In the 25 years we have been involved in real estate here in the Algarve, we have never seen anything like it. It’s not just Brits buying anymore and not just Northern Europeans – it seems the world has discovered our little slice of heaven.
There is no need to list all the many merits of living in the Algarve here as you readers will of course know why we have all chosen to settle here. Suffice it to say that the Algarve and even Portugal have enjoyed worldwide media coverage over the past 5 years, whether it’s tax benefits, Golden Visas, nominations for the place the safest place to live, and much more.
Here’s a quick recap of what happened just this first quarter of 2022 in QP versus Q1 in 21 – the numbers are astounding:
We have sold 28 properties so far this year, up 180% from the 10 properties sold at the same time last year. We have received 44 offers so far, which is an increase of more than 50% from the 29 offers received last year and our total sales volume so far this year is 88.5 million. , up 386% compared to 18.2 million euros in the same period last year!
It seems that despite everything that is happening in the world at the moment, the trend of investing in Portugal continues at full speed.
It’s probably safe to say that the last 2 years have changed us all in one way or another and the local real estate market is of course not completely immune and has seen changes in what the people are looking for and, most importantly, how much they are willing to invest.
The bottom and middle markets suffered first during the pandemic. The level of demand declined as people’s financial situation made it more difficult to invest in property and while they could and still wanted to invest, travel restrictions made viewing properties possible only virtually. And as transaction levels decreased, so did prices and what sellers could accept. But after the pandemic, this market recovered so quickly due to the unprecedented sudden demand and resulting lack of supply.
In 2020 and 2021, real estate has provided investors with an income opportunity as they seek returns in a low interest rate environment. Government stimuli in the wake of the pandemic have meant there is more capital in the system and real estate is seen as a safe store for it.
Demand for property here in the Algarve, particularly in the Prime market in which we specialize, continues to grow as we have seen with the figures above. New price highs have been recorded with values over 10 million euros which are no longer a rarity. In 2021 we sold a truly magnificent detached house in Quinta do Lago for 18.5 million euros. A record for us at QP and even for the country. Several other properties are now coming to market at an even higher level, a testament to the exceptional quality of the properties that are being created in Central Algarve and the caliber of clients we are privileged to work with.
In 2021, demand for property was still largely driven by UK buyers. Over 65% of our buyers are from the UK, followed by Portuguese and Irish nationals (15% each), then French and many other nationalities in small numbers. The region attracts a somewhat more international group of buyers. AFPOP (the Association of Foreign Owners in Portugal) reports that in the last 12 months, 34% of its new members are from the UK and, surprisingly, 30% are from the US.
In years past, ROI was key for many of our buyers. These were opportunities to buy land and projects for lucrative resale. Buyers today want beautiful homes they can move into and we attribute that to the new world we live in. The post-pandemic workplace offers many of us the opportunity to work from home, helping to increase interest in bigger and better homes. , a place where shoppers can comfortably spend more time. Many move here with families, and the local schools are not just growing, but improving their facilities to meet the needs of the discerning among them. 65% of our buyers hope to spend more time in the country (min 4 to 6 months), 15% buy for occasional holidays and 20% of our buyers buy to make Portugal their main residence. Thus, a property, even remote, could be less a vacation home than a second home.
It is also interesting to see that few of our sellers sell and bring their capital back to the UK or France etc, but almost all reinvest in some way in the local property market. This, added to the fact that many new big buyers are arriving in the Algarve, explains the phenomenal increase in demand for properties, the lack of stock and the increase in property values.
Many of our buyers know the Algarve very well and have been traveling there for years. By the time they invest in real estate, they have familiarized themselves with all the advantages that the region offers. A very important driving factor contributing to demand in the Algarve is personal safety. The Algarve was recently named among the top 5 safest places to live in the world and the low crime rate is a big factor for buyers. Investment security is the second most important factor and buyers perceive Portugal as a safe place to invest in a first or second home – the houses are well built; the infrastructures are good and the strength of the real estate market gives additional confidence to all buyers. And for those who want to work from here, the substantial high-speed fiber optic internet is icing on the cake.
Most property searches at all levels begin online. Our website had over 1.7 million visits in 2021 and for the first quarter of 2022 visits were up 30% compared to the same period of 2021. Over 38% of our new buyers found us online and we are delighted to see that 35% of our buyers are repeat customers or customer referrals.
Fortunately, virtual tours are a thing of the past. Serious buyers can enjoy a Facetime tour of a property or a virtual tour before taking off, but an in-person property is certainly standard at QP before buyers commit to a purchase.
The NHR and Golden Visa programs continue to be a popular draw for buyers nationwide. NHR buyers represent around 20% and GV buyers represent 15%. We would say that number is well below the national average. Most of our Prime market buyers seem to have their ducks in a row on these fronts.
For buyers unfamiliar with the Algarve, there is undoubtedly some surprise at first regarding property prices, but that inevitably fades as those same buyers take stock of the prolific market activity and often miss opportunities as they look sideways before they embark on their own purchase.
So what will happen on the real estate front in the Algarve?
There is a real lack of stock all along the coast and at all price levels. We can clearly see that demand continues to increase and therefore our short to medium term forecast for the market is that values will continue to rise. New local planning laws (PDM) will be confirmed this year and we anticipate that they will make it even more difficult to build new properties or redevelop old properties.
There are a lot of investments from large funds that want to invest and develop in the region. We are very proud to say that QP sold 90% of Marriott’s W Residences Algarve, developed by Nozul before construction was even completed. And many other exciting projects are about to be launched. Vilamoura World, Conrad Algarve, Vale do Lobo, The Keys (now renamed One Green Way) to name but a few have all been recently purchased and are in the process of being redeveloped and relaunched. The trend is for 5 stars, all the bells and whistles and the market will happily absorb them! Exciting times ahead for all of us!
The advantages of NHR and GV, an excellent and affordable health care system, security in terms of personnel and investment, climate, lifestyle and ease of access make this place hard to beat. Portugal is indeed on the world map. It is a solid and trendy investment.
It shouldn’t take long for developers to bring new stocks to market. Buyers, buy now or pay more on your next visit!
Led by our Managing Director Jules Hamel and Sales Director Jamie Robinson, our multilingual and growing team of 23 like-minded people are highly skilled and experienced and are here to help you achieve the results you want. We look forward to hearing from you.