Monday, Nov 30, 2020
Dear Your Overseas Dream Home Reader,
All roads lead to Faro…
At least in Portugal’s Algarve they do. Faro is the gateway to one of Europe’s most visited sun destinations. Yet, few of the millions of people who pass through its international airport ever stay.
Tourist development skipped Faro. It moved west along the coast, towards Vilamoura, Albufeira, and Lagos. And it moved east of Faro, towards Olhão and Tavira.
Faro was left behind. And for this reason, it’s never been a place where I’ve found promising deals. There is far greater opportunity in following the Paths of Progress moving in either direction along the coast.
Yet, it’s an underrated town. Despite being in central Algarve, it’s remained more authentically Portuguese than many of its more popular neighbors. It has a stunning coastline, beautiful parks, and plenty of café lined streets.
It’s where my senior researcher, Margaret Summerfield has been staying for the past couple of weeks.
Last Thursday, Margaret wrote to you about the first leg of her journey. She discussed how a “temporary” assignment turned into a 14-year stay in Panama City’s historic district.
Now, however, she’s moving back to Europe, and she’s on the search for a base with easy international access and warm weather.
Faro is her first port of call.
Read her take below…
Wishing you good real estate investing,
|
|
Ronan McMahon, Real Estate Trend Alert
***
My Biggest Discovery in Faro (And it Wasn’t Real Estate)
By Margaret Summerfield
Ronan gave me a few pointers for my trip to Portugal. The best spots for real estate, the contacts to meet, the places he thought I’d like.
He signed off with a mention of the country’s famous custard tarts (pastel de nata). They’re really addictive, he warned me. One is never enough.
Personally, I can take custard tarts or leave them. What Ronan should have warned me about was bolas de Berlim.
They’re donuts (without a hole), rolled in sugar and filled with custard. In Portugal, they’re a national treat, associated with sunny days on the beach.
Your cardiologist would probably describe them as a heart attack on a plate.
|
|
I came across them in a little shop called Gardy in Faro’s Old Town. One bite and you’re hooked. Warm, spongy, sprinkled with sugar, dripping sweet, creamy, custard. Delicious. I understand why people eat these by the boxload. I decided to give Gardy a wide berth going forward in case I do, too…
The bolas were a pit stop on a walk around Faro’s Cidade Velha (Old Town). I like walking around new neighborhoods, sizing them up for both real estate and lifestyle potential. I’ve walked huge chunks of Faro already, building up a picture of the city as I go.
Faro is home to the Algarve’s main airport. People fly in here from across Europe. But that’s where most folks end their Faro experience. They land at the airport and move on to other parts of the Algarve for their fun in the sun.
I wanted to see what Faro had to offer.
I booked a couple of weeks in a brand-new studio in the city’s Old Town. It’s very spacious for a studio, nicely kitted out, with high speed internet, a laundry area, and a balcony for people-watching while you have your breakfast.
It’s also a short walk to Faro’s (albeit limited) tourist sights, the marina, cafes, and restaurants. There’s a shopping street a few minutes away. It’s a great central location.
I’m paying $300 a week. This is about average for Faro from what I’ve seen for this time of year. The studio is in a building with a commercial space on the ground floor, three studios, and two penthouses. Occupancy in the apartments seems decent enough considering the time of year, a mix of Portuguese and foreigners. The commercial space was supposed to be a café and co-working space but was never kitted out. The whole building is now up for sale.
|
|
From my research so far, it looks like nothing is driving the real estate market in Faro. It’s not a top tourist destination. That doesn’t look set to change any time soon. There’s no big company moving in, creating a slew of new jobs, either. It seems to be a market geared towards locals.
I’ve shared details of a few opportunities I’ve come across with Ronan so he can run the numbers…but the investment front doesn’t really stack up.
There are some nice historic buildings for sale in Old Town. But they’re not particularly cheap. You’re looking at around €2,000 per square meter ($222.60 per square foot) for a small house that needs work—and up to €3,000 per square meter ($333.89 per square foot) for a similar-sized renovated home. There isn’t much availability—only a handful of historic homes proper on listings sites. That could be partly due to the crisis…extended lockdowns and restrictions means many real estate markets have been slower this year. It could mean that owners sit on these historic homes and they simply don’t change hands very often. The margins don’t seem attractive enough for doing a reno and a quick flip.
