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Positive outlook for Algarve property market

by Stephen Anderson [email protected]

Stephen Anderson is the Managing Director of Infinito Real Lda and has a broad knowledge of the real estate industry in Portugal. Having held senior positions in a number of companies around the world, he now lives in Portugal with his family.

Well, another Christmas has come and gone, and the weather is anything from frightful here in the Algarve. A month generally reserved for festivities has been particularly busy this year.

Whether it’s been the culmination of a year of bad news and bad weather forcing the UK and Irish to clamber for a bargain in the sunny Algarve coastline, or investors using the time off to search for a bargain, we’ve seen them all this month.

Not normally a busy month, there’s been an upturn this year which is a positive sign for the upcoming year, with mostly investors looking for bargains and buy-to-let properties, which is commonplace in the Algarve now, with such good prices and the rental yields remaining strong.

The big question most have is, how next year will fare for the property market. Well, as much as I’d like to say it will bounce back, it will be unlikely we’ll see much of a change from this year, at least for the first quarter anyway.

There is still a reluctance for the banks to finance overseas buyers and this has put a lot of potential buyers off.  

There have been a couple of exceptions to this, where some proactive developers have thrashed out deals with their own lending banks to provide much better terms for their properties only.

With rates as low as 2.5% and loan amounts of up to 80% for non-residents and 100% for residents, if the trend continues it will most certainly breathe some life back in the market as these properties are snapped up.

The continuing trend however, seems more likely to follow the cash buyers or those with finance capabilities at home as the Portuguese have been typically slow to respond during this economic crisis, and it has cost a lot of property owners dearly.

We’ve seen quite an upturn the last quarter of this year from buyers outside of the UK and Ireland, coming from the Middle East, France, Scandinavia and even the USA, so we can see demand is still there, as it has been all through the last few years.

The difficulty is just tying up a deal which suits the individual buyers.

At a time when conventional methods are becoming more and more difficult, it is now more than ever vitally important to look outside these realms and find financial solutions that suit more of the market.

Eventually we will find a lot of developers having their own incentives for buyers which will help kick-start the market, and maybe even push the banks into competing for clients’ business once again.

If we look back at 2011, it’s certainly not a year that any in the real estate market would hope for again anytime soon, and with a few minor adjustments, 2012 could see the start of a recovery for the market, rather than just treading water as many have been doing now.