Brexit Means Profit for Britons Selling Portugal PropertyBy
Stronger euro vs pound seen as incentive for British to sell
French overtake British as biggest property buyers in Portugal
Just weeks after the U.K. voted to leave the European Union, Peter Thompson, a British healthcare consultant, sold one of his two homes in the fishing town of Tavira in Portugal’s Algarve region, capitalizing on the plunge in the pound against the euro.
Thompson and his wife, who spend half the year in the British northwest county of Cumbria and the other half in Portugal, had bought their second property in the Algarve at the end of 2015 from another Briton who sold his home at a discount after the U.K. announced it would hold a referendum on its EU membership. When Thompson, 59, and his wife sold their property, they were able to take advantage of a drop of more than 10 percent in the value of the pound against the euro.
“We didn’t want to have two homes in Portugal,” Thompson said in a phone interview from Cumbria. “Our timing to sell was almost perfect because it allowed us to take advantage of a weaker pound.”
The pound’s post-Brexit-vote drop has triggered a flurry of real estate deals in Portugal as British second-home owners sell properties -- sometimes at a discount -- and still make a profit, according to investors and real estate brokers. Nowhere has this trend been more evident than in southern Portugal’s Algarve, a long-favored destination for British nationals, where demand from French property investors is now on the rise.
“British property buyer numbers began to fall after the sterling fell following the Brexit vote,” said Zoe Hawker, head of Fine & Country Algarve, a real estate broker with about 900 listings. “The flip side was very good because the French are coming in with stronger euros and buying from agents like us who happen to have large portfolios from British sellers.”
The pound has fallen about 12 percent against the euro since the vote. Before the referendum, British nationals made up 80 percent of all of Fine & Country Algarve’s buyers. Today, they account for only about 40 percent of the clients looking to buy, said Hawker.
With Portugal’s home prices on the rise, the euro’s strength against the pound is seen as another incentive to sell. Portugal’s existing home prices rose 9.1 percent in the third quarter of 2016 from a year earlier, the biggest increase since at least 2009, the National Statistics Institute said in December.
“Both buyers and vendors have tried, quite understandably, to take advantage of the fluctuating currencies, and for the most part this has worked well for the market,” said Alison Buechner Hojbjerg, a director at Quinta Properties real estate agency, which sells luxury villas in the upmarket resorts of Quinta do Lago and Vale do Lobo in the Algarve. “Many vendors are sterling-based and consequently were prepared to accept lower euro offers which resulted in some great deals for both parties.”
And while the sun, sand and golf are expected to continue to attract British second-home buyers to Portugal, the French last year overtook U.K. nationals as the biggest foreign property buyers in the country, accounting for about one out of every four real estate purchases, according to Portugal’s Real Estate Professionals and Brokers Association.
“Some U.K. nationals who bought Portuguese real estate decades ago and waited for the market to recover have now decided to sell for a profit,” said Luis Lima, head of APEMIP. “It’s an intelligent move. I’m sure the British will continue to invest in Portugal.”
Home prices in the Algarve are expected to rise about 5 percent this year, according to Robert Bijker, head of Land & Houses Algarve real estate broker. A two-bedroom penthouse apartment in a condominium with swimming pool in Tavira carries a price tag of 255,000 euros ($270,000) at his agency. That’s about the same as a similar apartment in Spain’s Costa del Sol resort of Puerto Banus, according to the website of property broker Marbella Estates. Both regions have long been magnets for British second-home buyers.
“The Algarve is still seen as a safer bet for foreigners because it didn’t go through a construction boom and bust and a massive price overshoot that took place in Spain,” said Bijker.
Health consultant Thompson, for instance, has no intention of selling his remaining home in Portugal even if the U.K. decides to formally withdraw from the EU by triggering the so-called Article 50.
“We like the climate, the relaxed way of life and the coffee mentality of Portugal too much to even consider selling our second home here," he said.
— With assistance by Neil Callanan