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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.”

For investors looking to achieve the best return for their outlay, buying a property in Portugal is more accessible than buying a property in the UK, says Stephen Anderson, Managing Director of Portugal based property investment company, Infinito Real.

“It’s common knowledge that buying a property in the UK is not as easy as it once was.  Part of the issue is funding of any purchase and, in particular, for investment purchases the selection of mortgages are few and far between and, when they are available, the criteria is very stringent.” says Stephen.

“When purchasing in Portugal, you don’t have to specify the purpose of the purchase.  Mortgage options are straight forward with the choice of either an interest only or capital repayment loan, although an interest only loan is harder to obtain for higher loan to value mortgages.  The banks now look seriously at the income of each client and, if there is a high risk, will in most cases refuse the lending or lower the amount they will lend and exclude the interest only period.”

Examples of costs, income and expected profit are illustrated with figures supplied from Infinito Real using the average cost of a two bedroom apartment at Vilamoura Golf Course at €228,000 and incurring acquisition costs of €15,400.40.

Option 1 – 100% Finance, 3% Interest rate, 30 year term

Repayment monthly instalments – €961.00

Interest only monthly instalments – €570.00
Option 2 – 70% Finance, 2% Interest rate, 30 year term

Repayment monthly instalments – €589.91

Interest only monthly instalments – €266.00

Running costs will amount to roughly €3,000 per annum assuming the property is rented.

Expected Income (net of 15% commission charge):

High Season rental – 8 weeks x €800 = €6,400

Golf Mid Season rental – 8 weeks x €640= €5,120

Winter Rental – Potential for long term winter lets for 3 or 6 months – €650 per month =€1950 / €3900

Total Rental Income Potential – €15420.

Net profit per year

Option 1

(Repayment) Total running costs = €14,532                Profit – €888.00

(Interest only) Total running costs = €9,840              Profit – €5,580

Option 2

(Repayment) Total running costs = €10,078.92        Profit – €5341.80

(Interest only) Total running costs = €6,192              Profit – €9,228.00

Stephen concludes, “these options illustrate the main difference in how a lot of buyers perceive property investment.   Although many would be concerned that the high levels of finance in option 1 leave little room for a bad rental year, the benefit is that a relatively small amount of capital outlay is required. Assuming the property increase in value each year the investment return is very high.

The second option is a much safer option, and has plenty of room for a bad rental year.  In fact the peak rental periods alone would cover the costs, so the operating expenses are more often than not going to be completely covered. “

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Date of Issue:  17^th September 2010

Infinito Real gears up for their busiest month of the year

Infinito Real are preparing themselves for what has historically been their busiest month of the year for enquiries and purchases.  For the past decade, the Portugal based group of property investors have seen a substantial increase in the number of enquires received from potential purchasers, both for private holiday homes and investment properties, during the month of October.

Managing Director, Stephen Anderson, knows the pattern well and is already experiencing an increase in clients booking appointments, and viewing trips of around 300% in the last six weeks which, from past experience, will increase further during the ensuing month. With viewing trips becoming more popular again, there has been a rush to book, and we have confirmed trips every weekend up until December, with numbers likely to double in the coming months.  The reasoning is simple he explains, “a lot of people have spent the summer abroad and returned home to a cold UK with the idea of having a second home in the sun.  The summer attracts scores of tourists to Portugal, a great many looking at property so, during this period, the prices are high as owners are optimistic and there is no real rush for them to sell with the rent ability factor high and an income almost guaranteed.  Once the peak season is over there are less tourists and, subsequently, less rental opportunities and this is the time owners are keen to offload their property and may be more willing to drop their price or accept an offer in order to secure a sale before winter arrives.  With flights and hotel accommodation cheaper, October is the perfect time for a potential purchaser to look around to see what is available.  The same principles apply whether buying a holiday home for private use or an investor looking for a good return on their outlay.”

For those looking for a market with sustainable and strong demand, there are lots of reasons to buy in Portugal.  Stephen Anderson names a few of them, “Portugal is always among the top 20 most visited destinations in the world and is particularly popular with Brits.  The high volumes of golfers who take breaks in the Algarve represent an affluent and increasing base upon which an investor could make a property investment purchase decision and could draw an income.  Access is easy with numerous low cost airlines flying in and out, including Easyjet, Ryanair and Monarch and flight routes are continuously being expanded which, in turn, will increase tourism traffic and business flow which can only be good news for anyone thinking about buying a Portuguese property.  One of the most important considerations for Brits is that the people of Portugal are particularly friendly and most of them speak English so conducting business and holidaying is easy.”

