Text by Alison Buechner Hojbjerg, Director QP Savills
It’s that time of year again when families come together for the holidays and to bring in the New Year. Let’s take a moment to look back on how the property market fared, specifically in the Quinta do Lago and Vale do Lobo area, compared to the rest of the Algarve.
At QP Savills, we have specialised on the very top end of the market with offices in Quinta do Lago and Vale do Lobo. Earlier this year we opened a new office in Loulé and we also run the new sales office at the W Residences in Galé. As the end of the year approaches we are delighted to see that we have achieved our best year since the company’s start over 20 years ago. The percentage of properties sold by the end of October in these luxury resorts was 5% up on the previous year — the strength of the market is evident and we foresee this trend to continue.
Where are the buyers from?
As in previous years, the British remain the main property buyers in the Algarve, according to the Resorts Market in Portugal Report, representing 58% of buyers in the Albufeira – Loulé area. The British were also the largest group of investors in the Barlavento region (to the west), at 27%, followed by the French at 19% and the Swedish at 14%. In comparison, in Quinta do Lago and Vale do Lobo, the percentage of British buyers is much higher at 80%, followed by other nationalities including Irish, French, German, and Dutch. Whereas the French are buying more countryside properties, it is the UK and the Irish buyers who are more likely to be the big spenders, as they look at it not just as an investment, but the ideal location for a family holiday home, enjoying the many amenities that these resorts have to offer.
Why are buyers choosing Portugal?
A few of the reasons include security on investment, ease of access, the Golden Visa program and the NHR, the security of the country itself, the climate and of course the unbeatable lifestyle. Portugal is trendy right now, having won several awards, including best golf destination six years in a row. And it has been said that Lisbon is considered one of the coolest capital cities in all of Europe! The Algarve is certainly no longer the well-kept secret it once was, having received enormous press coverage in recent years. It seems the world has discovered our little paradise and we have seen interest from far-flung locations, such as India, Hong Kong and the United Arab Emirates. Another factor has been the surge in health tourism, with the Algarve boasting several excellent private hospitals offering state of the art facilities. Many of our clients who used to fly back to their home countries for health reasons in past years are now making it a point to have their medical procedures done here at one of the private local hospitals offering first class care.
How are properties being sold?
And what obstacles are there?
Over the last 10-year period, very few buyers used a mortgage to finance their property purchase, but now we are seeing close to 20% of our clients borrowing money. With interest rates still so low it makes perfect sense and lenders are happy to oblige.
The biggest difference we have seen this year is the change of ownership: In 2007 almost 90% of property ownership was corporate and only around 10% was private. This year corporate ownership has decreased to 49% and private ownership has increased to 51%. The fiscal advantages that used to come with owning property in a corporate structure clearly are not as attractive as in past years and so many of our buyers insist on buying the asset out of the company, often at a greater expense to vendors.
In conclusion, all is well on the property market here in central Algarve. Investors who spend time researching and analysing markets for second homes are opting to buy here which means, of course, less product on the market and a steady increase in prices. As prices increase here in Quinta do Lago and Vale do Lobo many buyers are now looking to buy further afield and so price tags of properties outside of these areas are also on the rise. Brexit uncertainties have not stopped the Brits from buying here, in fact they still represent the biggest nationality of buyers. It will be interesting to see how this trend continues and next year we will be able to report on who the buyers of 5 star luxury W Residences continue to be. So far the first phase has sold to a wide range of nationalities. Portugal has clearly made its mark on the world property scene.