The weeks in the Algarve were fantastic for the third year in a row - the fourth holiday in Lagos went by far too quickly. This or something similar is how many people feel when they return from their summer break. Not least because of the pandemic, many who could afford it have bought a holiday home in the past two years. As an escape from everyday life, possibly also for the home office - and given the still low-interest rates on credit balances and high inflation, often also as a capital investment that can be rented out.
Because of this bundle of reasons, a holiday property pays off in many places. Among other things, hotel prices have also risen strongly in the past two years. As a result, the purchase prices for real estate have also increased.
Due to inflation, pandemics or the war in Ukraine, many people continue to think about "where can I buy something that gives me and my family security". However, supply and demand are becoming more and more balanced throughout Algarve.
Everything that is directly next to the Sea has a high stable price level. Holiday properties in remote regions, however, could already be overvalued. According to industry data, prices here have recently risen even more strongly in percentage than in expensive locations on the coasts.
Therefore, we at Live Algarve Realty recommend that you find out in advance from the tourism associations to what extent holiday homes are offered in the respective area - and at what price. This can indicate the rental income one can expect when marketing one's property. In addition, there are regions where homes can only be rented out for three months a year. This fact can also make it difficult to make money.
The situation can be different if renting out a flat only serves to cover the costs of maintaining it - and you buy the estate primarily for yourself. Then you at least have the benefit of being able to spend your holidays there yourself - and thus also save money on expensive trips.
Either way: There are costs associated with maintenance: electricity, water, internet, and furnishings. In addition, there is a business tax for renting out.
However, if the property is highly owner-occupied, buyers have the chance to earn a return on their investment through the increase in value when they resell it.
If the property is not exactly close to one's own home, one also needs staff to take care of the cleaning and minor repairs in the flat and to hand over the keys. There are companies that take care of all this for you - as well as professional marketing on the internet. These providers charge a percentage of the rental price.
Whoever decides and invests and wants to rent out temporarily now has to deal with the wishes of the holidaymakers. According to agencies, the demands for equipment such as a pool and furniture have increased. In addition, people want to treat themselves on holiday.
Live Algarve Realty sees a good development of real estate in Southern Europe, especially in Portugal's Algarve. Perhaps also because some people are looking for more distance from the war and the energy crisis in Central Europe. In addition, when it is warm, less heating is needed.
