Does Property in Portugal Prove a Good Investment

By Rhiannon Davies Published on 11th December 2009 .

Does Property in Portugal Prove a Good InvestmentEarlier this year we ran a report about how ‘property in Portugal was not necessarily so popular’ after being inundated with what we felt were less than well rounded and researched articles about the property market in Portugal weathering the international war on real estate values. 

Reports then went fairly quiet about the nation’s real estate offering for a while – but once again focus has been turned to Portuguese property following press releases reporting, among other things, that Zara Phillips has invested in the nation’s real estate market.  Added to this is the fact that the Global Property Guide has published findings that the value of property in Portugal is continuing to rise…

…so, is it time for us to eat our words?  Does property in Portugal prove to be a good investment?  Well, for those who have been lulled into buying and speculating off the back of recent positive media reporting of the nation’s economic developments, I’m afraid that we can’t actually offer anything up in support of taking a short-term punt on the market!  We stand by our earlier argument that Portugal is potentially good for the long-term investor, but that a short-term approach to investing in property in Portugal will not necessarily prove profitable.

We fully understand why anyone trying to sell or market a property or a real estate development in any nation would want to do all they can to put a positive spin on anything remotely optimistic in the news about that nation.  After all, if you want to sell something you need to create desire around your product!  Therefore, the fact that Zara Phillips has invested in a development on the Silver Coast in Portugal makes for great material for promotional purposes. 

However, look a little closer and you can see that actually, whilst she has put her name down for a villa at CampoReal Golf Resort & Spa, she’s probably benefitting handsomely for allowing her name to be used in marketing material!  This is an exceptionally common ‘trick’ used in the world of marketing and selling high-end property, get a ‘celebrity’ or a ‘name’ in on the development and you can sell off the back of their reputation…

So, no one can simply state that Zara Phillips’ commitment to Portuguese property makes the nation’s real estate market a sound investment bet at the moment – but those wanting to make it appear as though property in Portugal is now even more desirable can perhaps draw someone’s attention to the fact that now a ‘celebrity’ has bought in, so why don’t you!  Nothing wrong with doing that in terms of legality or even morals – but you have to see it for what it is!  Marketing manipulation!

As for the figures from the Global Property Guide that suggest the value of real estate in Portugal has risen up to 1.48% over the past year, we’re not quite sure where they get their data from, it’s very hard to tell – so we are not going to rely on it I’m afraid.  Instead, we would like to simply draw your attention to some facts about the Portuguese property market.  Yes, there are some excellent fundamentals that support a long-term commitment to the market.  For example, tourism in Portugal is strong particularly in the Algarve and increasingly along the likes of the Silver Coast.  Tourism demand from the golfing community is particularly strong, consistent and a potential good long-term bet – this is a fact that an investor can keep in mind when thinking about targeting a sector for returns on any investment.

The economy in Portugal is relatively stable, relatively strong – as is the political landscape.  Again, strong fundamentals for building a picture of the country from when considering whether to invest or not.  However, taxation on property is quite high, the property market is fairly slow moving in terms of re-selling, and so these are reasons against a short-term approach to the market.  So, yes there are reasons to consider an investment and no, there are reasons very much against a short-term approach to the market.

This all means we stand fully behind our earlier expressed and explored opinion that Portugal has potential, but not for a speculator – and that it is a market approached carefully, with a view to earning rental income over the long-term for example.  But then, that’s just our opinion!  If you prefer to buy in because Zara Phillips has given her commitment already, then you are of course free to do so!

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Rhiannon Davies

Rhiannon is the Publishing Director at Shelter Offshore. With extensive experience as a technical author, Rhiannon's expat life began in Frankfurt with Deutsche Bank. Later as a freelance writer she was able to realise her ambition of living in some of the World's most beautiful locations.