Market review by QP Savills special agents

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QP are real estate agents specializing in the very first real estate market in the Algarve for almost 25 years. They oversaw more than 1.25 billion euros in sales during this period. “Buyers and sellers need to be reassured that we have their best interests at the heart of our business and, with the support of Savills’ global network, are providing the best service in the region. “

It is estimated that over the past 2 centuries, around 90% of the world’s millionaires were created by investing in real estate.

Real estate is the world’s largest store of wealth – more valuable than all the world’s stocks and debt combined, and almost 4 times the level of global GDP. The value of all gold ever mined pales by comparison to $ 12.1 trillion, at just 4% of global property value. The value of real estate worldwide reached $ 326.5 trillion in 2020, a 5% increase from 2019 levels and a record high. Growth was driven by the residential sector which is by far the largest real estate sector, accounting for 79% of all global real estate values. It saw its value increase by 8% over the year, to some $ 258.5 trillion.

Regionally, significant residential wealth is concentrated in Europe and North America, accounting for 43% of the total global residential value, although it is home to only 17% of the world’s population. *

Family villa near Vale do Lobo
Ref: 95179QP For sale with QP Savills 1,395,000 euros

In 2020 and 2021, real estate has offered investors an income opportunity as they seek returns in a low interest rate environment. Government stimuli in the wake of the pandemic have meant that there is more capital in the system and real estate is seen as a safe store for it.

Here in the Algarve we have seen the demand for real estate continue to grow – especially in the high end of the market in which we have specialized – around the million euros and above, where we have seen valuations increase – especially in highly sought after areas. after the locations. New price highs were recorded with 6 of our sales in 2021 exceeding 10 million euros. Our biggest sale this year was € 18.5 million – a record for us at QP Savills and possibly in the country. A testament to the exceptional quality of the properties that are now being created in the Quinta do Lago area and the caliber of the clients with whom we are privileged to work.

Our market research provides valuable information and allows us to see who is buying, what their main motivations are and why they choose Portugal and more specifically the Algarve. We are delighted to share these ideas with you. In 2021, the demand for real estate is still very largely driven by UK buyers. Over 60% of our buyers come from the UK, followed by Irish nationals (15%) then French and Portuguese. The region is attracting a somewhat more international group of buyers and we are seeing more buyers from Belgium, Germany, the Netherlands as well as the United States.

Traditional villa in Vale do Lobo sold by QP Savills. Indicative price 1,500,000 euros

Contemporary villa in Vale do Lobo sold by QP Savills. Indicative price 5,500,000 euros

Our research indicates that two-thirds of our buyers choose a vacation home with income potential. 70% of these buyers are couples and 30% are families with the average age, between 45 and 65 years. The post-pandemic workplace offers many of us the opportunity to work from home, which contributes to an increased interest in bigger and better homes – a place where buyers can spend more time in comfort. 20% of our buyers buy to make Portugal their main residence. Second, return on investment is the key. In a context of low interest rates, rental yields offer a very advantageous alternative to other investment vehicles and many buyers are focusing on returns on investment of up to 1 million euros. Above this yield seems less of a motivation for buyers.

Many of our buyers know the Algarve very well and have been traveling there for years. They got to know what is a very popular destination for so many reasons and decided to take the plunge and buy a house. A very important factor contributing to demand in the Algarve is personal safety. The Algarve was recently nominated as one of the top 5 places to live in the world and low crime levels are a big factor for buyers. Security of investments is the second most important driver and buyers perceive Portugal as a safe place to invest in a first or second home – the houses are well built, the infrastructure is good and the strength of the property market gives confidence. extra to all buyers.

For buyers unfamiliar with the Algarve, there is undoubtedly, initially, some surprise regarding property prices, however, this inevitably decreases as these same buyers take stock of the prolific activity of the area. market and often missed out on opportunities while they looked aside before they embark on their own purchase.

The NHR and Golden Visa programs continue to be a popular draw for our buyers. NHR buyers represent 20% of total inquiries and GV buyers represent 25% of all inquiries.

One factor contributing to the rise in prices is pressure on the supply chain. Demand for properties has continued to outstrip the supply of housing in the market – the last time we saw this happen was 14 years ago. Historically, there were more transactions from homeowners selling to buy again. We are now seeing new entrants in the market and they have big budgets, having often sold large companies, and are another big driver in the overall market.

Fantastic development of 8 contemporary villas designed by Jutta Hoehn.
REF: 95592QP. For sale with QP Savills from 1,150,000 euros

The pace of the market forces buyers to react quickly, otherwise opportunities are seized by others. Home sales are happening for the usual ups and downs factors and lifestyle changes, but other factors are at play. Some stocks are coming into the market due to pressures from Covid and Brexit also contributes to it. Higher prices offer sellers attractive returns on their initial investment and they take the opportunity to realize them.

Smart homes are popular among buyers. Home automation systems have always been complicated and unreliable. Now the best new homes have to come with the most exciting new technology. Buyers are demanding and look for a very sophisticated finished product. Additionally, older properties continue to be in high demand and offer development potential as their owners decide to make a profit – giving buyers inherent opportunities.

So what’s next for the Algarve property market? There is a real lack of stock, especially in the offer of apartments in general. There is a high demand for good sized 2, 3 and 4 bedroom apartments. The keys next to Quinta Shopping have recently been purchased. We look forward to seeing how this plays out. There are other construction projects that are being muted among developers and a number of investment funds are looking to build and invest here. We are keeping a close eye on this part of the market and it shouldn’t be long before developers bring new stocks to market.

The number of visitors to the Algarve is still below around half of historical levels, which would imply that there is still a significant potential demand for real estate in the region. Figures from our Savills partners project that values ​​in Prime Central London will rise on average 2.0% in 2021 before a more significant recovery next year, with expected growth of 8.0%. ** The implications of ‘A price increase in London has historically suggested a positive impact on our market here in the Algarve and will provide positive momentum as we look towards the end of the year and into 2022.

Click here to download this market review.

For more information contact us on:

Phone. : (+351) 289 396 073 | Email: [email protected] | Website: www.qp.pt

* Source: Savills Research

** Source: Savills Research | Note: These forecasts apply to average prices for homes in the second-hand market. New build values ​​may not move at the same rate.


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