Wednesday, December 01, 2021
Dear Your Overseas Dream Home Reader,
Today, I’d like to give you a tour of one of my favorite towns in Portugal’s Algarve.
For those who don’t know Portugal, the Algarve is in the south of the country facing the Atlantic, yet it boasts a perfect Mediterranean climate.
It’s a place of rich culture, great food…soaring cliffs, white-washed villages, stunning beaches, and 300 days of sunshine a year…all of which has made it one of the most popular beach destinations in Europe, attracting millions of tourists each year, as well as expats.
I’ve been visiting the Algarve since 2002. It’s where I’ve found some of the most profitable opportunities on my beat (including one of my most recent real estate investments).
Our recent opportunities in the town of Lagos, on the western side of the Algarve have been superb…
Lagos is a place where the historic old town spills down cobbled lanes, into shady plazas toward a state-of-the-art marina.
And it’s eminently walkable.
You can walk to the beaches. Walk to the restaurants, bars, stores…walk to the train station and hop a train to Faro where the international airport is…
You can walk to the marina and jump on a boat to go sailing, fishing, or cruising around the cliffs, sea stacks, and bluffs of the Western Algarve’s awesome coastline.
Lagos has amazing restaurants, artsy boutiques, imposing old fortifications, and a Southern Californian vibe. In fact, I know of at least two Californians who say it’s a better place to live than California…more affordable, certainly safer…with weather just as good.
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Life is easy in Lagos…
A typical day might begin with an early cup of coffee and warm custard tart known as pastel de nata, savored on your veranda overlooking the brilliant blue Atlantic, sparkling with sunshine.
After your coffee, you could meander the town’s postcard-perfect golden coves. Or spend a relaxing afternoon on arguably one of the loveliest beaches in the region, the wide expanse of Meia Praia, where you can sunbathe, swim, kayak, or surf…
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Few cities in this part of Portugal can compare to Lagos for sheer variety of historical buildings and monuments, stretching back through more than 2,000 years of Carthaginian, Roman, and Moorish influence.
The old town’s narrow, wave-patterned streets are partially enclosed by 16th century stone walls and easy to navigate on your own. Though you never know what you’ll find around the next corner. It could be a charming café, a quaint market, or a pastelaria selling mouth-watering cakes and pastries.
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Lagos attracts tourists from all over the world. It’s one of the reasons I like this town so much. And not just to visit, but as a place to invest in real estate.
As a conservative investor I like to buy in places like the Algarve where there’s a huge mix of markets. Northern Europeans come in the summer, North Americans are increasingly coming to visit and live…Scandinavians escape their harsh winters to play golf and relax around Lagos…people come from all over Portugal, Spain, France…
Despite its popularity with tourists, Lagos has a chronic shortage of hotel rooms, and unbending regulations mean development is restricted. Owning the right kind of property here puts you in prime position for handsome rental income as Lagos gets even more popular.
And I predict that it will indeed get more popular.
Here’s a fact: 2019 was a record-breaking year for tourism in Portugal. 24 million tourists visited the country, causing a surge in demand for accommodation. It was the ninth year in a row that Portugal’s tourism has increased. The Algarve alone had a record-breaking 20 million overnight stays.
I fully expect the Algarve to continue on a tear when the pent-up demand of millions of wannabe tourists meets the new work-from-anywhere surge…
Lagos is drawing remote workers from all over. Millions of folks are free of the office and can now relocate anywhere in the world. Lagos has all the pull factors they’re looking for—perfect year-round weather, stunning beaches, a low cost of living, and great food.
Importantly, unlike many other towns on the Algarve, Lagos remains lively all year round. It’s a liveable town with a lively cultural scene, where you can still find plenty going on even in winter.
Last year, despite the lockdowns brought about the COVID-19 pandemic, I hear some property owners in the Algarve were still pulling in gross rental yields of 7%.
Given what was going on in the world, that’s impressive.
My contact in the Algarve, Chris White, rents his own villa there each summer. As lockdowns spread rapidly around the world in 2020 Chris had most of his reservations cancel.
It took him less than a week to replace every single one with new bookings.
I’ve spoken before about how I believe the pandemic is going to massively accelerate the use and popularity of vacation rentals. As we can see on the Algarve, it’s already happening…
With the right kind of property and no pandemic you could expect to rent for around 40 weeks of the year.
Chris tells me tells me that in 2020 the average occupancy for well set-up and well-managed properties was around 35 weeks. Chris manages a lot of rentals in Lagos and elsewhere on the Algarve. So he should know.
And I’m not surprised.
I like to dig deep in the world’s internationalized places for precisely this reason. I seek out those parts of the world where—no matter what happens—people always come.
Wishing you good real estate investing,
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Ronan McMahon, Real Estate Trend Alert
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