Date of Issue: 31^st October 2011

Top five mistakes British buyers make when purchasing an overseas property

With the summer over, and the UK bracing themselves for yet another freezing winter, now is the time when UK buyers who have considered making a foreign property purchase, start to look at making this a reality, according to property expert and Managing Director of Infinito Real, Stephen Anderson.  He believes there are some common, costly and time-consuming mistakes which many novice investors make and offers advice on how to avoid them.  Stephen comments:

• “Budget – Before starting to look at properties, either on the internet or by arranging a viewing, set a budget and know how much you can afford. Too many times investors come looking for their dream property but haven’t looked to see if the amount they can afford matches that of their expectations, and this often leaves them disappointed.  There is more than just the cost of the property, so consider all fees, mortgage arrangements and furnishings as part of this budget so you do not use your entire budget on the property leaving you with a hefty bill for all the extras.
• Location – Consider where you want your property to be located. If you want something in the middle of nowhere look at the ramifications of this in accordance with the purpose of your purchase. For example, if the property is for your own use, a holiday retreat for some peace and quiet, no problem. However, if you are looking for a buy-to-let investment, you can’t expect to cover 20 weeks of rental throughout the summer if it is not near local facilities.

Many people feel that being near an airport is an important factor but in the main tourist spots of Portugal, you are never more than an hour from an airport, Faro for the Algarve and Lisbon for the Silver Coast.

• Property Profile – Make a list of priorities in order of importance i.e private swimming pool, near to the beach, strong rental opportunities, sea views, child facilities, and then consider what you would be prepared to sacrifice. Without an unlimited budget, it’s rare you will find everything you desire, so there has to be some compromise. Highest on the ‘wish list’ is usually sea views, but this is something which can bump the cost up quite significantly. This is especially true in somewhere like the Algarve where there is only about 150km of coast line and the surrounding land is very flat so frontline properties are more scarce, and therefore come with a hefty price tag.
• Research – Look at the competition and know your market. Make sure you are paying the market value and not what you have been told is the market value. Always visit a property before making a purchase and do not rely on an advertisement ‘selling the dream’.  It has to be your dream and suited to your individual requirements and this can only be judged by seeing it yourself.
• The Future – Consider re-selling as an important factor. Many buyers only look at the immediate purchase, but even if you have no plans to re-sell in the near future, this should always be considered as circumstances can change. Lots of people who bought in ‘the boom’ were lured to buying new properties which looked great, but were built on estates with numerous other properties exactly the same. This has left them with much competition and a lack of rental demand, therefore limiting the properties ‘saleability’ going forward.”

Stephen concludes “the most important thing to remember is buying a foreign property, in Portugal by example, is very different to buying a property in the UK.  It is essential to do your research, know the area and talk to other people who have bought in the same region to get advice. Then making a purchase can lead to a sustainable and profitable investment.”

ENDS

Date of Issue: 21^st September 2011

Green shoots of recovery from the Algarve

Data from the latest RICS Survey revealed a slight improvement in activity and sentiment in the Portuguese property market, and reports from Portugal’s airports have recorded the highest number of passengers in over ten years as tourism was boosted over the summer.  Stephen Anderson, Managing Director of Portugal property experts Infinito Real, says that the coming weeks will be significant in determining exactly whether the summer has fared as successful as many had hoped, but says it has already helped generate greater interest.

It has been suggested that by 2012, Portugal will be making its way out of the slump and by 2015 will be completely recovered and seeing growth once more. Stephen Anderson says, “Whilst suggesting that growth could be some three years away sounds daunting, this is probably a realistic target for nationwide recovery.”

However, areas such as the Algarve are already leading the way in turning the tables as property prices have fallen the least in this region, according to the RICS survey. It is hoped that a bumper summer of tourists, who flocked to Portugal for a cheap holiday amid the economic crises, will have generated fresh appeal to holidaymakers looking for a second property. Stephen adds, “We have seen a marked improvement of interest in purchasing property in Portugal off the back of a busy summer. The greatest problem for us at the moment is finance and therefore cash buyers really are the purchasers in the driving seat. With that said, agents must carefully manage the expectations of investors who still believe that asking prices are just a figure to be heavily negotiated – discounts of up to twenty and thirty percent are simply not available, as these prices are already discounted by at least this amount, although some movement can be negotiated. The next few weeks will determine whether the summer has helped the market turn a corner.”

