Portugal Property News

ALGARVE PROPERTY NEWS

Welcome to Algarve Property News. Here you will find a list of the latest Algarve Articles about the property development in the Algarve.

Index of articles:

Portugal, 26 February 2008: Algarve Property News

Is it a good time to invest in Portugal?

The answer really depends on your individual circumstances. There is no doubt that global property prices are slowing but the answer everyone is looking for relates to the future…………….will property prices just slow and then continue upward or will they drop dramatically?

There is a lot of evidence to support the bulls and the bears on this one, both the positive and the negative viewpoints have their advocates. I think most people would agree that over the longer term property is a great investment, but then most would probably agree that during 2008 we will not see any dramatic price rises in Europe or the US.

If you are in the process of buying there are some basic factors to be considered like the location, the price you pay for the property and of course the condition of the property. Even today if you can buy at a good price in a great location then you are quids in, you may not be able to sell it very quickly at a great profit, but if you can hold on over the longer term you will do well. The fact is property has proven itself as a valuable investment over the long term time and again. We have to expect some dips in prices but the golden rule is invest over the medium to long term; which is 10 years plus.

In the UK repossessions are forecast to rise, from 30,000 in 2007 to 45,000 in 2008 but in the 1990s, repossessions rose to almost 80,000; so we are some way off those levels.

Economics

I would suggest that the current economic problems have been created by policy in the USA. They hiked up interests to try and support a weak dollar and in doing so have caused enormous problems for American home owners with increased mortgage payments. The Federal Reserve simply hiked interest rates too quickly and too high. They have realized their error and are now hastily retreating but the damage has been done.

The US has another problem separate to mortgage interest rates. China has for years been earning surplus US dollars from exports and they have been buying US Treasury Bills with this cash. In effect the US has been sending them IOUs in return for cash, nice if you can get away with it. China has recently been selling their US T Bills as they have a new policy which involves setting up an international investment fund so the Chinese themselves can invest globally and make bigger returns than they get from US T Bills.

The Chinese policy of selling their T Bills for USD in cash and continuing to earn international revenue in USD (growing exports) has sucked billions of US dollars out of the system, this has dramatically affected the amount of liquid cash in the banking system; hence the credit crunch.

The fact is with having to import more and more oil at record prices (in USD) and the change in policy in China the US is running short on liquid cash. They figured that by increasing interest rates they could attract more dollars back into the US, but they did not properly take into account the effect of increased interest rates on US homeowners; big mistake Mr Ben Bernanke, I say bring back Mr Alan Greenspan.

The reduction in US interest rates does provide some room for other countries to reduce interest rates and thus stabilize the current international mortgage problems.

The fact is that the American economy is under pressure from numerous quarters including the emerging economies of Russia, India, China and the consolidated power of the European Union. They also have problems with massively increased expenditure on oil imports, as their own reserves run dry, and this is of course compounded with the ever increasing price of oil. The result is the US dollar is getting weaker and weaker and all the indications are it will continue to get weaker.

The good news is that the rest of the world is doing quite nicely demand is growing and growth looks strong in most other economies. Particularly relevant to property is the continued growth in the population and the immigration. More and more people are requiring more and more homes therefore by the simple law of supply and demand property prices will grow, except of course in the USA.

Article by Algarve Property World

Portugal, 22 October 2007: Algarve Property News

Property will cost as much in Portugal as in Spain.

The price of the houses in Portugal will increase so much within the next five years that it’ll be close to the neighbouring Spain. The opinion is given by Manuel Ferreira dos Anjos, director of the college of Real Estate Activities (ESAI), which investigation centre is promoting in cooperation with EUROSONDAGEM, a study about the ideal home for the Portuguese people. A pioneer work, because is being done from a scientific point of view and it will be concluded by the end of the first semester of 2008.

The objective, says Manuel Ferreira dos Anjos is “to put is perspective what the Portuguese people want the Real Estate market to be in the future.” A market where currently there’s a very high building quality but with very cheap prices, this because we maintain the lowest average price per square metre in the Euro Zone – 1350 Euros against the 2400 Euros for the rest of the Europe”.

All indicators point for an increase in the housing quality, because people care a lot more with the areas, materials, costs with energy and the ecology in general, says the school director. As regarding to the price per square metre, he guarantees that in short term, it should come close to the Spanish average, which is 2200 Euros, due to the increase of Spanish investors in the national market. We have yet to come to the second phase, which is when Spanish companies start building and bringing buyers with them, he alerts.

