Portuguese residential tourism resorts: Why interest remains strong
The coronavirus pandemic initially rattled members of the Portuguese Association of Resorts (APR) as they feared lockdown, travel restrictions and a continuation of restrictions this year would scare off investors. Yet interest has remained buoyant, says managing director Pedro Fontainhas.
Text: Chris Graeme
By the second quarter of 2020, as air travel dried up and Portugal emerged from a State of Emergency in which it had been since mid-March, the Portuguese Association of Resorts (APR) began to worry.
The association, which represents some of the most prestigious luxury resorts in Portugal such as the West Cliffs Resort, Ombria Resort, Pestana Gramacho Residences and Vilamoura World in the Algarve and Belas Clube do Campo near Lisbon, was worried that the year would end in a tragedy in terms of sales of residential tourist real estate.
Yet, despite 2020 having been an adverse year, it ended up being less disastrous than the APR had expected.
“The crisis made the quality of national tourism real estate even more relevant and evident,” says Pedro Fontainhas. “For years, the offer of a safe, healthy lifestyle, close to nature, in houses designed and built with the most demanding criteria of energy efficiency, ergonomics, comfort and interior spaces, has contributed to making Portugal the best destination for residential tourism in Europe. It continued to appeal to foreign customers and stimulated many Portuguese families looking for alternatives to their lifestyle.”
The APR managing director explains that the ‘Clean & Safe’ initiative from the Portuguese tourist board, Turismo de Portugal and the pandemic’s then favourable numbers helped Portugal to become a safe refuge in the eyes of the international press.
Fontainhas says that the resort entrepreneurs, developers and promoters deserved considerable praise in the face of an adverse economic situation that they never could have possibly anticipated at the start of 2020.
“Faced with the prospect of a lost year, they struggled to keep companies open, and workforces and enterprises in a state of complete readiness,” he explains. “They reinforced the use of communication technologies and virtual visits to homes and resorts. They developed digital campaigns, independently and articulated with APR, to communicate Portugal, our regions, and the offer of housing in tourist developments.”
What has proved to be a relief, but in some ways quite logical from the perspective of a growing need noticed by the residential tourism and overseas relocation market in Portugal for houses with more space away from large urban centres, was that the pandemic further reinforced international buyers’ interest, while the national audience is proving to be no less attentive and sensitive to the arguments for living in a resort, according to the APR managing director who adds that overseas investors from 28 countries accounted for 66% of leads collected from September to December last year. The United Kingdom and Ireland represented 22% of international inquiries.
Fontainhas explains that from the beginning resort managers and promoters had suspected that Brexit would trigger many people in the UK to reassess where they want to live and what they want from their lifestyle.
“With the impact of Covid, life in Portugal has even more appeal to many families and has led to a surge in interest from those looking for something more than they currently have,” he says. “Moving to Portugal may make economic sense too. The Non-Habitual Residents’ regime offers material tax incentives to anyone moving their fiscal residence to Portugal.”
Fontainhas also points out that UK citizens could now consider the Golden Visa program that provides a residence permit in Portugal, and access to the Schengen area, for investors in different areas such as real estate.
“It is important to note that the Portuguese Government has just enacted changes to the golden visa program that will come into force on 1 January 2022. As of that date, only investments in housing real estate located in defined locations, all outside the urban centres of Lisbon and Porto, will qualify. Investments in real estate for other purposes, such as touristic apartments, remain eligible regardless of location,” he highlights.
Covid: A lasting impact?
And will COVID-19 have a lasting effect, either positive or negative, on the concept or design or adaptation of residential tourism developments and projects in the future?
Fontainhas says that resorts in Portugal will continue to be at the forefront of what is best done worldwide in architecture and engineering.
“The demands brought on by the pandemic coincide with what life at a resort already implies: more expansive areas, balconies and gardens, sparsely populated areas, proximity to health, education and leisure services, energy efficiency, security, and investment protection.”
They are also fitted with the latest telecommunications technology and high-speed internet which are standard in every home.
And while the situation is still difficult in Portugal, the APR managing director is in no doubt that Portugal will recover from the current situation.
“Vaccination in Portugal and other countries and adopting long-term measures to prevent new variants and new epidemics will increase people’s and governments’ confidence levels. The question is when, or how fast, such confidence will grow,” says Fontainhas.
However, he insists the Government must support companies so that they can remain ready for the recovery. Fontainhas gives the example of measures like the simplified layoff and says that without it, critical companies for the recovery of the economy, such as those in tourism and tourism real estate, might have been unable to continue and contribute to the economy.
But more, he says, is needed, despite the country’s high indebtedness.
“Credit guarantee measures are becoming anachronistic as companies’ capacity to take on more debt runs out. The emphasis should be more on the continuity of efforts to preserve jobs, capitalise companies, moratoriums and tax exemptions. And, of course, support for massive communication campaigns with the international markets where our customers are.”
And while the traditional overseas markets for Portugal’s residential resorts such as the UK, Ireland, France and Germany will continue to attract the lion’s share of investors, the APR’s members have investors from 28 countries. The association is targeting markets such as Switzerland, South Africa, Brazil, Canada, US and Sweden.
Stronger than before
Despite a bleak national economic landscape now, Fontainhas is confident that the Portuguese residential resorts sector is in a much stronger position than it was 10 years ago when the last economic crisis hit during the Great Recession and Sovereign Debt Crisis.
“Without a doubt, the sector is financially stronger than ten years ago. Companies are capitalised, and projects are in healthy demand and are sustainable. That’s what has enabled them to resist this crisis and allows them to be ready for any recovery that comes,” Fontainhas concludes.