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PORTUGAL
MARKET VIEW
The European
football championship – after the Olympics and the World
Cup – is one of the largest sporting events in the world.
Host nations spend millions and often reap huge financial
rewards. In Portugal the central bank estimates an increase
of 0.2 per cent to GDP growth in 2004 as a result of extra
tourist revenues from the million plus visiting football fans.
Some may return as tourists.
Others
may return to peruse the property market, and it has even
been suggested that a mini property boom could result. Not
everyone agrees. Alexander Kraft at Sothbey’s International
acknowledges that there may be some increased interest in
the property market, but he does not expect a boom at any
level.
Anyone who does
return to view property with the aim moving to Portugal or
buying a holiday home will find the overall economy in expansion
mode. But the message is mixed. On the one hand, the unemployment
rate of 6.4 per cent is about half that of Spain. On the other,
Eurostat figures put June inflation at 3.7 per cent, up from
2.4 per cent in May. The country is tentatively emerging from
a major economic downturn, so much so that Brussels had to
issue a warning for breach of the EU ‘growth and stability
pact’. Although the Portuguese economy contracted by
1.3 per cent last year, PricewaterhouseCoopers forcasts 1.25
per cent growth over this year and 2.25 per cent in 2005.
Despite this mixed economic picture, Portugal’s residential
property sector has been strong. But like other buoyant European
markets, property has slowed slightly. Any dampening of Portugal’s
international property profile has been largely due to the
new legislation that heavily penalises those who use offshore
companies to buy property. Even so, property nowadays is thriving
in the most sought after areas by international buyers - first
in the Algarve, followed by Lisbon and its environs.
The most popular
areas on the Algarve are Quinta do Lago, Vale do Lobo, Pinheirros
Altos, Vilamoura and the immediate neighbourhoods. But with
the opening up of the new motorway, the Western Algarve is
in the ascendancy. Prices have increased by 25 to 50 per cent
on the Algarve over the past three years according to Sotheby’s.
Over the last five-year period, Hamptons International research
indicates that house prices in the region have doubled.
Figures from Sotheby’s
suggest a 15 to 40 per cent increase over the past three years
for the greater Lisbon area. Some of the most sought after
places in and around the capital are the seaside towns of
Esoril and Cacais on the Lisbon coast as well as Restelo and
central Lisbon. Praia D’El Rey is also gaining in popularity
for the international buyer. Away from the Algarve and the
Lisbon area, pockets of properties – ranging from ramshackle
to regal – increasingly attract foreign buyers.
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