2023-02-21-莱坊-Algarve_Insight_Report_2023_2页_796kb

Central Algarve Residential Market Summary (2023)

Core Content

The Central Algarve region has experienced notable growth in its residential market, driven by a combination of investment, demand, and favorable policies for foreign residents. The market has seen sustained interest from international buyers, particularly from northern Europe, South Africa, the US, Brazil, and China, due to its lifestyle appeal and accessibility.

Key Findings

• Prime Property Prices:
  Prime prices in the Central Algarve increased by 61% over the decade to 2022.
  In the year-on-year period ending September 2022, prime prices rose by 15%.
  The exclusive enclave of Quinta do Lago commands the highest price per square metre in the region, averaging €14,000 per sq m.

• Residential Sales:
  Residential sales in the Central Algarve increased by 21% in the year to Q2 2022.
  The region's sales growth outperformed both Portugal and Lisbon, indicating strong demand and market resilience.

• Investment via Golden Visa:
  Since the introduction of the Golden Visa in 2012, over €5.9bn has been invested into Portuguese real estate, accounting for 90% of total investment through the scheme.
  The Golden Visa allows non-EU residents to gain permanent residency after five years of investment, with €500,000 or more required for property investment.
  However, coastal regions of the Algarve are excluded from the initiative, while some inland zones qualify.

• Inventory and Construction:
  Inventory levels have been depleted due to strong sales activity, especially since the pandemic.
  Residential completions in the Algarve have fallen by 89% since 2005, reaching just 632 units in 2022.
  The lack of supply is helping to stabilize and cushion property prices.

• Non-Habitual Residents (NHR) Scheme:
  The NHR tax, introduced in 2009, offers significant tax savings to foreign residents.
  Successful applicants benefit from a 20% flat rate income tax and exemptions for some private sector pensions over a 10-year period.
  The scheme has attracted over 10,000 residents, demonstrating its success and attractiveness.

• Expatriate Lifestyle:
  While second home purchases dominate the market, permanent residents account for 37% of Knight Frank's enquiries.
  The rise of hybrid working has enabled more foreign nationals to relocate for extended periods, increasing demand for long-term residency.

• Tax Advantages:
  Portugal offers no inheritance tax, wealth tax, or gift tax, making it an attractive destination for foreign investors.
  The Non-Habitual Residency initiative provides tax benefits that further enhance the region's appeal.

• Accessibility:
  Faro Airport, located near the Central Algarve, saw only an 11% decline in passenger arrivals in the first nine months of 2022 compared to 2019, highlighting the region's continued accessibility.

Summary Table

Additional Insights

• The number of square metres of prime property that €1m buys varies across key neighbourhoods:

  • Quinta do Lago: 71 sq m
  • Vale do Lobo: 91 sq m
  • Dunas Douradas: 92 sq m
  • Vale Formoso: 133 sq m
  • Vilas Alvas: 134 sq m
  • Quinta Verde: 143 sq m
  • Varandas do Lago: 298 sq m

• Visa Options:

  • Golden Visa: Residency by investment, 5 years for citizenship.
  • D7 Visa: Passive income visa, allowing relocation using personal funds.

Contact Information

• Research: Kate Everett-Allen, +44 207 167 2497, kate.everett-allen@knightfrank.com
• Press: Astrid Recadlin, +44 20 7861 1182, astrid.recadlin@knightfrank.com
• Sales: Alex Koch de Gooreynd, +44 207 861 1109, alex.kdeg@knightfrank.com

Need to Know

• Market News & Research: Scan QR codes for the latest updates and reports.
• Wealth Report: Available at knightfrank.com/research for detailed market insights.

Note: This document is for general information only and should not be relied upon. Knight Frank LLP does not accept responsibility for any use of the content.