Apartment rental market in Algarve

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Slim

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We are looking at the possible purchase of a 3 bed apartment in Villamoura, communal pool etc. Supposedly this apartment can earn up to €875 per week in high season. I am not familiar with the Algarve property market so am wondering:
Is this a realistic rental expectation in Villamoura? and
Is the golf holiday market about to slump along with property markets, recession etc?

Slim

PS: Apartment is on at €220k
 
Slim, as an investment it doesn't stack up. Let's say you get the 875 for say 12 weeks, that's 10,500 before costs such as service charge, cleaning & changeover expensers, wear & tear. Your return will be less than 4%, and that is assuming you get that many weeks; there are an awful lot of apartments on the market.

If you are looking at a place to use yourself, out of season, or between bookings then that's a different matter. However, I recommend you look at the eastern Algarve, close to the Spanish border, and look at non-estate villas with pools. My partner has just such a property. We've had 18 weeks lettings this season.(In August we get £1,000 a week). It's 10 minutes from fantastic beaches and appeals to the family market - one Portuguese family from Lisbon have been three times this year and have already booked for next year. It's a very traditional area - lots of good restaurants, no karaoke bars or discos, but it is beginning to take off; lots of EU money being spent on infrastructure.

Forget the golf market. Most holiday golfers (I'm one of them) are groups of men and don't want the hassle of self-catering; they stay in hotels. Also, they don't want to play just one course. Our villa is within 15 minutes drive of 6 quality courses.

For not much more than your proposed apartment you can get a unique property with far more long term potential. It's a buyer's market and there ae lots of desperate sellers. I suggest you visit estate agents in Tavira (charming old town).

Incidentally, we'll be going over next week £20 return to Faro on RyanAir !.
 

Rog. Thanks for the prompt reply. Ditto holiday golfer, so I see your point, although Villamoura is well served for courses. My budget would be very stretched at 220k, I would be hoping to deal 200k max. Even at that, it has to generate some income for itself.

I have heard of Tavira and would be interested in that area but it seems pricey on the internet. I suspect that there are few deals on the 'net. If you know of any estate agents there locally that would be worth approaching, could you let me know? Thanks.

Slim
 
Slim
Just read your message. As it happens we hoping to sell on v. large 2 bed 2 bath seafront 2 balconies 20 mins Faro airport in Fuzeta, Formosa village new build. Ideal for your needs hop, skip and jump from main airport and exc. value. Ready in 4-6 weeks.
 

Could you let me have more information? Are you a developer? Price etc? PM me if you prefer. Slim
 
Slim,

As I've said it is very much a buyers market. I know of lots of properties, new build & resale that have been on the market for over a year. Don't rush, do your homework & don't even think about buying anything until you have visited the area and checked out rental demand for yourself. I'm not recommending an agent but my partner bought through a long established English agent in the centre of Tavira:

[broken link removed]

I was in his office in September and heard him talking to an elderly couple (who wanted to return to Germany) about their villa. They'd had no viewings in 6 months on the market. He advised them to drop the asking price by 15% and, if they were lucky, to expect offers @ 10-15% below the new asking price. Be advised, I think the asking prices on the website are wishful thinking. You really do need to get over there.
 
These kinds of rental figures are often quoted by agents and developers, but they mean nothing. First you have to actually get tenants, then you have to service the property and arrange for key collection etc, it all costs money. If you get six or eight weeks in high season at anything approaching these figures you are doing well.
If you want a property for your own use in that part of the world, or anywhere along the Spanish/Portugese coast, this is a great time to buy. However you are better off dealing with agencies that carry lots of distressed sales on their books, and making low offers. Someone will cave in and sell to you.
Whatever you do, don't buy new and don't give anyone the full asking price. You can certainlybuy something nice there for no more than 150k, possibly a lot less.
 
Rosinsky said:
I agree with the previous poster regarding not purchasing off-plan.
Click to expand...
He didn't mention off plan, which I would not touch now anyway. There may be some bargains from new builds, would there not?

Thanks everyone.
 
Non-estate villa = not in an urbanisation?

220k is a bit on the high side for a 3 bed apt in that area with the present collapse of the market. You should be abe to get it for well under 200k and that should include full furnishing.
If you buy new, either off-plan or from someone who bought off plan and wants to unload, you will still have to buy furniture and appliances, as well as maybe AC. Buying second hand is a better bet, you essentially get the furniture for nothing and the sellers are usually happy to get what they paid four or five years back.
It's a complete buyers market out there, so don't be in any rush to close on a particular property. As other posters have said, look around a bit, over to the Spanish border and even into Spain. I know of one agency in Marbella who are crying out for customers for instance, business is very bad even though they have lots of distressed sales on their lists. Don't pay any attention to the asking prices; they are only a starting point.
Pick out half a dozen properties where you know that the owners are desperate to sell (the right agent will let you know). Make really low offers on all of them, on the basis that the offer is only open for two weeks, and see who comes back to you. It works!
And just to reinforce what has been said already, forget the idea of making a rental return on most of this stuff. If you get enough rent to cover the running costs you'll be lucky, and will be doing better than most. Everything else is sales talk.
 
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