Moreover, in the opinion of Manuel Ferreira dos Anjos, the only reason why the prices aren’t increasing now is because the country is already in crises. “I’ve been to an area in Copenhagen and the price for a normal T2 varies between 900 thousand and 1.1 million euros, whilst in Telheiras, Lisbon  which is more or less an equivalent area, a T2 is worth between 300 thousand and 400 thousand euros” , he adds.

For the director of ESAI, the point is “a brick and tap costs more or less the same here and there” and therefore “the country needs to increase the quality of life and fast, because we’re loosing the train”. The solution which he can’t really point out, but he says that “if the others can do it, the least we can do is copy their example”.

Article by Algarve Property World

Portugal, 16 October 2007: Algarve Property News

Vilamoura marina expansion Portugal has been among the UK’s top 10 destinations for overseas property investment for more than 30 years and this is set to continue as plans to expand the Vilamoura marina have been announced.

The Algarve has seen a resurgent growth, with investors continuing to buy in well established areas such as Vilamoura, one of Europe’s most complete resorts and has been hailed as the Algarve’s largest and most exclusive destination.

Over the last year we have seen a 600% increase in the sales of Vilamoura property and this is set to continue well into the future with people flooding back to a tried & tested market after perhaps disappointing forays into property investment further afield.

With the marina now expanding and the pending freedom of UK pensions allowing individuals to buy property in Portugal for inclusion in a SIPP, Portugal in expected to remain as one of the most attractive markets in mainland Europe.

Article by Algarve Property World

Portugal, 15 October 2007: Algarve Property News

The real estate market in Portugal is steady, having in recent years corrected itself of the fast rise of prices verified in the past and because of which it will not suffer consequences from the current crisis in the market of the credit, considers analysts of the biggest Portuguese banks.

In Portugal, “the real estate market is very steady”, said Gonçalo Pascoal, chief economist of the BCP to Algarve Property World.       
“The heating of the real estate market was verified in the past, but is already in the corrective phase”, considers Cristina Casalinho, team leader of economic and financial studies in BPI (Banco Portugues de Investimento).The most recent data from the bank of Portugal shows that before the current instability in the financial markets (with origin in the current crisis of credit in the real estate market in the United States), the number of property loans in the Portuguese market was slowing down. On one hand, “we have seen a softening in the number of contracts” and the debts from families and companies is very high so it is not expected to grow, as the economist of the BPI referred.
On the other hand “there’s still too much competition in the property market of the home loans” in Portugal, said Rui Constantino, team leader of the Santander bank, to explain that this can attenuate the effect of the rise of interests.
In the Zona Euro (euro zone), is possible to make a correction in the real estate markets that are overvalued such as Spain and France, as the analyst of the BPI said to Algarve Property World, Spain was also pointed out by a recent analysis made by the research team of BES.
This reaction to the higher interest rates (the 3 month Euribor, that is used as an index to many loans, went up from 4,25 to 4,75 percent of the beginning of August until now), but however it will be limited in Portugal, for all the reasons stated above, the analysts estimate.

 Article by Algarve Property World

Portugal, 10 October 2007: Algarve Property News

The bubble in the Portuguese Real Estate happened about 5 years ago, originating an uncontrolled ´boom` in the construction of houses and was more noticed in the Parque das Nações area. When the euphoria was gone, sales started to drop and the offer started being greater than the search, resisting only a small portion of the market such as: luxury habitations or rehabilitated houses in the town centre. Currently these are the surviving markets of a recovering market. In habitation, the search does not correspond to the offer – there’s more need of T2, but there’s more T4 for sale-, and in the office property the situation is stable, a consequence of our economy, that doesn’t allow companies to grow and want to change to new premises. However, the most recent DTZ study, says that the optimism in the property sector is reaching high levels, which has much to do with the fact that number of mortgages has increased during last year, bring new trust to the sector

Article by Algarve Property World

Portugal, 01 October 2007: Algarve Property News

Black day in the stock market scares a sector that is already starting to look for other business markets.

