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Algarve Property Market 2009 in review
Algarve luxury propertyThere is no doubt that 2009, like it´s sibling 2008, was a strange year in the property market in the Algarve. On reflection, one of the main issues was the fact that no-one could agree what the market was doing, when and why. With the benefit of hindsight we can review the facts, and consider what actually happened, from our (first hand) viewpoint. One of the key problems is information. On one hand accurate historical date is very hard to obtain in Portugal, as, until recently, many of the prices registered for the sale of properties were inaccurate.

Add to this the fact that many offshore property transfers were not even registered here, and it can be seen that the data available was worthless.

The other problem with information was that there was simply too much of it, and much of it inaccurate or misleading. With the average person receiving information from social media sources such as Digg, Twitter and Facebook, plus the printed media and the internet based information resources, TV and radio, it can be seen that it is easy to achieve information overload. The weather forecast is a good illustration of the problem. If I want to know what the weather will be like in Portugal, I can follow a weather feed on Twitter, look at the BBC website, refer to meteo.pt, listen to the local radio and I will probably look at an international site such as weather.com. I will be faced with different, sometimes conflicting information from each of these sources, so I have to assess and filter this to establish which is correct. If out of these 5 sources, 3 say it is going to snow tomorrow, I may believe them, even though I think it is impossible.

Because the credit crunch was such big news, consumers had it rammed down their throat, morning, noon and night. In a country such as Portugal, where small stories such as a bank robbery that netted €1.000 are headline news, big stories are incessantly repeated and debated. So, we all became obsessed with the credit crunch.

There is no denying that the property market here was affected, but we need to look closely at how it was affected, and, more importantly, why? Within Portugal, there are many unique areas of real estate. The Algarve is a good example of this, as are the big metropolitan centres such as Lisbon and Porto. The Alentejo also has its own sub-market, but for different reasons. This distinction is important, as the property market was affected in varying ways, depending on the geographical area, and type of property.

If we consider the Algarve, and simplify things somewhat, we can divide the market up into sections, as follows:

* Primary habitation, normally purpose built apartments
* Habitation with a related commercial activity (e.g. agriculture)
* Holiday accommodation for the "bulk" market, apartments and townhouses, normally in coastal areas within closed condominiums
* Second homes, either in urban

Each sector of the market has behaved differently, and a large proportion of this behaviour is due to basic economic principles. In two particular sectors of the market, where volume of sales has been traditionally high, and supply and demand have been well balanced previously, the effects of the slow market have been felt hard. These sectors are the bulk holiday accommodation, and primary habitation parts of the market.

As demand has been reduced by the well documented effects of the recent years economic troubles, over supply quickly became a reality. In these parts of the market (and any others where supply vastly exceeds demand) the market was, and still is, weak. The reluctance of banks to lend to clients in these sectors, or at least to lend to the level they had previously, compounded the problem.

If we consider the second home market, the situation is, not surprisingly, different. The supply of this type of property is restricted, as a result of a number of factors. Building is well controlled now in Portugal, and the process of getting a construction project is slow. Clients for this type of house tend to have very particular requirements, reducing the suitable number of properties available. Add these factors together, and it is clear that the market will never be flooded at any one time with new properties, thus controlling the supply.

Even during these leaner times, there is continued demand for this type of property (albeit at a lower level than previous years). The net result is that there are few bargains in this sector of the market. Of course, some owners have to sell as their personal situation dictates this, but in our experience these are not the norm. The general tendency is to be more flexible, and external factors such as the exchange rate do play a part.

In summary, we have a sub-market (the Algarve), which behaves differently to the rest of the country, and sectors within this market that are also affected in different ways.

Some facts
As we have mentioned, facts are few and far between in relation to the Portuguese property market, but we do have some information available.

If we examine the information shown on the following website http://www.globalpropertyguide.com/real-estate-house-prices/P#portugal (which is extracted from Portugal´s national statistics), we can conclude as follows:

* Average house prices have shown a positive trend throughout 2009
* The average bank evaluation of a property was higher at the end of the third quarter of 2009, than at the start of 2009
* Bank evaluations have returned to a similar value seen in 2004
* Bank evaluations peaked at around 1.250€/m2 in 2007, and they are currently around 1.160€/m2, a difference of 7%


With the caveat that this is an overview of the entire country, it seems to indicate a stable, slow moving market that has regressed to previous levels, but not in an overly dramatic way. Compare this to countries such as Latvia

and Lithuania (which were promoted as fantastic investments recently) where prices have dropped up to 65% in the last 2 years, and this reinforces the point. (Info here: http://www.globalpropertyguide.com/real-estate-house-prices/L)

We should also consider the effect the exchange rate has had on the Algarve property market during 2009. Buyers from the UK still make up the majority of purchasers here, so this is a key factor.

At the time of writing the exchange rate is around 1.12, compared to 1.06 at the end of 2008, a difference of some 5%. This does make a difference, and in many cases those returning to the UK are factoring in the increased buying power their euros currently have in the UK, and adjusting the prices of their properties accordingly. It should be emphasised that this is only relevant to a very small sector of the market

Summary: What really happened?

To conclude, we can say the following:

* Sectors of the property market where supply and demand was unbalanced as a result of the economic climate have suffered the most.
* External factors such as the exchange rate, and banks lending policies have reduced market confidence overall
* Some sectors of the market have fared better than others, and whilst there are opportunities to purchase property at reduced prices in these sectors, it is not the norm
* The high land cost, restrictive building legislation and relatively high construction costs have combined to ensure strong residual value in many types of property

Importantly, we can see that the Algarve has continued it´s tendency to be one of the tortoises within the European property market. Slow, steady growth has resulted in a much slower decline than in some of the hares in Europe, who have seen drastic declines.
Algarve Villas Entice Investors Away From Spain

Wise planning choices have given Algarve, Portugal the edge over Spain in terms of property investment demand. While the rest of the European real estate market dwindled last year, the Portuguese government retained tight control over construction in the country’s Southern coastal area. Villas had to be built under strict guidelines adhering to the personality and aesthetic of its surrounding areas. As a result, property in Algarve rose 2 percent last year and went for a modest 1,429 per square metre.

