Investment in Portuguese Real Estate
According to the 2020 Global Peace Index Portugal is considered the 3rd safest country in the world, it is considered stable in a political and economic sense and offers many desirable qualities for investors of all kinds. The Portuguese government has helped with its innovative NHR scheme (Non-Habitual Residency) and of course the Golden Visa Program whereby your investment can secure access to the Schengen zone.
Portugal has been steadily rising on the investment horizon for several years and has a lot to offer. Portugal is very dynamic and varied in its opportunities to invest and with English being widely spoken investors confidence has been on the rise for a while.
Following the Financial Crisis (2007-2009) people were amazed at how quickly Portugal bounced back and the dynamism of economics and scale meant that Portugal was also more resilient when the Covid-19 pandemic rocked the world. Throughout it all the Portuguese tourism sector continues to boom and attract visitors from across the globe. Since the pandemic more and more people are choosing to improve their lifestyle by working remotely which again is a draw to Portugal where low living costs and exception quality of life combine to answer the wishes of those seeking more from life than the Monday to Friday commute.
Real Estate Prices have been on the rise for some time and show no signs of slowing as the demand outstrips the supply. Prices on average in Portugal have risen by around 60% in the last five years yet the average prices still compete strongly against other European destinations.
LISBON + 49% in last 5 years
PORTO + 83% in last 5 years
THE ALGARVE + 50% in last 5 years
Each area of Portugal has its unique investment opportunities but what is clear is that the perfect storm of rising tourist demand and property prices means that it’s a win-win to invest in property in the Algarve or wider Portugal.
Investments in Real Estate In The Algarve
These can take many forms, importantly it is crucial to see every real estate purchase as an investment, whatever the purpose for purchase.
Algarve Investment Options
Buy to Sell
Taking advantage of a growing market to capitalise on short-, mid- or long-term growth in the property value.
Buying Off Plan to Sell
Higher returns can sometimes be had by buying a property Off-Plan as the value upon completion often rises immediately. Off plan means that you buy during the development and construction phase prior to the building being completed. This can have some risks if the developer runs into something that delays or prohibits the completion of the property, on the flipside you can possibly have greater returns.
Buying to Let (Long Rentals)
This option can be seen as a fairly stable investment in a property with a monthly rental return over a period of time. In the longer term it could be possible to pay off the property value through rental earnings ad have the capital value freed at the end of a period.
Buying With Guaranteed Rental Returns
There are developments that sell properties withing touristic condominiums which offer some attractive options to have a guaranteed rental return (varies between 3% and 6% typically) whilst also being able to use the property for your personal requirements outside of peak times of the year.
Buy to Let (Holiday Rentals)
Tourism in the Algarve is booming, and the region is being discovered by countless new visitors from around the world year on year. Rental platforms such as Booking and AirBNB to name a few mean that by using a reputable agency in Portugal you can have your property available for guests from around the world whilst having the possibility to keep winter weeks for personal use to have some needed winter sun.
All of the above can benefit from rising prices of property in the Algarve that can create equity within the property.
As with all options of investment its important to seek advice on how your individual case will be affected by your choices. There are licences needed and taxation to consider for rental properties and its worth consulting with our rental specialist before proceeding down any particular path.
For more information of Investment options in the Algarve please drop us message and we will get back to you.
