Overseas property – why should investors be considering the eastern Algarve?

The coronavirus pandemic currently has us all in lockdown and getting used to a new world of social distancing, self-isolating, remote working and quarantining.

But it has also given the unexpected gift of time and an opportunity for people to get their life admin in order and consider their next moves once this awful crisis is over. For many, this might include putting in the groundwork for their dream home abroad.

Meanwhile, existing investors may be considering where is best to expand their portfolio, seeking safe havens that are likely to bounce back quickly once something close to normal life returns.

Here, with the helping hand of João Richard Costa, the director of sales & marketing at Ombria Resort, we take a look at why Portugal – and more specifically the eastern Algarve – might be one for investors to consider.

History, charm and nature

A warm climate, year-round sun, unspoilt surroundings, authentic whitewashed houses, beautiful beaches and cheap but delicious food – the Algarve’s appeal to tourists and investors in recent decades hasn’t been hard to fathom.

Since the advent of package holidays and cheap air travel, the Algarve has become one of the most popular destinations for holidaymakers around the world – in particular Brits. Despite that, parts of it have remained remarkably untouched and over-tourism hasn’t been as much of an issue as in other well-known travel hotspots such as Venice, the Costa del Sol or the Greek islands.

The Algarve has been particularly influenced by Moorish culture – the name Algarve comes from the Moorish ‘Al-Gharb’ and many of the churches and markets are Moorish in design, for example. I’s also become famed the world over for its stunning beaches, exclusive golf courses, charming fishing villages and bustling towns.

While the central and western Algarve tend to be well-known because of popular resort locations such as Praia da Luz, Lagos and Albufeira, the eastern Algarve doesn’t tend to warrant as much attention, despite being home to historical working towns such as Loule and Olhao, the springs, churches and narrow streets of pretty Alte and the beauty and charm of Tavira.

Many of the towns and villages in this part of the Algarve feel like they are stuck in a time-warp – in the best possible way. The pace of life is slow, traditions still thrive and nearly all the restaurants, cafes and bars are independent and family-run.

It’s this sense of authenticity, and seamless blending of people and nature, that Ombria Resort is keen to promote with its Viceroy Residences and Alcedo Villas.

Ombria Resort is the newest luxury resort and real estate development in the heart of the Algarve and announced the launch of the off-plan sales of its residences and villas earlier this year.

“Construction of the Viceroy Residences and hotel started in December 2019 and construction is currently going well, with around 100 people working on site - abiding by the relevant safety measures in place due to the spread of coronavirus,” João Richard Costa tells us over the phone, the day after Boris Johnson announced the initial social distancing measures in the UK.

“In terms of sales and construction, it’s so far, so good,” he adds.

Once complete, the resort will include a five-star hotel, residences, villas, a golf course, a five-star restaurant, three exterior swimming pools and one interior swimming pool. The makeup of the resort includes 76 guest rooms and 65 branded Viceroy residences, with a further 12 bespoke villas which can be furnished to the buyer's needs.

Carrying on despite coronavirus

Costa believes there will be a resolution to the coronavirus crisis, but it’s not yet clear how long it will take to get back 'to normal'.

“We are still receiving enquiries. And, with more people at home due to self-isolation, there could be more activity with people looking to buy/invest. The current travel restrictions are, however, impacting on site visits at the moment.”

In a message sent out at the end of last week, Julio Delgado – the chief executive of Ombria Resort – said: “These unprecedented and challenging times have shown us the vulnerability of our society but also its most committed and supportive side. Whilst the health and well-being of our clients and staff is our top priority, we are remaining fully operational.” 

He added: “We have created the conditions for most staff to work from home and we continue to manage our day-to-day business via conference calls and/or video conferencing and assisting clients with their requests.”

“Construction works at our Viceroy Hotel & Residences are ongoing, under a contingency plan that includes appropriate practices as per the government’s advice, to ensure the health and well-being of all the workers on site. We remain fully committed to the planned completion date of the first phase and to start welcoming golfers, hotel guests and property owners in early 2022.”

