BEACH, GOLF & SUN ATTRACT INVESTORS TO PORTUGAL
Portugal has always been a popular destination for second home buyers from northern Europe, however new visa and taxation schemes have opened the gates for new markets including Asia and the Middle East.
Portugal is seeing a tentative economic recovery. GDP growth stood at just 0.92% in 2014, but it still represents a steady improvement over previous years’ performance, says the latest Savills research on world residential markets 2015/2016. Unemployment is falling, and at 13.2% it is significantly lower than that of neighbouring Spain, at 22.4%, Savills reports.
Foreign investor friendly policies in Portugal coupled with economic recovery in northern European markets and have recently triggered an increase in foreign investment in Portuguese property and experts are confident about a positive long term outlook for the country.
The market today
Cityscape magazine spoke to Peter Statham, Head of Real Estate Sales at Oceanico Group, a leading Algarve-based resort and golf owner-operator, who says that Portugal’s residential markets fared much better than those of Spain.
“Real estate prices in the whole of Europe dropped significantly with the financial crisis and so they did in Portugal. Portugal however benefitted over Spain at that time because Portugal didn’t have a huge oversaturation of property such as Spain had. Spain actually had a property crisis before the EU sovereign debt crisis – there was and still is a massive oversupply. Portugal on the other hand has always been different; it’s had stricter planning laws, which are getting even tighter by the years and which protect the country against a drop in capital investment,” Statham explains.
Up until two years ago, the Portuguese market stalled, developers were selling what they had and construction of new projects practically didn’t exist, Statham says.
“Over the past 18 months however northern European markets [which constitute the largest foreign property buyer group in Portugal] began to pick up and investment started to come back into Portugal,” Statham explains.
As a result, the Portuguese market has significantly picked up over the last two years to 18 months. “Since there has not been much construction during the crisis, the stock has been slowly running out, leading to a situation of undersupply. Now, developers have started to launch off-plan projects to meet the growing demand for real estate in Portugal,” Statham says.
One such example is the recent announcement of Vilamoura for the masterplan of its 400 hectare, second phase in its development. With a total area of 1,700 hectares, eight times the size of Monaco, Vilamoura is one of the Algarve’s largest leisure developments and one of the largest real estate developments in Portugal. The EUR 1 billion project boasts the award of best International Marina of the Year 2015, five world renowned golf courses, magnificent beaches, and a range of four and five-star hotels.
Portugal has always been a very strong tourist destination and hence has always had a fairly stable property market, says Statham.
Furthermore, Portugal is friendly to foreign investment. There are no restrictions on property ownership, while transactions costs are low, according to Savills.
In addition to this, two programmes launched by the government over the last three years have stimulated the prime residential market in Portugal, namely the golden visa scheme and the Non-Habitual Residents (NHR) regime.
For a minimum investment in real estate of EUR 500,000, the golden visa scheme grants non-EU buyers a visa and longer term, a route to an EU passport. According to Savills, by June 2015, the scheme has brought Portugal EUR 1.46 billion in investments. More than 1,500 visas were issued in 2014 alone.
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