The Spanish Real Estate suffered in the last months, one of the biggest breaks of trust since the economy started to reveal the first signs of slowing down. The Real Estate stocks like Colonial, Inmocaral or Fadesa, were dropping more than 2 digits for a week, after Astroc´s launched a sense of distrust over the market. On Tuesday only, Fadesa fell 13% and Inmocaral  19%, dragging with them banks and constructors, like for example Acciona that dropped 4.1%.

Facing this panorama, sector specialist’s opinions divide: to some, this is a current situation that originates from a specific case (Astroc´s), and because of that Spanish companies are not worried and that the market will stay stable, affecting only small companies or the ones that are more related to Real Estate. “The “real” Real Estate business is very favourable but the stock is another thing. Real Estate sales will not be affected by the stock market”, a Sacyr Valhermoso source guarantees.

However, to others the Spanish Real Estate bubble is indeed emptying in what will be a slow and smooth process, and is being faced by the Spanish property companies as inevitable.

In consequence, it has been starting to develop some fusions and acquisitions, a process that has started in the end of 2006, date appointed by some specialists as the beginning of the “Spanish Real Estate bubble”. Aguirre Newman director, Carlos Moedas refers to the recent acquisition of Ferrovial by Habitat, of Parque Sol by San José Constructor and of Amorim Imobiliária by Chamartín.

Another repercussion of this situation that is being lived in Spain is the search for other property markets, such as Portugal, to channel their business. To ISEG economist, João Carvalho das Neves, “the Spanish property companies have already understood that the Portuguese property market has more support, with more attractive prices. “Especially in the second home and holiday property categories”, adds BPI economist Paula Carvalho.

However according to DTZ Iberian director of property market evaluations, “ Portugal will not benefit so much with the Spanish situation, because we are seen as a bureaucratic country where building licensing take years and where the new lease law has not been implemented yet”. In the same line of thought is ISEG economist, João Duque, who is not sure about the impact in Portugal says that “ if things start going wrong for some Spanish property companies like big liquidity problems, they can always sell any position that they have in the Portuguese property market”, therefore creating pressure on the prices”.

 Article by Algarve Property World

Portugal, 14 September 2007: Algarve Property News

For those investing abroad, strong rental demand is one of the biggest considerations of all and a new report has said that the Western Algarve is ideal in this respect.

According to Prestige Group, average hotel and apartment occupancy in 2005 was 77.6 per cent in the Algarve and with 3,000 hours of sunshine this is perhaps unsurprising.

Around 15 million tourists visit the region every year and this is expected to rise to around 45 million by 2020.

Like in Spain, investors in the Algarve benefit from the huge number of tourists travelling to play golf and 14 per cent of all tourist revenue in the area comes from this source.

The Algarve's reputation as one of the world's leading resorts for golfing enthusiasts means that it attracts the more affluent tourists and the rental season extends well beyond the summer.

Speaking about the Western Algarve, Paul Coghlan, chairman of Prestige Group, said: "It is a prime location to invest in based on its value for money, with an average two bedroom villa with pool starting at under £270,000 compared with £500,000 in the prime resorts of central Algarve, giving it exceptional long-term potential."

Capital growth in the Western Algarve has totalled 66 per cent over the last three years, which compares to 15 per cent over the past 18 months in the rest of the Algarve.  

Article by Algarve Property World

10th September 2007: Algarve Property News

Portugal has recently taken on the EU Presidency, which will undoubtedly raise its public profile, but in addition to this honour, they will now receive a 21 Billion Euro grant to help further develop the country. This grant will enhance its strong position in Western Europe and with the upgrading of infrastructures, will again encourage more people to invest there.

Prime Minister José Sócrates joined Economy Minister Manuel Pinho recently in the presentation of ten new hotels for the Algarve, that globally represent an investment of 1.5 billion Euros. Amongst the new units, eight of which are five-star hotels, is the Hilton Vilamoura (the first Hilton to open in Vilamoura) which will be up and running this year.

Together, the 10 hotels will create more than 6,000 new jobs and increase the present accommodation capacity by 5,400 beds. State Secretary Bernardo Trindade was also present at the grand unveiling, entitled, ''Algarve with a future - ten new projects of excellence'', which took place in Lagos and integrates the Government's plan to double the number of five-star hotels in the region by 2010.

Meanwhile the rest of the country also looks to be on the brink of a promising tourism explosion. A large amount of money will be spent on new units to be built throughout the country before 2011 and whose projects are considered priority to the evolution of Portugal's tourism.

Article by Algarve Property World

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