Unlike Spain and some other countries, oversupply is not an issue in Portugal and as a result, there is not the number of repossessions that many eager investors believe. “Those repossessions that are available often have mortgages on them for more than what you would be able to buy the property for, and therefore the banks still have to get back that amount, which blocks them from being able to offer any greater discount” says Stephen.

He concludes, “Significantly once the banks do start to lend again, the Algarve will be best positioned for a quick recovery, which provides a window for investors to make the most of property prices at the lowest they are likely to be, and a light at the end of the tunnel for those hoping to make a move in the future.”

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Date of Issue: July 2011

The introduction of low-cost airfares put countries such as Portugal, which relies on its tourism trade, under increasing pressure as The Americas and Far East were made more accessible to the masses.  However, rising fuel costs mean long-haul flights are once again reserved for the more affluent, providing the likes of Portugal an opportunity to be put back on the map. With numerous planned events and funded improvements being made to encourage and cater for the increased tourism in Portugal this summer, Infinito Real believe this is a great time for property investors.

The coastal hot spots such as Vilamoura attract the greatest number of tourists with the lure of sun, sand, sea and numerous leisure options, such as great golf courses and wonderful water-sport activities.  With August typically seeing more than 30,000 people a day in this town, this year an investment of around €1.3 million has been used to improve the area by enlarging pedestrian areas and creating a cycle path which extends for 1.5 kilometres, including the ring that surrounds the marina and the majority of Vilamoura hotels.

Stephen Anderson, Managing Director of Infinito Real says “Next year, there are plans to upgrade the marina with a new set of buildings containing shops and restaurants. The marina will also have more space for larger boats to moor, adding to the existing 1,000 spaces that make it the largest marina in Portugal. They have already started work on this by decking the whole area around the marina allowing for a capacity of 2,000 people to sit overlooking the water.”

According to Anderson, Vilamoura has become increasingly popular with the sophisticated urban crowd who are drawn by the regular themed parties at the spectacular PuroBeach which offers a relaxed atmosphere in opulent surrounds during the day, and a place to party at night with top DJs and live performances.  “As property prices have dropped, Vilamoura has become more accessible to those looking to make a purchase and these improvements and increased interest as a holiday ‘hot-spot’, are great news for investors whose assets will only appreciate over time as the improvements continue to take shape.”

Summer events which are taking place in Portugal and will be big attractions for tourists are the Festival Med in Loulé which has already taken place in June. It is one of the largest world music celebrations in Portugal and filled the calçada streets of the city center with music originating from Morocco and various southern European countries, such as Spain, Italy, Greece and Portugal.   Stephen comments “other important events are the annual Festival do Marisco and the International Sand Sculpture Festival.”

“The Festival do Marisco is a paradise for seafood lovers and an opportunity to bring locals and visitors together to see Portuguese culture at its best.”  Due to be held in August in the town of Olhão, just five kilometers from Faro, the festival is one of the most important gastronomic events in the Algarve calendar.  “Visitors have the chance to sample some of the local delicacies with a wide range of seafood on offer from shrimp to shellfish, as well as the favourite traditional Portuguese dish of Cataplana, consisting of clams, mussels, bacon, chouriço, garlic, onions and olive oil.”

The International Sand Sculpture Festival held in Pêra, Algarveis considered the largest sand sculpture festival in the world, people travel from all over to see experts in this art give shape to thirty-five thousand tons of sand.

