Bank of Portugal Reports Tourism Revenue Gains

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(LISBON, PORTUGAL) -- Despite the economic crisis, the Bank of Portugal has 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 12 months has not been as bad as the media suggests, according to 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," Anderson added. "Many of those that did venture over were looking to capitalize 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 percent 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."

Anderson does not see the resort real estate market changing all that much in 2011.

"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," Anderson said. "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 $77 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 Ryanair 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 renting out their properties, according to Anderson.

"Although rental levels have been lower this year, the occupancy has been relatively unaffected, meaning property owners have been able to cover costs," he adds. "This will likely remain the same next year with perhaps an extra few weeks rental due to the extra flights now available."

 

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