Why the failing euro could be good news...

By Cheryl Markosky
Posted: 2010/04/07

Despite a nose-diving economy Portugal is still hot for property buyers says CHERYL MARKOSKY, who meets former Blackburn Rovers footballer turned savvy investor John Waddington

IT'S OFFICIAL. Portugal is one of the PIIGS. Along with four other eurozone countries (Ireland, Italy, Greece and Spain), Portugal is most at risk in the current financial climate. So, is it a good time to buy a second home in Portugal?

Or, to put it another way, can "piigs" fly?

James Hickman from currency exchange broker Caxton FX thinks they can. "The euro is overvalued and the pound is floating along.

I believe that after the General Election the pound will strengthen." So British buyers can sit back and enjoy the euro's slide.

Another reason to look at Portugal is the recession. Many British owners can no longer afford to maintain their dream homes in the sun and John Scott of Algarve Removals reports twice as many Brits coming home than a year ago.

Algarve house prices have fallen about 19 per cent since the beginning of 2009, reports Mary Mangan of Winkworth in Portugal, and she thinks some of the best value is in these resale homes.

"Brits who bought five to 10 years ago when the pound was near €1.50 can afford to take a modest hit on the euro price of their property and still show a good profit in pounds when they return home, " she explains. A £100,000 house bought five years ago would have cost about €150,000. Selling the same house today at €140,000 would make a £20,000 profit.

Mangan is selling a resale two-bedroomed apartment at Boavista golf resort in Lagos on the western Algarve for £184,040, 20 per cent less than a new home.

It comes furnished and you can use the tennis courts, gym, indoor and outdoor pools and get discounted green fees.

Another good bet is buying a home through established tourism and leisure group Pestana, with properties around four golf courses in the central Algarve a few miles from Lagoa. Sales director James Harrison bases his business model on sensible pricing. "We know this is a difficult time financially and value accordingly, " he says. "We're pretty flexible when it comes to doing a deal, too."

ANOTHER plus is variety. There is everything from a basic, fractional quarter-share of a two-bedroomed apartment for £66,000, to a luxury four-bedroomed villa with a pool at about £875,000. Hunting down resales at family-friendly Vale do Lobo, 25 minutes from Faro Airport, could prove to be a canny choice. A two-bedroomed apartment with a pool starts at £430,000, while a three bedroomed villa near the beach costs £615,000.

"We have put in a new entrance, updated some older houses and will upgrade the main square and clubhouse. Everyone feels safe here. Teenagers can party in the nightclub without parents worrying, " says resort spokesman Diogo Gaspar Ferreira.

The new hot spot is believed to be the eastern Algarve, close to the Spanish border and an hour from Seville, where a two-bedroomed apartment costs from £110,000 or three bedroomed villa from £220,000 near the pretty city of Tavira on the River Gilao.

Expect to pay a bit more on a resort, however, which would be better if you are wanting to rent out your home.

Overlooking the Guadiana River, Quinta do Vale has 66 three- and four-bedroomed villas with private pools from about £1million, and 57 three-bedroomed townhouses sharing communal pools and a small spa between £570,000 and £685,000.

The sleek upside-down Riverside Village townhouses with living room and terrace on the top floor and oak-floored bedrooms below could be a excellent buy. They have great views of the river, a Seve Ballesteros-designed golf course with a marina, a beach club and a hotel in the pipeline.
You could probably do a deal for between 10 to 15 per cent below the asking price. "For a top-end £1million villa, we would certainly talk if someone offered £835,000, " says Quinta do Vale's director David Silva.

A few miles west, upscale Monte Rei is thought by golfers with deep pockets to have the best course and clubhouse in Europe. There is even talk of the Ryder Cup being held here in 2018 so grabbing a home now before values escalate further could be a very smart move. A building plot will set you back about £880,000 and three-bedroomed villas start from just over £1million.

JOHN WADDINGTON, a former footballer with Liverpool and Blackburn Rovers, has since made millions out of his greetings cards company. Now, at 57, he's ploughing some of his gains into building a dream 4,500 sq ft house at Monte Rei. Two years ago, John paid about £850,000 for a half-acre plot overlooking the sixth fairway and his palatial pad could cost that much again. "This area is how upmarket Quinta do Lago in the central Algarve was 20 years ago, " he says, appreciating the unspoilt countryside and towns in "the real Portugal" and prices that are as much as 30 per cent lower than the central Algarve.

Despite Monte Rei's sparkling golf credentials there is plenty for long-suffering golf widows and their offspring to do.

They can hike, birdwatch and fish and dine at Vistas restaurant, which is run by El Bulli-trained chef Jaime Perez.

"There are even plans for a restaurant and beach club, " says general manager Salvador de Lucena. You can take boat trips to an island off the Ria Formosa with a specially packed picnic and get away from it all. Presumably, there won't be a pig in sight.

MORE INFORMATION:
Pestana Golf and Resorts: 00351 2823 40930, pestanaproperties.com;
Vale do Lobo: 00351 2893 53110, valedolobo.com;
Quinta do Vale: 00351 2815 43407, quintadovale.com;
Monte Rei: 00351 28195, monterei.com