A record year for visitors and the property market is still vibrant
The summer in this region of the Algarve was, albeit not the warmest, definitely one of the most exciting, as both the Festival Med and Noite Branco in Loulé, both converged in 2019 and ensured that residents and visitors from many different nations mingled together at these vibrant occasions, rumour has it that upwards of 250,000 people attended Noite Branca, truly astonishing. This medieval town is waking up from being a sleepy market town and fast becoming a culinary and music centre with many new and varied restaurants, bistros and bars opening regularly, and particularly in the Islamic Baths area of Loulé Castle.
As I write this article the 178-year-old eponymously named Thomas Cook holiday and travel company had just ceased trading, unfortunately this will have a profoundly negative impact on the tourist industry in the Algarve as Thomas Cook was one of the largest players, this comes hot on the heels of Monarch Airlines going into liquidation and Ryan Air reducing its staff numbers at Faro Airpor. This sends a firm message to airlines and holiday companies that they must adapt to the changes the industry is experiencing. One example of a well-run company bucking this trend is Jet 2, who from humble beginnings in 2013 operating from Doncaster Airport with 3 planes, now have a fleet of 90 aircraft flying to 81 countries from 8 UK airports, plus hubs in Palma and Alicante, they have additionally developed a thriving holiday business, maybe Faro will be their next operational hub.
Whilst the tourist industry doesn’t necessarily directly affect the property segment there is undoubtedly a knock-on effect in as much that new visitors to the Algarve can easily become seduced by this beautiful region and convert into buyers of the future.
There is every chance that as you read this article the UK has already exited the EU….or maybe not…what I can say is that in spite of the devalued GBP and the uncertainty property sales are still very buoyant, hundreds of enquiries are still being received. Nevertheless, one significant change has to be mentioned, and that is that banks although suggesting that they are willing to lend to property purchasers. In principle, they indicate that they are prepared to lend c.a. 70% of the valuation of a property (LTV) loan to value. The reality is very different, firstly they have been directed by the Bank of Portugal to downgrade all valuations by 30%, this in itself reduces the actual sum they will fund in relation to the sale price, and in some cases results in only a 50% exposure for the bank in order to reduce their risk if the lender defaults.
Enjoy the beautiful Algarve Autumn, probably the best season of all with temperatures reaching 26 degrees and clear blue skies right through until November, or even December.
By Doug Styles