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Date of Issue: 12^th July 2010

Infinito Real warns potential buyers on the reality of high loan-to-value mortgages

Infinito Real, a Portugal based group of property investors, has seen a growing number of clients searching for mortgage deals that involve putting little or no money down in order to purchase a property.  Although these types of deals have always been difficult to obtain, Stephen Anderson, Managing Director of Infinito Real, confirms that it has been possible and could potentially still be, for now. Looking at the best deals to be had now, Stephen offers his advice on potential changes in the Portuguese mortgage system and costings in the near future.

The premise behind 100 percent financed mortgages is simple, the property is valued at 20% or more above the purchase price allowing an 80% loan-to-value (LTV) mortgage to be taken out,  thereby eliminating any need for the buyer to part with any money at all, other than buying costs. According to Anderson, the reason these deals have been difficult to obtain is not because of the property itself but the actual client purchasing.

He comments: “Typically these high LTV mortgages have been constrained to borrowers that have, and can prove, a high income. For example to obtain a €200,000 mortgage on a 100% finance deal, you should look to be able to prove around €3,000 NET income per month (between both applicants if jointly purchased), otherwise the banks will more than likely decline the application. Currently, if you can meet this criteria then there is still a good chance of being able to still purchase in this manner but only for the time being.”

However, Anderson does warn that banks are becoming more cautious and much more stringent with their criteria for lending due to rising interest rates. “On high LTV mortgages, the interest rate on offer is significantly higher than that of a 70%, or even 75% mortgage, and the bank has all the risk. Buyers can walk away without any financial loss and the banks are stuck with the property. We have seen this happen in huge numbers in Spain and it has cost the banking institutes heavily. We saw an increase in rates at the start of June and with predicted increases due shortly lending could become even tighter, which is no bad thing as there are still some great deals to be had.”

Anderson continues: “For the qualifying buyer there are still some fantastic mortgage products available. With rises that lie ahead, the chances of looking in a sub 3% mortgage rate will be out of reach by the end of next year. Therefore, I would advise anyone who can buy now to do so as this time next year it would be prudent to expect rates of around 5% again. Interest rates are fixed for the term of the mortgage, so if you can get a low rate now it will remain so for the lifetime of the loan, the only increases will come from the Euribor which will not be heavily increased for some time to come. Currently the best rates available for 80% LTV based on valuation (allowing for 100% of purchase price) is around 4% (3% spread + Euribor, currently 0.7%), which is almost double what it was at the start of the year. Compare that with the rate for a 70% or 75% LTV mortgage at 2.6% (1.9% spread + Euribor) and there is a large difference. Also, the options available for the lower LTV % are much more cost effective and less troublesome to acquire.”

Finally, Anderson advises that to be assured of getting the property you’re looking for, you should expect to have to find at least 20% of the purchasing price, if you have a good financial history demonstrated over the last six months bank statements.

ENDS

Date of Issue:  12^th May 2010

Infinito Real reports a revitalisation of the Portugal property market but popularity in the areas and types of property being purchased have changed direction

Infinito Real, a Portugal based group of property investors, have released their latest statistics showing that, whilst Portugal has realised a revitalisation of the property market in general with average sales prices for the first quarter of 2010 increasing by 49% year on year, popularity in the areas and types of property being purchased have changed direction.

The latest report from the company demonstrates that, during 2009, the split in popularity in areas for purchase was:  55% East Algarve, 22% Central Algarve, 11% Western Algarve, 11% Silver Coast.  However, for the first quarter of 2010, there has been a swing in popularity with 50% of purchasers choosing Western Algarve, 28% Central Algarve, 14% Eastern Algarve and 7% Silver Coast.

It could be argued that areas such as Carveoiro, Porches, Alvor and Logos have always been popular and are frequented by tourists year after year, which brings a level of comfort to buyers as they know the area is well liked.  However, Stephen Anderson, Managing Director of Infinito Real believes there are further reasons commenting, “the more developed and touristic west coast offers a safer rental potential and the addition of the Formula 1 track and, potentially, a new airport in Portimao, has helped swing clients in this direction.  In addition, much of the current available property in the Eastern Algarve is not yet finished and the smaller areas have been heavily developed without the infrastructure to match.”

Whilst Infinito Real report that clients are happy to spend more for larger or better quality properties, with villa sales becoming more regular whilst the market is stable and the prices remain competitive, the highly priced Vilamoura properties are not currently attracting buyers, with little movement on prices.  “The same properties have been for sale for quite some time now and we would recommend only purchasing re-sales in this area at present” advises Stephen Anderson.  “Most developers are totally unrealistic with their pricing.  For example, a new build in this area would commonly market at between €300,000 and up to €500,000 for a two bedroom apartment whereas a good two bedroom re-sale apartment can be found for around €200,000.  If you are looking to buy in this area, be aware of what else is for sale in the development.  If there are lots of units available negotiate a good price or walk away – it’s as simple as that.”

