PROPERTY UPDATE

PORTUGAL PROPERTY… A real success story

Stefan Humpenöder and Robert Bijker, the MDs of Yellow Homes, have decades of experience that can benefit property sellers as well as buyers looking for the best possible investments

Last month, we detailed Portugal’s successful initiatives that have proven to be key to the country’s positive performance in the property market – 2018 was another year of good growth and, in the absence of unexpected global events, 2019 looks set to continue the trend. However, in most other property markets across the world, ‘uncertainty’ just might be the word that endures throughout 2019. Historically, trade wars do not have a winner, only losers. These self-inflicted wounds cause harm to the global economy, hence the downward revisions for 2019 and 2020, with the ongoing Brexit saga adding momentum to the downturn in economic activity.

Questions result: can stock market volatility, political struggle and economic instability change the real estate landscape in Portugal? Will strong demand for residential and commercial properties in Portugal continue and will real estate prices stay stable? Is Portugal, in fact, swimming against the tide?

Since the start of the year we entered a period of uncertainty. The ECB (European Central Bank) was quick to put monetary

policy on hold resulting in a sharp reversal in interest rates which led to new lows – even the five-year swap rate turned negative for a short period.

The rate of growth Portugal’s housing prices are expected to continue to rise in 2019 albeit at a lower pace, fuelled by growing demand as well as improved economic conditions in Portugal. The national economy is expected to continue to grow at a level of at least 1% per annum.

Moody’s Investor Service is predicting that house prices will increase 7-8% by the end of 2020. However, we believe that this may be over ambitious and expect prices to increase by 3-4 % in 2019 and 1-2 % in 2020.

The underlying reasons for rising property prices are the low interest rate environment, demand for property outstripping supply, and a relatively good return on investment versus other asset classes.

The supply of housing is an important barometer to effectively keep property prices in check. Supply and

demand in real estate are not easy to balance. Building a property requires time – from architectural design to planning permission, construction and the updating of the property documentation. This imbalance often exacerbates upswings and downturns. And, when property prices are getting frothy, the difference in price expectation between vendors and prospective buyers widens.

That said, the disparity in price expectations has not been this high for a long time which often leads to disappointment. To keep property prices in check, more supply is needed and it will have to be priced appropriately. We see supply of newlybuilt properties increasing in Portugal and gaining momentum in 2019/2020. Therefore, it is likely for property prices to top out/plateau during this period. Interest rates Interest rates not only have an effect on business activity, mortgages and property prices, but they also influence asset allocation decisions both on an individual level, as well as investment and pension funds.

While parking money in a shortterm saving account in times of uncertainty will protect you from losses during market gyrations, in the long run they do not offer enough yield to cover inflation and, in the case of pension funds, fall short to cover pension liabilities.

In other words, a glut of savings is trying to find a new home which offers a reasonable and stable return on investment as, historically, periods of low interest rates can last for decades.

But right now we are seeing an increasing demand for mortgages and notice a preference for fixedrate mortgages over floating rates which signals the homeowners preference for stability.

At the same time, Portugal’s tax initiatives and Golden Visa regime continue to set the scene for healthy demand for property. Moreover, Portugal is an increasingly desirable destination as one of the most peaceful countries in the world, with one of the lowest crime rates in Europe. Demand for homes in the medium and medium-high sector is excellent and a growing number of new, middle-class buyers from emerging markets add to demand for real-estate investments in a safe and established jurisdiction like Portugal. The lack of alternative investment opportunities is another reason that makes Portugal an interesting investment proposition where rental yields are on average between 3–4% but can be as high as 7% in city centres. A healthy scenario So, it is good news for the Portuguese property market but, in order to sustain a healthy market, supply needs to increase to match demand. All things considered, we believe that the the property market here seems to be on a strong footing, offering excellent opportunities for those looking for a stable return on investment in the foreseeable future.

If you consider buying or selling a property in the Algarve and would like to speak with a member of our team then please call us now to make an appointment. All our multilingual property consultants live in the Algarve and offer a wealth of local knowledge. In business since 1995 we have experienced various property cycles – use our unbiased and independent advice to your advantage. Vilamoura Office EN 125, Benfarras Boliqueime 8100 - 068 Boliqueime T: 289 301 294 / F: 289 301 439 Tavira Office Rua Dr. José Pires Padinha 178 8800 - 354 Tavira T: 281 320 281 / F: 281 321 901 (AMI - 6232) UNIQUE, SPACIOUS SINGLE -STOREY VILLA BETWEEN VALE DO LOBO AND QUARTEIRA. This wonderful south-facing property is for sale in the beautiful Algarve conveniently set on a large private plot within a luxurious development close to Vale do Lobo and the vibrant coastal town of Quarteira. The long sandy beaches are easy to reach within a few minutes’ walk, as well as restaurants and a supermarket. Price: €1.190.000 Ref: HNG EC: In progress. AMI: 6232 GOLF PROPERTIES - VILLAS - APARTMENTS - TOWNHOUSES - PLOTS Contact us! Our email is info@yellowhomes.com or call us on (+351) 289 301 294 Find out more info on our website www.yellowhomes.com

