REASONS TO
INVEST IN ALGARVE PROPERTY
Why invest in Portuguese Property? This is a basic
question that requires a solid answer before launching
into a substantial commitment in a new country,
particularly with the current bleak short-term outlook
around the world. The potential on-going rewards,
whether through direct use from owner occupancy or
diverse forms of rentals, can bring in an excellent
return with potentially promising tax treatment in
Portugal. Let us examine some of the underlying factors
that outweigh the short-term doom and gloom that
bombards us daily on the evening news.
Demographics
The heart of future growth lies in the demographic
reality of an aging Europe. We have all heard about the
“greying of Europe”. A recent report in the journal
Science revealed a picture of a fast-ageing population.
Life expectancy for British women, for example, has
risen from just 50 a century ago to nearly 80 now and by
2080, it is expected to rise to 100.
The consequences for Society are startling. As it
impacts on our youth-dominated culture, the aging
population will spark a seismic change in the landscape,
making all the familiar features unrecognisable. In all
areas of life – pensionable age, crime patterns, popular
culture, politics and family relationships – nothing
will be left untouched.
Over the coming years, as the “baby-boom” generation
retires, there will be a tide of seniors migrating south
to the warmer, more hospitable climates. In neighbouring
Spain, demographers predict that the number of foreign
property owners will increase by five fold in the next
decade alone. For a tiny country like Portugal, this
wave of retirees translates into a huge influx of new
home owners looking for their place in the sun. Not only
will traditional destinations such as the Algarve or
Madeira remain popular, whole new regions of the
interior will be discovered by this coming invasion of
greying Northern Europeans.
Expansion of
Residential Tourism
The term “Residential Tourism” is commonly used and
refers to a specific type of tourist: one who chooses
non-hotel accommodations, usually owned, rented or lent
property. Contrasted with vacation tourism, the
residential tourist typically stays longer and/or more
often, uses an owned or rented residence for
accommodation and has a leisure goal connected with a
certain quality of life.
In 2004, this foreign investment in Portuguese property
equalled overall income from general tourism. While such
studies in Portugal are few and far between, our
neighbours in Spain have a tourist industry similar to
ours. Currently, Residential Tourism accounts for 25% of
foreign investment in Spain and 20% of new construction
is purchased by non-residents.
“Low-Cost” Air
Travel
The advent of low-cost air travel will have profound
implications on “Residential Tourism”. Instead of saving
up for one expensive holiday a year, low-cost travel
means that purchasing a second home in the Algarve
becomes practical, whether for long weekends or
occasional lets to help meet expenses. “Low-Cost” means
frequent travellers which inevitably will prove a boon
for both conventional hotel tourism as well as the
residential variety.
Climate
Although the Algarve is not on the Mediterranean, it
does have a Mediterranean climate with mild, wet winters
and dry summers. Basking in sunshine at the southernmost
tip of Portugal, the Algarve enjoys perhaps the best
climate in Europe. With only a short period of rainfall
(it normally rains between November and March) and long
hours of sunshine (the highest in Europe), the Algarve
region is truly blessed.
Due to its relief and geographical position, the Algarve
is influenced climatically by the European continent,
North Africa, the Atlantic Ocean and the Mediterranean.
The maximum temperatures in the Algarve vary, throughout
the year, between 15ºC and 31̊C and the temperature
almost never falls below zero in the winter.
Average Temperatures in the Algarve
Air temperature in Summer:
24ºC to 29 ºC
Air temperature in Winter:
15ºC to 18ºC
Seawater temperature in Summer:
21ºC to 24ºC
Seawater temperature in Winter:
15ºC to 19 ºC
Average Temperatures
in the Algarve:
Air temperature in Summer: 24ºC
to 29 ºC
Air temperature in Winter: 15ºC
to 18ºC
Seawater temperature in Summer: 21ºC
to 24ºC
Seawater temperature in Winter: 15ºC
to 19 ºC
Capital Appreciation
For over 50 years, property has proved to be the most
consistent vehicle for investment, with property prices
doubling every 7-10 years. Since the inception of
statistical surveys, property has proven to be a great
medium to long-term investment, regardless of short-term
market fluctuations.
Unlike almost any other asset, you have a wide range of
long-term, low-interest finance available to help
purchase your property. You also have the added benefit
of being able to obtain income throughout your ownership
of the property.