Construction costs would run around €500 to €800 per square meter ($55.65 to $89.07 per square foot) for a makeover of kitchens and bathrooms, depending on the finishes, and around €1,200 per square meter ($133.61 per square foot) for a full restoration. There are some incentives—a lower rate of sales tax on construction fees, for example. But these “project” homes really only make sense if you want to live in Faro full-time or part-time.
|
|
From a lifestyle viewpoint, Faro is a nice spot. It’s calm and quiet, with every convenience that you’d need. There are good restaurants and cafés, a produce market, big supermarkets, and hardware stores. There are walking trails…little towns and villages to explore close by…a huge national park (the Ria Formosa) and nice beaches on your doorstep.
But, I don’t love Faro enough to base myself here. For me, it is lacking a certain something. After some days musing, I realized what it was…
As I wrote last Thursday, I’ve been living in Panama City for almost 14 years. It’s a city that has everything you need, from drinkable tap water to top-notch dentists to modern malls. But it also has an exotic, tropical heart. Things are done differently there. The attitude is different, the lifestyle is different. You never quite know what’s going to happen next, how people will react, how a situation will play out. It’s a new, young, exciting city.
Faro so far feels very tame in comparison. I like it, but I don’t love it. It’s not going to be my next base. The next stop is west along the coast, towards Albufeira and Lagos. I’ll report back on what I find.
Like what you’re reading?
Send your thoughts to feedback@realestatetrendalert.com. I’ll post and respond to as many of your emails as I can right here in the e-letter. Find out more about our feedback policy here.
Your Comments and QuestionsElena asks: I have a similar love of historic homes. I will be retiring soon and looking for a university town in Europe to relocate to. Can you speak of these places as you explore southern Europe? I have Coimbra, Salamanca, Montpellier, and Ljubljana on my list, but I know there are others worth looking at. I speak Spanish and French and have limited knowledge of Italian. I am willing to learn a new language, as that has always come easily to me. Please make recommendations as to additional places I might consider. I prefer cooler weather. Thank you! Margaret says: Hi Elena, I’m not sure I’ll get to all the towns on your list, but hopefully I can help you narrow down your shortlist. And if you’re a RETA member you can read Ronan’s take on Coimbra in the September issue from last year as well as this year’s October issue. And he’s discussed Montpellier in the July 2019 issue.
Antonio says: Good morning Margaret and Ronan, I hope this email finds you well. I was reading about Margaret’s journey and her Panama adventure for the last 14 years and found it motivating and interesting. I was also asking myself about the potential in Spain, especially the Valencia region, since they speak Spanish there and I understand that it offers a lot of tourist attractions without the expensive budgets of Madrid or Barcelona. Margaret says: Antonio, Valencia is one of the places on my shortlist and I am hoping to visit and scout there. I spent time in Madrid and the Costa del Sol last year…while I loved Madrid, it’s too cold in the winter months…and the Costa del Sol just wasn’t a good fit for me. Valencia, as you say, looks very promising, but I’ll only know for sure once I put boots on the ground!
Richard says: Hi Margaret. It’s refreshing to see what you have done for RETA members. There’s a great wealth of knowledge in your exploits. Myself and my partner, Claudia, have been involved in property in several facets for a lot of our life and have a similar outlook to you. Beautiful quality refurbishment of old character buildings with help of rezoning and a good splash of cash. Like you, we cannot do the high-density apartment or gated community herd mentality. Nor the removed hamlet on a mountain side. We love the ocean, tennis, and community exercise. Entertainment and good restaurants, good wine, and friends. We hooked up with Ronan recently and he has landed you in our lap. Our good fortune. Currently in our Antigua Villa above Falmouth preparing it for market.
We have been looking around Lagos. Claudia loved it from previous times, yet we look forward to your on-the-ground reporting wherever you might be. And we are looking forward to putting our feet on the ground in the Algarve ourselves in mid-March. In the meantime, we feel great about having you on our team. Nice choice Margaret.
Connect with Ronan on Instagram |