ENDS

For further information, please contact:

Stephen Anderson, Managing Director, Infinito Real on +351 289 313 325, www.portugalvillasandapartments.net

Helen Evison, Infinito Real PR on 01276 62201 / 07979537335

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.

Date of Issue:  March 2010

Infinito Real, a Portugal based company, believe the recession has brought about a market where the “rich get richer”

Infinito Real, a Portugal based company started and run by property investors, have seen a vast change in the type of client they are getting in comparison to last year and believe this “high earning, big investment” trend will continue to grow up to the end of the year.  So have continuing low interest rates and reduced property prices only benefited a certain clientele?

Last year, the majority of customers for Infinito Real were what one would deem as “lifestyle” clients – someone who has saved to purchase a property for themselves to use for a prolonged period of time, or for a permanent move. However, the demographic has changed rapidly over the last year and 2010 has brought about a high influx of new clients who are in a much higher income bracket.  With more disposable funds, these clients are looking for investment properties that can double as holiday homes.

As the climate continues to stabilise those who had not been looking into property investment before realise the time to capitalise is now. With mortgage rates particularly favourable for those clients with wealth, and therefore low risk, and the prestige of owning a property in a luxury area such as the Algarve, the appeal is much higher than leaving it in the bank and perhaps making a 3% return.

Stephen Anderson, Managing Director of Infinito Real comments, “The ‘boom’ of 2007 was a time of property madness, where there was a frenzy to buy as much as possible which ultimately left many in a financial nightmare. In those days the idea of buying abroad was still relatively new and the implications not always fully understood. Nowadays buyers are much more savvy, taking elements such as location and type of property into consideration. Generally speaking the two bedroom, two bathroom apartment is the bench mark for the majority of buyers, with at least a swimming pool on site and only a short drive to the beach. These types of properties in high yield rental areas are extremely popular, which when coupled with a large discount can bring in rental returns in excess of 10% per annum.”

The key for those “lifestyle” buyers who are still looking to fulfil a lifetime ambition of owning a property in Portugal is to remember the benefits of a Portuguese mortgage are still very appealing.  Stephen continues “Generally my advice is, if you are interested in a property discuss the types of loans available and the associated repayments with a mortgage brokerage. Set yourself a monthly budget that you are comfortable with and see how much you can borrow without over stretching.  Certain areas will yield a better return if you “need” to make an income from the property so look for a bargain that will put you in a strong position to sell at a good price in the future, lowering the risk of becoming stuck with a property you can’t sell on.”

On the recent Forbes rich list, the average increase across the top earners in the world has gone up by $500 million, the time to invest is when the market hits the bottom, and right now is that time!

Figures from Infinito Real, a Portugal based company, see enquiries double from January 2009 to January 2010

Infinito Real, a Portugal based company started and run by property investors, have had a busy start to 2010.  Their volume of enquiries has increased on average 17% month on month from October 2009 to January 2010 and January enquiries hit a high of just over 500, compared to half of that in 2009.

The appeal of Portugal as a destination to invest or buy a holiday home has always been popular without becoming overcrowded like neighbouring Spain. With the end of the recession in sight, owing to the UK market showing steady increases for the last 7 months, the Portuguese property market has seen a shift in buyer attitude with investors wanting to make a purchase which they like and not just for profit purposes.  Stephen Anderson, Managing Director of Infinito Real believes the recent “boom” in business to the Portuguese property market can be attributed to a number of factors.

Stephen comments “The start of 2010 has seen more positive press coverage for the property industry as a whole and with less focus on the global recession, confidence to invest has started to increase.  We have seen that a number of buyers who postponed their plans in 2009 are now ready to move which has created a backlog of buyers wanting to move as soon as possible. The small increase in the exchange rate from £1 – €1 throughout most of 2009, up to £1 – €1.15 has provided a 15% “discount” from previous months and has had a profound effect.”

A further notable change for Infinito Real has been the vast reduction in the number of distressed sales, a forced sale with a discount of at least 20% from the original price. Even though distressed sales have always been available, the economic downturn saw a considerable increase of people in financial difficulty including both individual sellers and also larger developers.

Stephen continues “Ironically, 2009 was the best possible time to buy a property in Portugal and the worst time to sell.  At the peak of the recession we had in the region of 150 “distressed sale” properties and with high appeal to the majority of investors they sold very quickly.  We currently have less than 10 and with the restabilising of the market place I think it is unlikely we will see any further bouts of desperation from developers slashing prices.”

After working in the real estate industry for 25 years, Infinito Real has one of the largest portfolios of property for sale in Portugal.  They offer services in financial advice including mortgage and taxation, interior design and legal and contractual advice, all learnt from their own experience of buying property.