country before the crash,” he said.
The vacuum, which had until recently been occupied by the British and Irish, is gradually being filled by Portuguese investors who are benefitting, on the one hand, from the devaluation of the Pound against the Euro and, on the other hand, from liquidity difficulties as banks tighten up mortgage lending.
“A few years ago, it was the Portuguese who were selling these properties to the British and Irish; now we’re seeing the opposite,” says Miguel Poisson Alves, Managing Director for Era Portugal.
“These days in the Algarve, more than 90% of buyers are Portuguese. A few years back the situation was completely different and the buyers were foreigners,” he added.
And Era’s own statistical research seems to back this argument up: between 2006 and 2010, the percentage of clients who were foreign in the south of the country went from 25% to 12% in just four years while the turnover amount from the foreign segment has plummeted from 55% to 14%.
The same story was being experienced by Remax, which also noticed a marked fall in foreign investment and an increase in Portuguese buyers.
The managing director of the company in Portugal, Beatriz Rubio, told Negócios that now the main clients in the luxury segment of the market were Portuguese, not foreign.
“The British market is going through a difficult time which, in turn, is affecting purchases,” she notes.
Ricardo Sousa, CEO of Century 21 Iberia, told the same publication that Portuguese clients were “gaining a larger slice of the market” while the company was seeing “a marked fall in foreign buyers”.
According to these major estate agents, most of the Portuguese buyers paid cash in hand and didn’t apply for a mortgage.
The properties were being snapped up because prices had fallen and were now within reasonable reach of most Portuguese investors looking for an eventual return on their investment when the market picked up and the foreigners were back in town.
It was also noted by the estate agents that prices had fallen not just because of the difficult economic climate but because there was an excess of supply and falling demand.
The Algarve Resident welcomes views from Algarve-based realtors on this subject. Please email Editor Inês Lopes at [email protected]
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