What is the demographic of buyers in the Algarve?

“So far, 25% of units have been sold or reserved,” Costa says. “The clients are mainly European, but with some non-European interest, too. Buyers hail from countries including the Netherlands, Belgium, France, Portugal, Sweden, Luxembourg and the UK.”

Costa says Ombria is targeting two different types of buyer. Those investing in the Viceroy Residences will benefit from 5% net rental income from a rental scheme which also guarantees them 70 days usage per year. These buyers will be looking for a safe investment, regular rental income and the opportunity to use the residence when they wish (with flexible seasonal restrictions).

“The idea for them is to maximise their rental income - they could be part-investors/part lifestyle-travellers, likely to be aged between 40s and 60s, and valuing a quality product. Five-star is what they look for,” Costa continues. “They will also want assurance of their return on investment.”

The other type of buyer, Costa says, who are more interested in the non-branded villas, will be looking to create a space that fits their wishes and dreams. However, they won’t be able to change the concept design.

“The villa will be something they can use all year round and not have to rent it out when they're not there. They can, however, rent their villa either through Ombria or privately, but there will be no rent guarantee.

Sustainability to the fore

One of Ombria Resort’s biggest focuses is on sustainability, which Costa says is 'part of the Ombria Resort DNA'.

“It's been considered throughout the entire design and in our minds since the beginning,” he tells us. “The finished golf course has an environmentally sustainable certificate, but the course is not open to the public yet.”

Meanwhile, from a construction perspective, Costa insists the architecture is designed to reduce energy needs to a minimum due to positioning around the sun, allowing units to stay warm in winter and cool in the summer.

There is also a focus on solar panels and 'geothermal' energy, with the latter not currently commonplace in Portugal. “Ombria has one of the largest geothermal energy systems in Portugal and is being used as a case study for the whole country,” Costa adds, before saying that another advantage of using this type of energy is the fact that it lowers energy bills for all parties at the resort.

What makes Ombria different to other Algarve resorts?

Costa says Ombria is situated in a standout location, one of its main selling points. “Other Algarve resorts with golf courses are situated on the coast or near the coast. Ombria, conversely, is the only resort in land, some 20km from the coast,” Costa explains.

As a result, it benefits from ‘high natural beauty’ and ‘authentic greenery’, with a river also flowing through it.

“There are beautiful views and it’s very much a countryside resort,” Costa says. “It's very different from most of the Algarve. Very authentic, very green and very hilly.”

In addition, Costa argues that because it's a new resort, it benefits from having new materials, technology and practices that other resorts don’t.

Why is Portugal a good location for British investors?

There is a historically good relationship between the UK and the Algarve, mostly due to tourism. “In the past, some 60-70% of tourists to the Algarve have been British,” Costa says. “Consequently, there are second and third generation Brits living on the Algarve who are learning Portuguese.”

Thanks to the tourism boom of the last 4-5 years, from countries such as France, Italy and Germany, Brits no longer make up as much as 70% of tourists, but the number of Brits heading to the Algarve continues to grow.

Costa thinks that, due to Brexit, more Brits will try to benefit from Portugal’s Golden Visa scheme and its other tax incentives such as Non-Habitual Residency (NHR). Buyers of homes over €500,000 can, for example, claim residency and citizenship after five years through the Golden Visa, while the NHR enables those who become tax resident in Portugal to receive qualifying income tax-free both in Portugal and in the country of their source of income.

Portugal and the UK have the longest alliance between two nations of anywhere on the globe, so despite the current troubles caused by the coronavirus, and continuing uncertainty over Brexit, it seems certain that the relationship will continue to be strong in the future.

And in these troubled times, where people are desperate for some escapism, searching for a dream holiday home abroad might just tick that box. The eastern Algarve should certainly be towards the top of any investor’s list.