The crisis is bringing huge changes to all sectors in Portugal, with one of the most affected being the property market. This can represent new and unique opportunities for investors. PDV tells you how to take advantage of the opportunities in Portuguese real estate.
The property market in Portugal is undergoing changes and many new investment opportunities are lying in wait. As austerity is driving many to sell their homes and the credit crunch is preventing others from buying, the number of houses on the market is forcing many people to scale down prices in regions which have traditionally been somehwat expensive, such as the Algarve – making Portugal a more appealing country for buying property in.
This fall in prices is giving rise to a wide range of opportunities. “Portugal has a very high potential” for investment in real estate, states Luís Lima, president of the Portuguese estate agents association APEMIP.
Miguel Poisson, managing director of the ERA real estate company in Portugal, agrees: “The market is very attractive for either investors or individuals”, he says, further stating that “this is the best time in the last 15 years to invest in real estate in Portugal.”
And why? Although the property market in Portugal has not suffered a deep crisis, prices in the sector are registering a sharp fall. According to figures released by the National Statistics Institute (INE), the average evaluation of Portuguese properties by banks continues to follow the downward trend registered since April 2011. In January, there was a 6.2% year-on-year decrease in the value of properties. And in Portugal’s more touristy regions – the Algarve, the metropolitan area of Lisbon and the autonomous region of Madeira -, property prices registered very sharp annual drops, decreasing 7.3%, 10.1% and 6.3%, respectively.
The oversupply in the market, caused by the austerity which has been having a great impact on the means of property owners and the increase in the number of foreclosures, is creating new investment opportunities. “There are many people resorting to their savings to invest in the housing market”, says Miguel Poisson, since it is relatively immune to the fluctuations of other assets abroad. And investing in Portugal seems even more attractive at this time, given that the fall in prices adds to Portugal’s temperate climate and the country’s natural assets, such as its extensive coast or its more rural and mountainous landscapes.
However, can Portugal’s risk perception, often placed alongside Greece as the first countries in risk of leaving the euro, prevent a greater entrance of foreign investors in the country? Luís Rocha Antunes, director of the investment department at Cushman & Wakefield, believes it is an exaggerated perception. Despite the economic environment creating a feeling of accentuated risk, “there are low risk opportunities in Portugal”, he claims, thanks to the sharp fall in prices, already reaching their minimum.
What are the best locations to buy property in Portugal?
For the specialists contacted by PDV, one of the more appealing locations is, naturally, the coast. Besides the Algarve, a popular region for those looking for a holiday home, focus is switching towards the central Silver Coast – between Peniche and Aveiro –, the Vincentian Coast – in the Alentejo and western Algarve -, and the coastal region north of Porto. “The Algarve remains popular and the Silver Coast is becoming more popular, particularly for the golfing community”, claims Simon Pownall, founder of the online community expatsportugal.com, speaking to PDV.
For those seeking a quieter location, – such as pensioners – “the Beiras and northern Portugal are attracting more buyers as somewhere cheaper and more peaceful to live”, Pownall adds. In this segment, Miguel Poisson of ERA also suggests the Alentejo plains as an area of “small farms” where people can enjoy their retirement. On the other hand, for investors (and also individuals), the metropolitan areas of both Lisbon and Porto are still privileged locations. According to Miguel Poisson, “the more institutional investors prefer to buy property in the city centres”, so as to “lease them and thus yield high returns” at a time when access to credit is highly conditioned and individuals or families prefer to invest in medium-term rentals.
What do you need to look out for when buying property in Portugal?
For Simon Pownall, the watchword is: “Research, research, research!”. The creator of expatsportugal.com recommends potential buyers to browse online forums “for advice from people who have already bought in the part of Portugal you are interested in”, or even consider renting a house in the area, “so that you can make sure you like living there”.
The managing director of ERA, Miguel Poisson, also recommends a thorough investigation of the area: an assessment of property prices is essential to understand if the price of the house you are interested in buying is advantageous, Poisson guarantees. “Buying property in Portugal is not difficult, as long as buyers take due diligence and research properly and employ the services of a good lawyer”, who may advise potential buyers on procedures, taxes and other bureaucracies, Pownall concludes.
(Photographs: TopRural/André Ribeirinho/John Hunter)