Property Investment Case Study: Portugal (TPI-PO-001)
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The European football championship – after the Olympics and the World Cup – is one of the largest sporting events in the world. Host nations spend millions and often reap huge financial rewards. In Portugal the central bank estimates an increase of 0.2 per cent to GDP growth in 2004 as a result of extra tourist revenues from the million plus visiting football fans. Some may return as tourists.
Others may return to peruse the property market, and it has even been suggested that a mini property boom could result. Not everyone agrees. Alexander Kraft at Sothbey’s International acknowledges that there may be some increased interest in the property market, but he does not expect a boom at any level.
Anyone who does return to view property with the aim moving to Portugal or buying a holiday home will find the overall economy in expansion mode. But the message is mixed. On the one hand, the unemployment rate of 6.4 per cent is about half that of Spain. On the other, Eurostat figures put June inflation at 3.7 per cent, up from 2.4 per cent in May. The country is tentatively emerging from a major economic downturn, so much so that Brussels had to issue a warning for breach of the EU ‘growth and stability pact’. Although the Portuguese economy contracted by 1.3 per cent last year, PricewaterhouseCoopers forcasts 1.25 per cent growth over this year and 2.25 per cent in 2005.
Despite this mixed economic picture, Portugal’s residential property sector has been strong. But like other buoyant European markets, property has slowed slightly. Any dampening of Portugal’s international property profile has been largely due to the new legislation that heavily penalises those who use offshore companies to buy property. Even so, property nowadays is thriving in the most sought after areas by international buyers - first in the Algarve, followed by Lisbon and its environs.
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Report Compiled By:
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Report ref: TPI-PO-001
Date created: 13-03-2006