NEWLY-RENOVATED 3+1 BED VILLA NEXT TO THE BEACH IN CENTRAL ALGARVE. Set amongst mature landscapes on established plots, this modern total renovation property is within a very short walk of one of the Central Algarve’s most stunning beaches and natural lagoons. The main house offers a good size living and dining room, a fully-fitted kitchen and 3 bedrooms with bathrooms. Separate guest annex available – finished equally impressively. Ref: BHM Price €1.650.000 EC class C. GOLF PROPERTIES - VILLAS - APARTMENTS - TOWNHOUSES - PLOTS AMI: 6232 Contact us! Our email is info@yellowhomes.com or call us on (+351) 289 301 294 Find out more info on our website www.yellowhomes.com

AND IT MAKES CALLS, TOO

Today’s mobiles are rated by their ability to take top-notch shots says our techno man, Chris Partridge. Here’s his pick of the newest breed of cameras – err – phones

Atidal wave of new smartphones is heading for the shops right now, from everyone except, oddly, Apple, which is not expected to unveil its next model, rumoured to be called the iPhone 11, until the autumn.

Smartphone action is fi rmly concentrated on the cameras, with a huge range of technologies vying for attention.

The Huawei P30 Pro seems to be all the cameras you will ever need, with four Leica-branded lenses on the back in addition to the selfi e camera on the front. There is a standard lens with a distinctly non-standard 40MP sensor; a super-wide angle lens; a 5x zoom lens and ‘time of fl ight’ lens that measures depth to create arty portraits.

The camera app even features an amazing 50x zoom but that is created digitally and the results can be mixed (but hey – if it is the only way of zooming in to wildlife then it must be good). The cameras also have optical image stabilisation to reduce camera shake at long zooms.

The results can be spectacular even in low light, but experts are warning that the level of digital massaging of the images to get this performance can give artifi cial-looking images, particularly odd colour distortions. For average users however, the results are better than most compact cameras.

Different again Nokia phones (now made under licence by the Chinese company HMD) have recently focused on photography with its PureView range. The latest, the Nokia 9 PureView, has no fewer than fi ve 12MP lenses making a star pattern on the back with the fl ash and time-offl ight imaging sensor.

The Nokia 9 is based on a completely Samsung Galaxy fold

different philosophy than other smartphones, using the various sensors to pull in both monochrome and colour at various wavelengths to capture the full spectrum of light. All the data is combined to create images of amazing clarity and colour depth.

However, the levels of software needed to combine all the data means that some images can look a bit artifi cial, though enthusiasts can mitigate this by exploiting the feature allowing direct loading of the images into Adobe Lightroom editing software (a free version is included) to create images to your own high standards.

Samsung’s new fl agship, the Galaxy S10+, sports a relatively modest number of lenses – just three on the back, though not many other phones have two selfi e lenses.

The main camera trio includes standard, 2x zoom and ultra-wide-angle lenses. Despite the relative paucity of lenses, however, the results are superb with low noise, exceptional detail and accurate colours. It is as good as most people will ever need.

Foldables The other big new thing in smartphones is folding screens, which have got the digerati very excited indeed.

First out of the trap was an obscure company called Royole, with its FlexPai phone that folds back like a ring-binder, leaving the screen on the outside. It cleverly changes the screen to put all the icons on the front when folded, but using the whole screen when unfolded into a tablet.

Next off was the Samsung Galaxy Fold, which folds like a book to keep the screen on the inside. A smaller outside screen is used when it is folded.

Then came Huawei’s Mate X, an outside screen folder with a clever sidebar carrying the rear-facing cameras.

The idea is to create a phone that is a tablet as well, so you can play games and watch videos on a device that pops in your pocket.

However... all the foldable phones currently coming onto the market have several big drawbacks. The main one is the price – from ¤2,000 – which is a gigantic sum of money. If you bought an iPhone X plus Apple’s brand new iPad Mini you could get change out of a grand.

Tech journalists say that folding phones will come down in price but don’t hold your breath – a folding phone has twice the screen, twice the battery and a complex mechanical hinge, so they will always be twice the price of a similar size smartphone.

And that is before you consider they are twice as thick and twice as heavy, making them far less pocketable than regular, non-folding smartphones.

They will, however, make you the centre of attention while they are still novel. Royole Flexpai

Nokia 9

TALKING POINTS...

Chris Partridge has been writing about technology since the days of wireless sets with real mahogany cases with glowing valves inside, mainly for The Times, the Telegraph, the Observer and The Sunday Times. His own phone? The Samsung Galaxy Note, because of the stylus and handwriting recognition.