Seventy per cent of leading Algarve property agents report that the market has bottomed and is now turning up according to the 10-10-10 Algarve Residential Tourism Survey. This unique research found consumer market confidence, offers and transactions all up on 2012 compared to 2011.
The first 10-10-10 Algarve Residential Tourism Survey on 2012 was completed in mid-February 2013, researching market confidence, performance and trends in the market using a detailed research questionnaire. Data was gathered from leading real estate agents across the Algarve.
Enquiries, offers and transactions were all reported to be on the up by the majority of respondents with evidence of enquiries leading to real transactions, for example 26% of enquiries for villas and luxury villas converted into 27% of actual market transactions.
The top of the market and the ‘modest’ end of the market dominated – 27% of transactions were at €1 million + and there was a 17% increase (v 2011) in transactions in the €100,000 – €500,000 price band which took 51% of the market in 2012.
The middle market has traded down from a price perspective in order to take advantage of discounted product and are paying in cash – there was a 32% decrease in transactions in the €500,000 to €1 million (10% of demand) price band. Twenty five per cent of total transactions were in the €250,000 to €500,000 price bracket.
Price stabilisation is only occurring in products at the top of the market, in prime coastal locations and on recognised developments with the lowest drop in prices in 2012, of 3% recorded for luxury villas on the coast, compared to 2011.
Key purchasing motives have changed to primary residence and retirement-related buying which together accounted for nearly 40% of transactions, with ‘for future retirement’ showing a substantial 13% increase on 2011.
Properties bought as a holiday home declined marginally to 27% of purchases.
The Top 5 purchasing considerations were:
1) price/value for money
3) product quality
4) running costs
5) flight duration.
Increasing market demand diversification is evident in the nationality of new buyers originating from countries less affected by the weakness in the core Euro zone countries with more than 40% of buyers representing more than 10 countries with 2-6% market share, i.e. Canada, South Africa, Switzerland, France, Russia & CIS, Sweden, Norway, Benelux. The UK provided 46% of transactions.
Market demand has been frustrated by pricing factors (40%), lack of finance and unreliable banks (22%) in addition to concerns about the Euro (16%).
Agents were very frustrated by the lack of support from the government and authorities for the industry: “The international promotion and positioning of the Algarve is very poor, and tends to focus on golf and the beach. We can’t compete with other destinations unless we focus on the authentic quality, nature and culture the Algarve has to offer.
“There is reason to be optimistic that after five years of market turmoil. 2013 will see the beginning of a new dynamic,” according to Andrew Coutts, CEO of ILM.