Portugal’s Algarve coast is one of the most popular second-home destinations in Europe but most of the investment in tourism and development has gone into the central region, between the towns of Faro and Lagos. This has left the eastern stretch of the 144km coastline largely ignored, yet this area has much to offer.
The eastern Algarve starts at the town of Olhão and ends at the low-key resort of Vila Real de Santo António at the border with Spain. Though within 30 minutes’ drive of Faro airport, the area is peaceful and rural compared with the glitzy “golden triangle” that has grown up around the central resorts of Vilamoura and Quinta do Lago.
Part of what has restricted construction is the protection afforded to the eco reserve of the Ria Formosa Natural Park. The beaches along this 170km-long lagoon serve as an informal summer resort for day trippers but cannot be built on, so any development occurs inland and is, therefore, less lucrative.
According to a 2016 report from Knight Frank, average prices in the eastern Algarve are €3,000 to €4,500 per sq metre. Farther west, prices start at about €4,000 but reach €6,000 to €8,000 per sq metre in premium resorts. “You can definitely get more for your money in the east than in the central Algarve,” says David Holder, managing partner of Fine & Country’s Tavira office. “Property in central resorts can cost double that of comparable property here. But buyers who come east aren’t necessarily priced out of central regions, they usually prefer the authenticity of this area.”
Holder says that despite a rise in inquiries from overseas buyers over the past 18 months, prices have barely moved since the 2008 downturn. “There’s little local activity, but we’ve seen increased interest from French and Scandinavian buyers. Things are becoming more buoyant.” With less infrastructure and amenities in the eastern Algarve, the main focus of activity is around Tavira. This historic town has an attractive riverside setting, a ruined castle, and decent shops and restaurants. The winding streets of quaint townhouses have been spruced up over the past few years but renovated two-bedroom homes can still be purchased for less than €200,000.
New-build apartments flank the edge of town and proliferate in the nearby resort of Cabanas de Tavira, with prices from under €100,000 for basic one-beds. But in the countryside you can buy renovation projects with land from €50,000, and larger three- to four-bedroom villas from about €350,000.
Though it is possible to find attractive detached homes in the €1m-plus range, when it comes to property designed to appeal to an upmarket international crowd, Monte Rei stands alone. The purpose-built golf resort, 15km from Tavira, offers high-end villas built round a Jack Nicklaus-designed course. The resort has a spa and a restaurant, as well as a guaranteed rental scheme, all rare in this region. A second golf course and beach club are in the pipeline.
Plots for bespoke villas start at 1,739 sq metres and cost from €997,000. A classic four-bedroom property with a pool is €1.85m, while a spacious, contemporary six-bedroom villa overlooking the 16th hole, is €3.95m. Prices compare favourably with central resorts, such as Quinta do Lago, but Monte Rei is further inland, with little surrounding infrastructure.
According to Salvador Lucena, the resort’s general manager, this is an attraction for some. “Residents discover the luxury of having more space and peace, and are moving away from the overdevelopment of the central Algarve.” During the downturn, construction froze in the resort but is now ramping up again. Prices at Monte Rei have not been reduced but the product has been re-evaluated and its Club Residences will launch this spring. A mix of apartments and townhouses, priced from €950,000 for two bedrooms, they aim to fill a gap in demand for smaller properties. “In the past year we’ve had more buyer inquiries and more visitors,” says Lucena. “This shows the conditions are right to relaunch.”
A major factor in Portugal’s recovery is its “golden visa” scheme, introduced in 2012 to allow non-EU nationals to obtain residency in return for making a €500,000 property investment. Lucena says it has “definitely boosted the market” and sparked interest among Chinese, Middle East and South African investors, as has the non-habitual residency programme, which offers significant tax benefits to residents drawing income from outside Portugal.
With tourism also at a record high over the past two years, Lucena believes Portugal’s increased financial and political stability will kick-start interest in the east. “The central Algarve has been developing since the 1960s, so is more established. This area will also take time to mature.”
Buying guide
● Buyers should budget about 10 to 15 per cent of the sale price to cover notary and legal fees, transfer and other taxes
● Crime in the Algarve fell 25.9 per cent between 2010 and 2015
● Unemployment in Portugal has dropped from 12.6 per cent to about 10 per cent over the past year and tourism is up an average of 10 per cent
What you can buy for . . .
€500,000 A four-bedroom, traditional villa in need of renovation with river views in Tavira
€1m A traditional quinta (farmhouse) with nine hectares of land, 10 minutes from Tavira
€2m A spacious, six-bedroom, detached villa with a pool in Monte Rei
More homes at propertylistings.ft.com
Photographs: Valter Jacinto/Getty Images; Sabine Lubenow
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