What are the Property Trends in Portugal 2016? Portugal is one of the most beautiful countries in the world with a great climate, sandy beaches and wonderful people. But for a while, following the global recession of 2008, the Portuguese real estate market was in deep trouble.
Property prices slumped to an unprecedented low following the economic crisis that hit Portugal, when it had to be bailed out by the European Central Bank and the IMF. This was much like that happened in Greece last year.
The loans taken from the ECB and the IMF, worth over 78 billion EUR, led to the imposition of strict austerity measures in Portugal. Salaries and pensions were slashed across the country, even as pensions were raised. The unemployment was as high as 25% when the crisis was at its worst.
Portugal has since successfully recovered from the crisis. The residential property market in Portugal grows at a rapid clip, registering double digit growth in 2015, largely because of the involvement of foreign buyers, including wealthy investors from China.
In fact, 20% of the properties sold in Portugal last year were bought by foreign buyers, according to the Portuguese Real Estate Agents Association. Among foreigners, Britons were the main investors in the Portuguese real estate market, closely followed by the Chinese and the French.
A representative of the Portuguese Real Estate Agents Association says, "The property market grew by between 9 and 15 percent in 2014. If it hadn't been for the Banco Espirito Santo debacle and the golden visas scandal it would have been 25 percent."
This is with reference to the collapse of the large Portuguese bank, Banco Espirito Santo and a massive international accounting fraud and visa scandal. Even so, the combination of Portugal’s terrific climate, favourable property prices and tax breaks announced by the government has made it one of the best overseas property destinations in the world.
A lot of French retirees are looking to spend their retirement in Portugal, for example. Serge Pasquier is a 75-year-old retired French businessman who bought a house in Portugal. He was one of the 3,680 French nationals who bought Portuguese property last year.
Mr. Pasquier says, "I sold my furniture store and my 90-square-metre (970-square-feet) apartment in Saint-Mande outside Paris and bought a 300-square-metre apartment with an ocean view near Lisbon for much less. The climate is very nice, the cost of living is considerably less and you feel safe. I don't regret my choice."
Portugal is attractive not just to French retirees, but to a number of high net worth, cash rich Chinese, Brazilian and Russian investors as well. Foreign investors are particularly interested in luxury apartments and villas in Lisbon and the Algarve region. Seaside villas with pools such as in the coastal resort town of Cascais are very popular with Chinese investors looking to buy properties here.
The Portuguese government has been working hard to lure Chinese investors to Portugal by offering them attractive deals such as the Golden Visa, which guarantees residency permits to all non-EU nationals who make investments worth 500,000 EUR in Portuguese properties.
The Golden Visa also guarantees the right to travel across the 26 European nations in the borderless Schengen zone. The Portuguese Golden Visa has been hugely popular earning the country investments worth over 2 billion EUR since its launch. Over 2000 Golden Visa have been handed out so far, most of them to Chinese nationals.
However, there was a major scandal involving the Golden Visa, when senior Portuguese government officials were arrested for money laundering and corruption. They were found to collude with property developers to inflate prices of properties so that they could qualify for the Golden Visa. Many Chinese had complained to the Portuguese government about it.
Since then, the strictest action has been taken and it looks unlikely that the visa scandal will have any serious impact on Chinese investment in Portugal. The property market should continue to be the shining star of the Portuguese economy in 2016 and beyond.