Stephen concludes “many countries are struggling in these austere times but the trade of national and international tourism, which is predicted to be high this summer, is vitally important to the Portuguese economy.  It is important that local businesses and the government take heed of this and make the most of the opportunity to show how much Portugal has to offer so we can attract new and loyal visitors and investors, which could lead the country back to financial health”

 
ENDS

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Date of Issue: 14^th June 2011

Infinito Real of Portugal say bumper summer could be catalyst property market needs

Despite the wider economic doom and gloom, Portugal based agent Infinito Real are gearing up for a bumper summer as reports based on current data from hotel chains and airline operators suggest holiday bookings are expected to be comparable to pre-crisis figures seen in 2007. With cash buyers being the main investors in property according to Infinito Real, Managing Director, Stephen Anderson believes the increased tourism could be the catalyst needed to revive the market.

According to The Portugal News, last month there was a reported 45.2% year on year rise in passengers coming to the Algarve, a destination which is also proving to be a major summer hot-spot for the Brazilians this year as well as the normal EU countries. Stephen Anderson says “Demand for rental property this summer is already high, and historically those renting have been interested in buying something similar for themselves. With the prices the lowest they’ve been for years it’s an opportune time and could be pivotal in kick-starting the property market again.”

Infinito Real has also recorded approximately 15% more buyers year on year so far in 2011. Anderson comments “Buyers are starting to turn a corner and realise that prices are unlikely to fall further and that the time to buy is now for the best bargains.”  However, the decline in the availability of finance has made the completion of these sales increasingly difficult, and the latter months have seen a huge rise in cash buyers jumping in before the summer.  They are able to obtain even better prices as there is no need for a lengthy completion for the developer.

Before this year, the ratio of mortgage to cash buyers was around 75% to 25%, and now the opposite is true with 25% looking for a mortgage and 75% of purchasers being cash buyers. Anderson comments, “Vendors who may have been holding off selling during the downturn should be looking at this as the perfect marketing opportunity. Not only can they make the most of the high rent ability factor during the summer months which is almost guaranteed due to the influx of tourists, but they should also use the greater number and more diverse range of viewers opting to holiday in Portugal as an opening to ‘show-case’ their property.  It’s a chance to sell a ‘lifestyle’ which many experience whilst on holiday, and subsequently choose to buy into on their return”

According to Infinito Real, whilst those who already have access to funds to make a purchase are able to buy property and purchase quickly, others relying on finance have ‘hit a brick wall’ and this has hindered both buyers and sellers. “We would hope that after June, now that the bailout has been approved and funds are being prepared to be released, the restrictive limits on non-resident mortgages will ease, making lending more freely available and giving others looking to purchase homes in Portugal the ability to do so.”
ENDS

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Date of Issue: 15^th April 2011

Portugal bail-out is good news says property agent Infinito Real

The latest reports on Portugal’s financial situation may have offered little confidence to UK investors having read how a bail-out request is expected to be discussed by EU finance ministers. However, the bail-out funding, set to assist present difficulties, will in fact be “positive for the country” says Stephen Anderson, Managing Director of Portugal based property agent Infinito Real. “Portugal has been an impoverished country for generations so the fact that the EU is now taking notice of this is, in many ways, a good thing.”

Despite the request, Stephen agrees with fellow industry expert Jorge Moniz, of Banco Espirito Santo, who has claimed to believe that the financial aid will have no knock-on effect on the country’s real estate sector.

Stephen comments: “Portugal is a recession hit country, but this does not mean that we loose our tourism appeal, a fact verified by a record number of visitors last year, and this year looks set to be no different. The beaches are still fantastic, and we are seeing more airlines adding new routes to Portugal, which helps to keep tourism unaffected. If anything, there is now more rental potential for property owners as the Portuguese, who may have been looking to buy, are waiting and are therefore looking to rent, thus increasing owners’ turnover.

In terms of property values, although prices have dropped, reports of 20% deceases this year are simply not a true reflection. Prices are no longer falling, and the news of a bail-out has not jeopardised stabilising prices. Therefore, for investors, Portugal offers sound investment opportunities. Many clients have talked about it being a great time to buy in the UK and Ireland whilst suggesting differently for Portugal. With both the UK and Ireland experiencing their own financial problems this makes no sense as our situations are very similar.

The only one affect is the mortgage rates available for non resident buyers. However, the rate is still much better than the average UK or Irish rate, and you can get loans between 3-4%.”

