How can you keep up with your plans of moving and/or buying property overseas in the middle of a pandemic?
More than ever, you need help.
You may not be able to travel today. But there are people on the ground out there who—thanks to our ever-expanding technology—can help you from afar.
One such person is our recommended property contact on the ground in Portugal, Luis da Silva…
Today, Luis shares his tips on how you can continue your property search in Portugal during these trying times—along with a couple of attractive sample properties from the market…
Editor, Overseas Property Alert
P.S. Luis is part of the far-flung team of experts and expats coming together online next week for our 2020 Retire Overseas Virtual Conference. These four days could be just the motivation you need to keep things moving. I hope you can join us.
Tips For Investing In Portugal During A Pandemic
By Luis da Silva
With unprecedented restrictions on travel these past six months, our world—that once appeared so small—is more difficult to criss-cross. For those in North America chomping at the bit to get to Europe, these are frustrating times.
Portugal is the 17th most visited country in the world—putting it in the top 10%. The Algarve is regularly counted among the world’s favorite retirement destinations. And the country is keen to continue receiving overseas visitors and future residents as soon as it’s safe to do so.
Faced with the reality of flight restrictions, quarantines, and looming lockdowns, how can you keep the momentum on your search for a piece of Portuguese real estate?
Here are a few ideas on how to bridge the gap…
Work With A Property Finding Agency
Many real estate agents in Portugal will tell you that this option does not exist. What they really mean is that they would prefer not to share their sales commission with anyone else.
An agent that works as a finder always shares because they understand that the probability of a property being listed and located via an agent is high.
The importance of having a reliable local partner, agent, or friend is now key to reducing risk based on incomplete information, or taking the wrong decision. As not everyone has a friend in their preferred retirement or investment destination, choosing the right partner is critical.
The right partner not only understands the local market but has a business model that makes it easy to collaborate at a distance. A combination of personal telephone or video conferencing communication combined with email and information-sharing tools will go a long way to ensure that you have enough information on which to base a decision.
Take the example of Emma, who recently decided to buy an investment property in Portugal, but couldn’t get here due to travel restrictions…
Emma had previously visited Porto and identified it as the place where she wanted to buy. By engaging a property finding agency, she had expert help at every step of the process—the multilingual agency recommended a lawyer, an experienced mortgage broker, and she was presented with options from owners, real estate agents, and listings on both English and Portuguese sites…
After a process of around six weeks—involving long-lists and short-lists, virtual tours and video visits—Emma selected a fully refurbished, three-bed apartment in the heart of Porto. The apartment came with a massive outside terrace and was within walking distance of Porto’s famous Crystal Palace gardens, as well as being an easy downhill stroll to the river Douro. With the team negotiating on her behalf, the price was agreed at 265,000 euros (US$313,890).
As it turns out, Emma got herself a bargain. The bank later valued her property at 343,000 euros. So, by the time she closed on the property, Emma had earned an instant equity of 78,000 euros… or an almost 30%. And all this during the coronavirus crisis.
Sign Up To A Mailing List
Don’t let anyone tell you that they have exclusive access to “off-market deals.” If someone has a good contact in a bank, for example, it may be that you can get on their “friends and family list”—in reality, bank deals in Portugal don’t tend to offer great value (they are more competitive in Spain).
If your contact on the ground is only based in one region, they can’t really claim to be knowledgeable of others or have an “inside track.” Access to good opportunities is all about the network. The larger it is, the more likely an opportunity will pop up.
I recommend getting yourself on a company’s investor mailing list… especially a company with a wide network of real estate partners and rental managers—and preferably one that has a team focused on market research that can perform investment analysis on a given property.
Consider Renting Before Buying
With selling prices continuing to increase, the rental market remains generally tight. In greater Lisbon/Cascais and Porto, where long-term rental prices have softened, potential buyers are choosing to rent while they watch what the market does. With transaction times in these locations becoming longer, and with some pent-up anxiety among sellers due to the coronavirus, buyers are hoping to find better-priced opportunities down the line.
In the most popular locations of the Algarve, summer demand was decimated by the complete absence of tourists. Many property owners made a “temporary” move from the short-term to medium-term rental market, which caused confusion. Local renters thought they were going to have access to more inventory, only to find that all these owners wanted was to plug the gap until a (hopefully) better 2021 season.
As a result, good stock such as villas and well-located apartments close to amenities were quickly snapped up by foreign clients immediately after they were able to travel.
Now we’re seeing a surge of interest in winter stays and long-term rentals—coming from families with children planning to attend the region’s international schools… to retirees needing contracts for their D7 visa applications… to those who wish to take their time in scouting out the right location to buy.
If you’re looking for rental accommodation, you’ll find more competitive prices in the large cities. In areas where the supply of long-term accommodation is tight, like the Algarve, prices remain unchanged.
But I Really Want To Buy… What Can I Expect?
The first question many buyers ask these days is whether prices in Portugal have started to fall. Disappointingly for many—especially those who have seen the value of both the U.S. and Canadian dollar fall against the euro—this is not the case. Although prices of long-term rentals in large cities have adjusted downwards, demand generally outstrips supply. Despite the coronavirus, real estate prices have shown a small growth.
Understand, too, that the days of “cheap” deals are gone. Most agents get irritated (and rightly so) when clients show up on a mission to buy cheap. Value for money is one thing. Cheap gets a cold shoulder.
Whatever happens down the line, an experienced and knowledgeable local team will be able to find well-priced options—for sale or for rent—and also help manage your expectations by explaining how the local market works.
Getting A Good Deal In The Algarve (Ocean View From 165,000 Euros)
The Algarve is Portugal’s top tourism, retirement, golfing, marina, and beach destination. It’s also the base of one of Southern Europe’s top destination airports—so, it’s within easy reach of the rest of the continent.
The village of Praia da Luz is upmarket. While not as exclusive as the Golden Triangle’s Quinta do Lago or Vale do Lobo, Praia da Luz manages to retain a combination of originality and charm. A favorite among expats, property prices here have increased significantly over the last five years. Due to the town’s small urban area, new-build development is practically non-existent. For this reason, potential for capital growth is excellent.
Of course, most expats look for a sea view. Near the center and the beach, sea views can be difficult as height restrictions imposed in the last two decades mean that some properties are the same height as their neighbors in front. Today, properties with ocean views located in the center of the village tend to sell for between 200,000 and 350,000 euros (US$237,000 to US$414,740)—depending on the quality of the view and the age of the property.
One exception to the planning restriction exists… It’s a large, bulky (and, in fairness, unattractive) building constructed before planning restrictions were as strict. It’s in this building that I came across an interesting opportunity…
It’s a two-bed duplex apartment, priced at 165,000 euros (US$195,560). It has magnificent sea views and is within walking distance of all the town’s amenities. Just a five-minute stroll to the blue-flag beach, potential buyers are likely to overlook the less-than-elegant building. Reasonably furnished, with a history of successful holiday lettings in the same building, a two-bed unit at this price doesn’t tend to come around often.
The bottom line… Despite the global pandemic and many lockdowns, Portugal is as open for investment business as it ever was. The ability to access this market will depend on having the right partner and contacts on the ground. The broader the footprint of geographic coverage, the more likely that an interesting investment opportunity will arise.