One look at the hoards of tourists coming through Portugal’s international airports and it is hard to believe that there was actually a time when the country was an off the beaten path destination. That time is now clearly over. Buying property in Portugal is no longer an exotic pursuit – especially for Brits and Europeans. Places like Algarve, the country’s southernmost region, have seen an explosion of resorts.
Still property in Portugal remains within reach of many folks who have the extra cash to purchase vacation homes. “For
people that have funds available Portugal is a very attractive place to invest – especially in the Silver coast – due to the very affordable prices and warm weather,” said Celeste Soares, an International sales consultant for Imatico Real Estate agency in Sao Martinho do Porto.
Portugal is located on the western coast of Europe and borders Spain in the north and east while the Atlantic Ocean encircles the southern and western part of the country. Portugal is bestowed with a wide range of landscapes including mountains in the North, a desert-like center, beautiful sandy beaches and rugged coastal landscape.
About 10.6 million people call Portugal home, a majority of which are Roman Catholic. The country’s economy is mostly service based but still has some strong industry in software and auto products. Its current economic model is based on building up the export sector, encouraging private investment, and nurturing the growth of the country’s high-tech sector. Portugal is now, for the first time in its history, a net technology exporter, according to the Financial Times. The country is also working on renewable energy sources and is currently among top five European producers of alternative energy technology.
Visitors are charmed by Portugal’s old world feel, picturesque villages, cities full of winding cobblestone streets and imposing cathedrals. Those who come looking for a rich gastronomical experience will not be disappointed by the country’s delicious Mediterranean cuisine. Much like its neighbor Spain, the Portuguese lifestyle is an infectiously laid-back one that gives visitors a sense of getting away from it all.
Development of a solid, upscale tourism sector is part of the Portuguese government’s economic growth strategy. The sector’s GDP contribution is expected to climb from 15.6 percent in 2009 to 18 percent by 2019, according to the World Travel and Tourism Council. Currently, some 975,000 jobs in the country are tourism related. This number is expected to grow to 1,153,000 jobs, accounting for 22.1 percent of the country’s total employment by 2019. Current predictions for the sector’s real GDP growth look grim at -1.4 percent but the rate is expected to increase to an average annual growth of 3.6 percent over the next ten years.
Real estate in Portugal
Just like most other countries, the Portuguese economy is affected by the global economic slowdown. The country’s property market was one of the first sectors to feel the pinch from the crisis and is the most hurt by it according to a report by Cushman & Wakefield, a global real estate solutions company.
The retail market is suffering from oversupply with demand dwindling as cautious retailers adopt a wait and see attitude towards expansion. The office sector and the industrial market haven’t escaped the effects of the recession either. As the tourism sector begins to take a deeper hit, the hotel sector is starting to be seriously affected by the economic crisis.
The residential market has also seen better days. In addition to weak economic conditions and the credit crunch, rising interest rates have curbed demand. The number of international buyers in the sector has also fallen a bit. “The current state of the real estate market in Portugal is a little slower due to the pound’s decline against the Euro. Our English and Irish clientele is slightly less in numbers, however our Dutch, Belgium and Swiss market are doing well,” said Soares.
Buying property in Portugal
There are no restrictions on who owns property in Portugal and the process is quite simple. International buyers need to have a verifiable identification such as a passport, according to Soares. They also need to apply for a “fiscal card” for tax purposes. Buyers should have a bank account in Portugal and they must be able to put down at least 30 percent of the property value. “An attorney is also needed,” said Soares. Lawyers usually write the contracts and research titles, and ensure all paperwork such as tax registration is done.
Foreign buyers should be aware that sometimes the purchasing process can take longer than anticipated, according to Soares. “This is especially the case when purchasing off plan properties,” she said. Another issue to think about is language. “Purchasing properties in areas that are too isolated can be difficult due to language barriers,” she added. She also points out that when buying property internationally, it is crucial to use a reputable and reliable agent that has handled similar transactions before.
Portugal is considered to be a sought-out location for overseas investors, according to My Portugal Property, a real estate website focusing on the country. Rental properties in popular resort areas are reasonably good and the medium to long term prospects of the property sector look solid. Once the effects of the current economic slowdown wears off, the country’s property sector is expected to bounce back. As far as international demand is concerned, Soares anticipates expansion in some markets. “I expect that the Scandinavian and the Russian market to grow,” she said.