Property: Port of call

For a real slice of luxury, why not check out the white beach houses along the Algarve

coast? Footballers Frank Stapleton and Steve Bruce have homes in the Algarve, as does Irish former Boyzone singer Ronan Keating. Golfers Nick Faldo and Christy O’Connor Jnr have designed golf courses, and former England goalkeeper David Seaman holds his annual celebrity Safe Hands Charity Golf Classic at Parque da Floresta. Richard Neubersch, an agent who has been selling property in the Algarve since 1986, says the market is still very strong despite the global credit crunch. “Prices have not decreased once in 20 years, an amazing phenomenon,” he says. “I sold a double plot a year ago for €4m and the same plot today for over €6m.”

Portugal has much stricter planning and development regulations than Spain, which has resulted in resorts that are generally more aesthetically pleasing and of a much lower density. But there are many myths that have developed about investing in Portugal, and a quick look at figures from the Global Property Guide instantly dismisses these as just that – myths. Portugal is often seen as expensive to buy in, and as having low rental yields. But the cost per sq m in Portugal is €2,517, and it is one of the cheaper countries in Europe, compared with €18,108 in the UK, €10,014 in France and €5,160 in Spain. In terms of rental yields, it also performs better than it is given credit for, and on average those renting out a property in Portugal will make 5.72%, compared with 4.27% in Italy, 4.02% in France and 2.87% in Spain.

One area where the myths hold some truth though is in price growth. Over the last five years, prices grew in Portugal by just under 14%, compared with 80% in Spain, 74% in France and 59% in the UK. Although it was strong in the 1990s, the noughties have experienced a sluggish economy, while strict regulations have led to slow growth. But agents at Savills say the good news is that home ownership in Portugal is at 75%, and there’s a large rental market of about 20%. The Portuguese also have a high propensity to buy second homes.

However, if you want to really make cash the Algarve is the place. In 2006 growth there was 6%, while in the rest of the country growth rose only 0.6%. If you are looking for something similar but cheaper, prices are lower on the Silver Coast and the Costa Verde.

Facts & Figures

AREA: 92,391 sq km
POPULATION: 10.6 million
CURRENCY: Euro
HOUSE PRICES: Prices rose by 14% in the last five years, and recent price growths have been less than 1%, except in the Algarve area where it is on average 6%.
RENTAL YIELDS: Average yields are about 5.7% in Lisbon, however like price growth the Algarve is producing figures as high as 15%.
AGENTS: The Associação dos Profissionais e Empresas de Mediação Imobiliária de Portugal (APEMIP) is a good source to start looking for agents locally. However, their website is in Portuguese, so for agents outside Portugal try the Association of International Property Professionals (http://www.aipp.org.uk).
BUYING TIP: As an EU country there are no restrictions on buying property, and once you have found a property you need to hire a lawyer who speaks English and can translate the contract for you, so you know what you are signing.
TAXES: Fees include lawyers, about 2%, registration costs of about 1%, stamp duty of up to 7.5% and a transfer cost of about 10%. Rental income is taxed at 15% and capital gains tax is 25% for foreigners – however, there is a 50% deduction if it is reinvested.
AVERAGE PRICES: In Lisbon the price is about €250,000 for a small apartment, while in the Algarve the entry price is €140,000. But on average, you will pay around €180,000.

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