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Market confidence has returned to the Algarve reso

18th April 2017: Report from Portugal Resident

Market confidence has returned to the Algarve resort market

Looking along the Algarve from east to west, one of the examples of investor commitment in the east Algarve is at Monte Rei, the luxury golf and country club resort community with the highest green fee and service levels in the Algarve.

Monte Rei is preparing to develop the Clubhouse Residences overlooking the 18th fairway and lake, and comprising 40 two- and three-bedroom apartments with a total of 8250m2 of building area.

Moving over to the Golden Triangle (Quinta do Lago, Vilamoura, Almancil), in 2016 Quinta do Lago saw continuing steady gains in both the volume of transactions and also average sales values moving significantly higher.

The strongest markets continued to be the UK and Ireland, in addition to a steady increase from Germany, Belgium and Dutch buyers. The Swiss and French markets seem to be the leading newcomers.

Quinta do Lago’s owning company is building a new development of 26 luxury apartment residences called Reserva, which overlook the lake, dunes and sea near the restaurant Casa do Lago. This project is to be sold off-plan and they quote: “We have an excellent level of interest already for this exclusive opportunity; these units will be finished early in 2019. We expect 2017 to be an excellent year, including the phased opening of our new sports complex.”

The first quarter of 2017 saw more Europeans driven by the NHR tax programme, as well as UK buyers who are exiting the south of France and Marbella for the same reason. Properties built in the last 10 years and costing up to €5 million are being acquired for demolition and a lack of new development stock and strong demand is also driving prices higher.

Vale do Lobo has also been investing in the resort’s centre and golf clubhouse area, as well as at the well-known Praça. Last year saw demand for plot and villa packages from the UK, Irish, Dutch, Swiss, French and Portuguese markets. Q1 2017 has resulted in strong enquiry levels and an increase in buyers with budgets for properties over €3,000,000. They stated: “There has also been an increase in purchasers looking for holiday homes up to €1,500,000.” Perhaps we will also see positive press news for the resort and its ownership in the near future.

Close by, Vilamoura World is now developing and selling the L’Orangerie II with 32 apartment units.. The new management team is formulating the development’s marketing strategy and should soon be launching a new project – the Uptown development located in the northwest corner of the estate with 280 residential houses and 50 touristic apartments.

Moving inland, construction of the Ombria golf, hotel and spa project is underway with tens of millions of euros being invested in the construction of the golf course, spa, hotel and residences, scheduled to be opening in 2019. Sales of the 65 Viceroy-branded residences, comprising studio, one-bedroom and two-bedroom apartments and 12 villas, should commence in autumn 2017.

In the central Algarve, the strength in the demand for luxury-branded rental apartments marketed during construction resulted in Pine Cliffs selling out of the Ocean Suite development at record sales values in Q3 of 2016. This project saw strong demand from non-European Golden Visa buyers as well as existing owners at Pine Cliffs.

Heading towards Albufeira, the proposed W hotel and residences project above the Evaristo beach is also eagerly awaited. Further west, the Oceânico Group saw strong sales in 2016 from a diverse nationality profile including Poland, Italy, Angola and France. Prices at the Belmar resort near Lagos have increased by up to 15% since the 2015 launch and a few units remain at Baía da Luz, in Praia da Luz.

Oceânico commented on the volume of walk-in and rental guest interest at the Amendoeira Golf Resort near Alcantarilha, which translated into approximately 30 transactions in 2016, including a handful of the large frontline villas facing the golf course. Around 50% of demand at Amendoeira was for the two-bedroom apartments, priced very attractively at €260,000 and producing a net yield of over 5% due to strong rental demand from golf groups, sports teams and holidaymakers in the summer. There have also been some Golden Visa buyers.

The Carvoeiro area, a longstanding northern European favourite, is also witnessing strong investment with Carvoeiro Club co-owner Erik de Vlieger and his partners continuing to invest in the market, including buying a development site further west on Praia da Ingrina to commence in May 2017. They have also been investing in their existing resorts Vila Gaivota and Quinta do Paraíso, as well as Carvoeiro Clube de Ténis. Carvoeiro with its mature residential areas, intimate scale and restaurant and bar offer, complemented by the wonderful local beaches, is enjoying significant NHR-related demand led by French buyers along with Scandinavians and other northern European markets.

Lagos acts as a destination anchor for the western Algarve where the market is buoyant with strong off-plan demand particularly from the French and Scandinavian markets for new developments with 30-40 units. The astute market positioning and diverse product offering of Boavista golf resort and spa continues to attract the UK and northern European markets. They report the resort’s Swedish and French communities are growing and the rental pool increasingly successful. To close on a very positive note, there is also rumour of a substantial investment in a western Algarve golf resort, from a US investment fund. This would bring much-needed development stock to the market and is a clear sign of confidence in the long-term future of the Algarve resort development market.

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