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property investment and tourism on Silver Coast

From: "Anna Maria Braden"
Date: Sat, 13 Jun 2009 20:57:20 +0100

Dear David,

I've just found your blog and it's got me interested in the
Silver Coast as somewhere to invest some funds in property.
Leaving money in the bank here in the UK seems pointless, as
they are not giving us any kind of return - and with the way
they are printing money now, it will soon be worthless unless we
put it into something.

Is the housing market in Portugal suffering on account of the
recession and are there any good property bargains to be had?

Is a purchase on the Silver Coast likely to be a good investment
if the area develops tourism the way the Algarve did? What do
you think the likelihood is, and how soon do you think this will

Thanks for sharing your opinions, and best regards,




Hello Anna,

You asked whether the housing market in Portugal is suffering on
account of the recession. Generally I'd say it's slowed down a
little, especially in the domestic housing market. So much for
my opinion, now on to some hard data from the Instituto Nacional
de Estatistica (INE)

House prices in Portugal fell 4.8% during the year to September
2008 and new building starts are slowing in 2009. (Building
permits and completed buildings trend - 1st Quarter 2009)

What is certainly true is that we've got less far to fall. The
worse may already be over as the market here has been much more
more sensible and finance not so easy to get. The silly rises in
most of Europe did not happen in Portugal. From 2001 to 2006,
average property prices rose in Spain by 100%, but in Portugal
that was a more realistic 17%

The only places in Europe where property is cheaper per square
metre are Bulgaria, Hungary, Turkey, Moldova and Macedonia. And
in Spain prices per square metre are double the prices here,
which may explain why they seem to have further to fall. In
France prices are on average four times as much and in the UK
they are just plain silly (second only to Monaco!).
Source Global Property Guide - square meter prices

The estate agents and the off plan golf developments were both
selling properties like hot cakes until recently on the Silver
Coast. But now the cakes are only warm.

It's pretty slow almost everywhere in the world at the moment as
far as I can tell. Some parts of the world are worse than
others. In Latvia prices have fallen 45% since the start of
2008. More than a third down in Dubai. Down 20% in Britain and in the
US prices have fallen by about 30% since 2006.

There are some bright spots, as of March 2009 the Global
Property Guide says that in Israel house prices have gone up by
6% in the last year. But many in Europe will not feel as safe
investing there. Parts of Africa and East Asia are also not
doing badly.

You also asked whether there any good property bargains to be
had here.

Yes. But mostly in the standard domestic property market, in
areas that would not usually interest foreign buyers. An
apartment in a larger town or city like Caldas da Rainha is
certainly a lot cheaper now than it was a year or two ago.

The investment property market is much more resilient, and
bargains there are to be found, if you dig for them, but they
are going to be fewer and harder to find. I've heard estate
agents grumble that sellers generally are not being realistic
and reducing their prices, and that is going to be even more
true in the higher priced coastal property which was bought as
an investment by foreign owners.

Anyone with money is going to hold on and wait. But I'd say that
there are a few people who may have over extended themselves,
and if the market doesn't pick up they may take a "silly" offer
if they need to make the payments this coming winter.

These might be any small builders who are building one or two
properties on bank finance. It might also include foreign buyers
who bought speculatively, possibly on foreign bank finance.
Those are the two kinds of situation I've heard tell of when
chatting to my bank manager, solicitor, and a few estate agents.

No harm in making a silly offer on anything you like.

You asked whether the Silver Coast is likely to be a good
investment if the area develops tourism the way the Algarve did?

Yes. and fortunately the regional development planners have a
policy of not making the same mistakes as have been made in some
areas of the Algarve. But the Silver Coast has already started
following the Algarve in developing tourism. The Regiao Oeste
has many projects underway which have the central government
"Project of National Interest (PIN) status.

It has been moving more and more in the tourism direction
consistently since we bought here in 1986. In this Regiao Oeste
it has grown with a lot more class than parts of the Algarve,
and around the Lagoa do Obidos, due to planning policy, it has
done so without the negative elements of "Costa" development.
(high rise not permitted around the lagoon!)

The pace has certainly picked up in recent years due to
investment in the infrastructure and the high quality golf
developments around the lagoon currently being completed and
more being built. You'll find several posts in the "Investment"
and "Infrastructure" sections that explain the phenomenal growth
potential this area has.

Feel free to ask more of your questions here.


Villa Apartment Rental with Pool and Tennis - Silver Coast.



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