The changing face of the property market in light of the Covid-19 pandemic, Brexit and other challenges
Property developers, investors, estate agents, architects, builders and anyone else whose livelihood depends upon the buoyancy of the property market here in the Algarve have all lived through some interesting times over the last few years. The market has changed, almost beyond recognition, but those in the business who have risen to the challenges have prospered. And in spite of the uncertain times we live in, there is a still a mood of positivity amongst property professionals.
To put this into context, let us look back a few years to a time when the market had just about recovered from the ravages of the last financial crisis. The year is 2016 and by this time there had already been a significant shift in the profile of international buyers. Most evident was the “French invasion”, with France having been the first country to seriously take notice of Portugal’s NHR (Non-Habitual Residence) tax scheme. The draconian tax regime, introduced by then socialist President François Hollande, played well into Portugal’s hands and France rapidly took second place behind the UK as a major market for foreign buyers.
The UK market at the time was also strong, buoyed up by a healthy exchange rate, but when the Brexit vote took place in June, we saw the beginning of a veritable rollercoaster ride as far as British buyers are concerned. Initially there was fear, fuelled often by ignorance and mostly by misinformation resulting in many buyers putting their second home or relocation plans on hold. But people soon became used to the idea that Britain would be leaving the EU and, especially amongst those strongly opposed to Brexit, a stronger desire to leave the UK themselves and relocate to Portugal or elsewhere in Europe became apparent.
Most real estate professionals in the Algarve would agree that, overall, Brexit has so far had a positive effect on the property market in the region. Brits have maintained the top position as the biggest foreign buyer market, but the growth in number of buyers from elsewhere has had perhaps an even larger impact. Some estate agents report selling properties in a single year to buyers from 20 or more different countries. Portugal’s Golden Visa scheme played an important role in this, attracting buyers from China, South Africa, Russia and elsewhere and, as other European countries cottoned onto the NHR tax regime, we have seen good growth from other parts of Europe such as Benelux and Scandinavia. Add to this a solid performance from markets such as Germany and Switzerland and the emergence of the USA as another important market, and we have a truly eclectic mix of buyers.
It was in this conjecture of strong growth from diversified markets that the Algarve, as far as property is concerned, entered the Covid-19 pandemic. Estate agents and property developers across the region seem to be bucking the downward trend in business being experienced in the tourism industry. During the lockdown period, those agents and developers that kept up or increased their digital marketing campaigns were rewarded by a large increase in enquiries from buyers.
People in the UK, around Europe and elsewhere were stranded at home. Many of those working remotely started to realise that they did not need to be doing so from where they currently lived and this created a trend that has seen the beginning of a small exodus from urban areas the world over. Many are upping sticks and moving to parts of their own country offering more space and a more relaxed lifestyle, whilst others are looking to move further afield. And it seems that Portugal, and especially the Algarve, is very much on the radar for such buyers.
Estate agents report that following the lifting of lockdown measures here in Portugal back in May, there was a flurry of activity in the market, caused in part by pent-up demand but coupled with an on-going surge in enquiries. Most agents have responded to the difficulties imposed by travel restrictions with increased investment in technology. Virtual viewings, either with a simple smartphone or using 3D guided tours, are now the norm and whilst most buyers will stop short of actually going ahead with a purchase without visiting a property, there are many cases where deals have been done. If anything is holding back sales at the moment, it is the expectation amongst some buyers that prices are about to fall. But those waiting for this to happen would be well advised to look at the property market in their home country.
Outside of urban areas, prices in the UK, for instance, are holding up and even increasing; it is all a question of supply and demand. And the demand for property in the Algarve seems to be stronger than ever.