Olhão to be the Ria Formosa aquarium

The construction of an aquarium to show the full potential of Ria Formosa is a project that already goes back ten years – but it’s now nearer to becoming a reality. According to a source at the local town hall, an economic viability study is underway to show that the idea is a “sustainable” investment. For the moment, we know that the architecture was designed by «Promontório Arquitectos” of Lisbon. It was this company that created the famous «Fluvário» in Moura – a very successful attraction in the Upper Alentejo.

World Cup promotions in Albufeira

Angus September, the Ambassador for South Africa in Portugal, made a presentation regarding the South Africa 2010 FIFA World Cup and the involvement of Portugal in the competition at a conference held at the Hotel Montechoro in Albufeira on February 25. “The 2010 FIFA World Cup is of extreme importance to South Africa and Africa as a whole. We are very proud to be able to welcome Carlos Queiroz and the Portuguese national team to South Africa and are ready to receive them at their base in Magaliesberg,” said Angus September.



<h5>Algarve: 4 natural wonders nominated</h5>

Algarve: 4 natural wonders nominated

Amongst the 21 finalists of the competition Seven Natural Wonders of Portugal, Algarve has four candidates: headland in Carrapateira, Sudoeste Alentejano and Costa Vicentina Natural Park, headland in Sagres, and Ria Formosa estuary and natural park. The public is to choose and elect the seven awarded locations and the voting runs until September 7. Located in Aljezur council, the headland in Carrapateira rises twenty-five metres above sea level. The cliffs face Amado Beach in the south and the vast Bordeira Beach in the north.

If you are in the area, we’d definately recommend a stroll around Moncarapacho. Sit and enjoy a coffee, and the friendly

village atmosphere will simply charm you.

Algarve rural retreats don’t get much better than Moncarapacho, situated midway between Olhão and the Ria Formosa Natural Park and Tavira. One of the most interesting museums on the Algarve is here next to the church, exhibiting everything from Roman Remains to Slave shackles.  Excellent for a walking or birdwatching holiday base on the Algarve, with easy access to some of the Algarve’s best beaches, Tavira, as well as local Algarve luxury golf courses, Moncarapacho is a hidden idyllic Algarve retreat indeed. All basic amenities are here including banks, a post office, internet cafe, supermarkets, a petrol station, restaurants and a  selection of shops and cafes. It still has it’s own saddlesmith and cobbler. Pick up your Algarve Arts and Crafts here, there is also a local ceramics factory on the outskirts of Moncarapacho. A big agricultural market is also held here annually. Albeit tiny, the museum at Moncarapacho is of real historic interest, focusing as it does on Algarve history, with a fascinating mish-mash collection of artefacts. The museum was set up by a local priest and it sits alongside the baroque  church Santo Cristo within the town (the museum is clearly signposted – just head for Moncarapacho and follow the signs). Inside you can expect to see archaeological exhibits from across the Algarve, including African slave shackles (rarely seen in Portugal museums! It’s worth visiting just to view these), Napoleonic cannon balls, old olive presses, various coins and Moorish waterwheels. There are plenty of Roman remains here too, including Roman stonemasonry, such as soldier gravestones. Tel: 289 792 362 for further details, open Mondays to Fridays from 11am to 5pm).

Moncarapacho surrounds

Moncarapacho surrounds are particularly rural, with citrus fruits, figs, vegetables and pomegranates all flourishing locally. The main village church Santo Cristo, is adorned with striking 17th century azulejos tiles - well worth a look. Moncarapacho is still a well kept secret, a rural retreat missed by the tourist itinerary. Peace and quiet in a stunning Algarve setting is on the menu here, yet you’re within easy access of historic centres such as Faro and Tavira. From Olhão to Moncarapacho (about 3 miles by the Estrada Nacional 398, passing through Quelfes) or via the IP1 road, the distance is even shorter, less than two miles to reach this pretty little village, lying between or-chards, carob-shrubs and almondtrees. Besides the Main Church, with its beautiful Renaissance portal, and the Miserichord Church, where six paintings reflect the 16th century style, the Chapel of the Holy Spirit is certainly worth visiting, (next to the Parish Museum of Moncarapacho). In the typical streets of this part of the Algarve, you can admire a few buildings characteristic of the bourgeois architecture from the 19th century. Various chapels illustrate the rural architecture. The chapels of Pé da Cruz, of São Francisco, of Nossa Senhora do Carmo and, specially, of São Miguel, built on heights, offer excellent views of the surrounding green landscape. At the Cerro da Cabeça (Hill of the Head), where you will find the hidden caves, is also an excellent natural belvedere, and a place of interest for those who appreciate speleology. It is worth the gentle climb, with the knowledge that a stunning view awaits you. Among the many cafes and restaurants in this area, Restaurant Colibri’s is a local favourite, offering local specialities at very reasonable prices. Restaurant A Caravela specialise  in fresh, locally caught fish, and excellent chicken dishes. New owners Luis and Larissa recently relocated from Luz de Tavira to run this restaurant, and now offer a popular take-away service. If you are in the area, we’d definately recommend a stroll around Moncarapacho. Sit and enjoy a coffee, and the friendly village atmosphere will simply charm you.



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Last Updated (Tuesday, 16 March 2010 11:56)