And what’s not to like? Portugal is a two and a half-hour flight from Ireland and is in the same time zone. The climate is warmer – it’s 20 degrees plus in October, for example, and the cost of living is lower. According to the global cost-of-living database numbeo.com, consumer prices in Portugal are 35.6 per cent lower than in Ireland, excluding rent, and 41.1 per cent lower including rental costs.
So watching your euro stretch a little bit further and the ability to work from home are just some of the reasons that the traditional expat profile of Irish residents in Portugal has changed since the Covid-19 pandemic. It’s why some 15 per cent of the market in the Algarve’s Golden Triangle comprises buyers from Ireland, according to QP Savills.
Other pros to living or retiring to this part of the Iberian peninsula is Portugal’s quality healthcare system, which is loosely comparable to Britain’s NHS, but for those who are particularly keen on number crunching, the country’s favourable tax regime might just be the deciding factor in moving there.
Making contacts
One Irish agent familiar with buying and selling property in Portugal is Michael O’Connor. O’Connor is managing director of O’Connor Murphy estate agents in Limerick, Cork and Dublin and has also built the successful online auction brand YouBid here over the past three years. A former resident in Portugal, his firm, OCM Portugal, has been on the ground in the Algarve for more than 20 years, helping Irish purchasers identify properties which suit their needs.
“OCM Portugal was born out of a curiosity in developments under construction there about 22 years ago, visiting building sites and getting to know local developers, making contacts and connecting Irish buyers with them. It evolved from there,” said O’Connor, whose company chiefly operates in the exclusive Quinta do Lago and Vale do Lobo resorts.
“For the last two decades, I’ve been doing it without anyone knowing about it, almost like a hobby, but our enquiries have increased by about 20 per cent in the last two years and a lot of that is coming from pandemic and post-pandemic remote workers, who based themselves in Portugal during the pandemic-associated lockdowns in rented accommodation, have now decided to buy property in Portugal.”
There has also been an influx of non-EU nationals to the Algarve region in the past few years under the country’s Golden Visa scheme, which is open to those who have bought properties worth €500,000 or more. The main beneficiaries include large numbers of wealthy US citizens, many of whom initially moved to Lisbon and Porto, but are now moving south, followed by British nationals and applicants from China.
What appeals to many Irish buyers is a scheme that Portugal introduced in 2009, called the Non-habitual Resident (NHR) tax regime, which offers new residents to the country the potential for very low or zero tax on pensions, capital gains and certain types of income for ten years. To qualify for NHR, you must live overseas, not have been a resident in Portugal within the last five years and want to reside in Portugal. To be considered a resident, you must remain in Portugal for 183 days a year or have your primary home there.
“The NHR tax regime is popular from an Irish point of view because one’s income tax is taxed at 20 per cent and your pension income is taxed at 10 per cent. It makes a lot of sense for wealthy people and about 11,000 people have taken advantage of that tax in general and I’m talking to a lot more Irish people looking at that now than ever before,” said O’Connor.
“When my kids went to school for a few years in the Algarve, the main concern among other expats was that there weren’t enough children to keep the local international school open. Now there are three main international schools in the local area and the worry is that they are over subscribed,” he said.
“I work off my connections there. So, for example, if you need tax advice, I’m not a tax adviser, I will put you in touch with a local tax adviser. I source the available properties listed with the local agents – and all the agents here multi-list. There are a lot of overpriced homes for sale here. I assess each potential property that fits the criteria based on my experience here and then advise on the ones that are of best value,” he said.
“Buying here isn’t the same as as going on a holiday and agents here are wary of tyre-kickers. The transaction process can take about eight weeks, which is far quicker than in Ireland, but it is a different system and a different jurisdiction.
“Buyers can be couples or families looking for a holiday home, or retirees moving permanently or semi-permanently, investors looking for yield-bearing acquisitions, or buyers who have sold companies and want to avail of a particular lifestyle. In any event, each client’s requirements are different and our services are tailored for them to reflect their budgets and needs,” he said.
Well-heeled Irish buyers are most keen on the upmarket Quinta do Lago resort in Amancil, which has established itself as one of the most prestigious golf, leisure and real estate developments in Europe and which is owned by Irish billionaire Denis O’Brien, since 1998.
“Quinta has about 1,800 residential units, which are mostly villas where prices can vary from villas guiding €5 million and which are in need of refurbishment, but it’s not unusual for villas to make €10 or €12 million, and in rarer cases to achieve €20 million plus,” O’Connor said.
Vale de Lobo has about 1,600 units and while it is still expensive, it’s not as pricey as Quinta do Lago. That said, the sites at Vale de Lobo are smaller. Apartment units can start from about €500,000 and villas can cost almost half of what they achieve in Quinta.
Property in Portugal – Income streams
“There are also new developments starting on the east and west side of the Algarve where little was built during the big recession nor during the pandemic,” O’Connor said. “It is now becoming more vibrant and the economy is stronger so it’s creating more confidence in the market.
“You don’t see large price falls in Portugal like that experienced in Ireland during the recession where prices and values fell by 50 per cent. It was more like 15/20 per cent and came back quickly. There are a lot of reasons for that, but chief among them is that this market is small and often buyers are very wealthy and don’t have a mortgage.
“During leaner times, they use their Portuguese properties as income streams where they could get say €250,000 a year – gross – in rent, which, if you don’t have a mortgage and your cashflow has been reduced, that can tide you over,” he said.
As well as helping Irish people buy and sell property along the Algarve, O’Connor has also been involved in putting like-minded investors together to refurbish tired villas in sought-after areas of the coast.
“Most people want to buy into a lifestyle purchase. They want to walk in the door of their home and be on the beach or on a golf-course in an hour. They don’t want to get stuck into renovation or refurbishment projects and, in fairness, in an unfamiliar market where you don’t know the architects, builders or tricky planning processes, it’s not advisable to take on old villas and do them up,” he said.
Rather, O’Connor cites examples where he and associated investors raised capital for a renovation villa priced at €1.6 million, where they spent a further €1.5 million transforming it and recently sold it for €4.8 million. He is currently working on a similar renovation project in the area.
