6 June 2017
Portuguese Property Market Recovers as Brits are enticed back
THE PORTUGUESE PROPERTY MARKET WAS HIT HARD BY THE FINANCIAL DOWNTURN BUT A RECENT VISIT TO THE ALGARVE BY MIRANDA JOHN, INTERNATIONAL MANAGER AT SPF PRIVATE CLIENTS, REVEALS THAT RECOVERY IN THE REGION IS WELL UNDERWAY. BELOW, MIRANDA DISCUSSES THE PROPERTY SITUATION IN PORTUGAL, THE LENDING OUTLOOK AND WHAT AREAS ARE PROVING POPULAR.
On a recent work trip to the Algarve, I was struck by the confidence of the local estate agents as we visited a development where half the units had sold even before the official launch. When it comes to Portuguese property, it is all about quality and location and in this case the developer knew the market, the project was well considered and exceptionally well situated. Lending in Portugal has also improved but is very much on a case-by-case basis with location key to obtaining the best terms. For example, I am arranging a mortgage on the lowest rate I have ever seen – a seven-year fixed rate pegged at just 1.9 per cent.
Most potential buyers in Portugal know the country well as they will have spent many years holidaying there. The real estate market is far smaller than Spain’s and areas have been developed sympathetically. In 2016 there were just over 450,000 property transactions in Spain compared to only 120,000 in Portugal. Since the financial downturn, Portugal has recovered more quickly comparatively and is now back to 70 per cent of total transactions seen in 2006.
British buyers tend to think only of the Algarve when they think of Portugal but the country appeals to many other nationalities, particularly the cities. Lisbon has seen huge investment on the commercial side and significant interest from French buyers, while Porto is also in high demand.
Over the past few years, Portugal has also put in place a number of incentives to attract overseas buyers, such as the Non-Habitual Residency scheme. This status provides tax exemptions or preferential rates – typically tax rates of 20 per cent – and have been successful in attracting talent and wealthy investors. Portugal is also ahead of the field post-Brexit as the Golden Residence Permit is aimed specifically at countries outside the EU. The Golden Visa requirements are relatively straightforward: to qualify the value of any property acquired should be €500,000 or above.