Foreign investment boosts «year of recovery» in Algarve real estate

Buying houses in the Algarve for people who work remotely is a new trend

2021 will be a year of recovery in the Algarve real estate market «both in number and volume of transactions». After, in 2020, property sales fell by around 13%, Tiago Jerónimo, director of the Algarve branch of UCI, a financial institution specializing in mortgage loans, expects that this year there will be an increase driven by the «return of the foreign investment, mainly from the British market'.

A British market that, in 2020, revealed “a different trend from what we were used to seeing. For the first time, the group of other nationalities that requested financing surpassed the British market, representing 66% of transactions, with buyers in the British market being 44%», said Tiago Jerónimo in an interview with Sul Informação.

Among the markets that rose, the head of the UCI in the Algarve highlights «the markets in the center of Europe (Switzerland, Germany and the Netherlands)», and «we even noticed that there are many foreigners buying a house under the Non-Habitual Residents regime, as many can carry out their work remotely and still have a tax break».

Tiago Jerónimo foresees that 2021 “will be a year of recovery both in number and volume of transactions”. The Algarve, «together with the metropolitan area of ​​Lisbon, are the regions that present values ​​in terms of bank valuations above the average for the country, with the Algarve region rising 5,2% in January 2021, compared to the same period of 2020'.

Looking at the year just ended, the UCI director emphasizes that «something notorious, when we look at the data by quarter, is that the evolution of the number of transactions in year-on-year terms follows the evolution of the pandemic, descending in more difficult periods and thus increasing that the pandemic slows down. Therefore, according to data from INE, there were reductions in the second and fourth quarters, in year-on-year terms, of 38% and 12%, respectively, but, in the third quarter, the number of transactions was practically the same as in 2019».


James Jerónimo

With regard to the amount of sales, Tiago Jerónimo emphasizes that “we are witnessing a slightly different scenario. The Algarve, still according to INE, drops only 4% in 2020, compared to 2019, and in the third quarter, it reverses the decrease in the number of transactions and increases the amount by 14%, compared to the third quarter of 2019 .And the upward trend in the value of transactions compared to 2019 continues in the fourth quarter, when there is an increase of 0,6%».

For the director of the UCI Algarve agency, «this evolution of transaction values, in counter-cycle to the number of transactions, proves the perspective we have on the ground: at the moment, people favor properties with larger dimensions and outdoor spaces, even that are a little further away from urban centers and that are a little more expensive. This possibility of moving away from large urban centers is a clear consequence of the pandemic and the new reality of telework».

Regarding the median value of sales per square meter of family accommodation in the Algarve, data from INE «points to an increase of 7,6% and 7,7% in the second and third quarters of 2020, respectively, so prices have continued to rise despite the pandemic”.

The forecasts for 2021, "and which concern Portugal in general, point to prices being maintained (data from Casafari) or that there will be a very small decrease (data from CBRE), which will not be a problem at all", according to James Jerónimo.

The pandemic changed the market for buying real estate and also changed the products that companies offer. This is also the case for the UCI, which launched a campaign “for our heroes who are at the forefront in the fight against the Covid-19 pandemic”.

This campaign is available for mortgage loan processes presented to the UCI until 31st May and with deed made until 31st July 2021. This campaign exempts the opening commission for mortgage loans.

“During 2020, 11% of our customers were covered by this campaign and we have already had heroes in the Algarve in different professional areas, from healthcare professionals to professionals in the security forces”, highlights Tiago Jerónimo.

Another product of the company is the «home loan solution green, which allows access to special financing conditions for the acquisition of houses with high energy efficiency or for the acquisition of a house and carrying out works that improve energy efficiency by 30%».

The head of the UCI in the Algarve also explained to the Sul Informação that, in the granting of mortgage loans, between the UCI and a bank “there are significant differences in the way of working”.

Tiago Jerónimo emphasizes that, «when the customer is working with us, he has the guarantee that we are focused on mortgage loans, without associated products, which is not always the case with a traditional bank, where mortgage loans are seen as an anchor product , but the goal afterwards is for the customer to subscribe to other banking products».

Another difference “is related to the opening of an account and domiciliation of salary. In a traditional bank, these are prerequisites for the mortgage loan to be approved, but in the case of UCI, the client does not have to worry about new accounts and extra bureaucracy. Our focus is only on mortgage loans, so the customer can keep his regular account without any problems», he concludes.