Reports have stated that low economic growth and high wages have led to the country needing bailing out. Stephen says that “for anyone wanting a holiday home or retirement home in Portugal, nothing much has changed.”

He continues: “Portugal is an incredibly popular place and will always remain so. Once the bail-out is introduced and the terms set then it will be yesterday’s news, and by next year prices will more than likely start increasing again. With a recent report that 2010 was a record year for property sales in Portugal, with 150,000 sold, there is nothing to suggest this will make things any worse than the previous two years of economic crisis, it’s more than likely affecting other EU countries more than the overseas property buyers.”

ENDS

Editors Notes

Infinito Real, a Portugal based company, is a group of property investors that over the years have formed a partnership to offer services to the consumer.  The idea is that the company provides the help and advice on mortgages and taxation, interior design and legal and contractual advice that was not available when they bought their first properties.

Complying with the recently introduced legislation in Portugal regarding real estate companies, Infinito Real’s licences are all up to date and their partnership network is made up only of registered companies. A key benefit to dealing with a real estate agent who complies with this legal requirement provides indemnity insurance for you as a consumer should anything unexpected happen.

AS BANK OF PORTUGAL REPORT RECORD YEAR FOR TOURISM REVENUE, INFINITO REAL REVIEW 2010 AND GIVE THEIR VIEWS FOR THE FORTHCOMING NEW YEAR

Despite the economic crisis, the Bank of Portugal has this week revealed that the tourism industry was responsible for generating revenue of almost six billion Euros in the first nine months of the year, well above numbers registered in 2009 or even 2008, which was considered the best year ever for tourism in Portugal. The past twelve months has not been as bad as the media suggests, comments Stephen Anderson, Managing Director of the Portugal based property group of property investors, Infinito Real.

“Going into 2010, the market was filled with uncertainty which was evident from the numbers of would be buyers who either postponed their viewing trips or who just came over to get a feel for what was happening without any firm decision to commit to a purchase.  Many of those that did venture over were looking to capitalise on distressed sellers wishing to dispose of their overseas property and willing to make a loss in the process.  With the Spanish property market going into freefall, many assumed that the reductions experienced in Spain would apply in Portugal.  Expectations were completely unrealistic, with clients looking for a 50% discount on sea front villas.  For us as a group, the first part of the year was unproductive.

Of course, there are still deals to be had, but this is a small area and anything with a unique location will hold its value.  Most reductions are in the main stream apartments and villas, the ones with investment potential and the occasional one off villa that, although may be very nice, is not in one of those never again locations.

The latter half of the year saw an upturn in clients looking seriously but they had to contend with an increase in mortgage rates and a tightening of the lending criteria, which are huge factors to take into account when buying abroad.”

Stephen feels that things will not change dramatically in 2011, explaining, “It’s likely we will see more of the same, albeit with less drastic price reductions, as those most hit by the economic crisis have either sold up or walked away.  Although prices will still be negotiable, there will be a more restrictive mortgage process hindering some of the previously available high loan to value deals.  Borrowers will also find that mortgage rates will have almost doubled in twelve months.

We would expect to see an upturn in the number of clients making inspection visits and, for the New Year, we will be offering special deals for those wishing to make viewings, starting at £49 per person.  The first few months will perhaps be the best time to look as the talk of a Portuguese bail out, although nowhere near the levels of the Irish or Greek one, will be enough to delay some people’s decision making, offering some leverage when it comes to making a deal.  This is unlikely to drastically affect property prices, although it will make financing a little more expensive as the rate will increase again, as well as some nominal increases in the stamp duty and IVA taxes.”

A boost in cheap flights to The Algarve, and Ryannair taking up a permanent presence in Faro airport have made it more accessible to tourists and placed Portugal on Europe’s and the world’s route of quality destinations.  This will help those letting out their properties, says Stephen, “Although rental levels have been lower this year, the occupancy has been relatively unaffected , meaning property owners have been able to cover costs.  This will likely remain the same next year with perhaps an extra few weeks rental due to the extra flights now available.”