Algarve investment – is this the region’s next major destination?

5 May 2021 | Investment

Located in a natural amphitheatre with spectacular sea views over the estuary of Alvor in the Central Algarve, Palmares Ocean Living & Golf is aiming to combine exceptional golfing and leisure facilities with homes from architects RCR.

It makes much of its sustainable and low-density credentials – things that are increasingly important to climate-aware buyers and investors.

“Palmares respects the local culture,” Alda Filipe, sales and marketing director at Kronos Homes, insists over lunch at the resort’s impressively designed Clubhouse restaurant. “There is full respect of nature and heritage, putting people in touch with their surroundings and making sure everything is sustainable.”

This is backed up by the stats, with a construction density at Palmares of just 5.7%, which the firm says ‘forges an exceptional harmony between residential accommodation, golf and the ocean’.

Strict construction parameters are in place to protect the sea views, including building implementation zones and height limits. This is to ensure that each villa or apartment has unobstructed views and the ability to benefit from the surroundings.

Kronos took on the masterplan for the development in 2018 and has been determined to drive it forward ever since. The residences mentioned above are part of proposals for 460 homes (made up of 103 villas and 357 apartments), a second five-star hotel (to complement the existing boutique 20-room five-star hotel) and an array of sports and leisure facilities, including a pool and wellness facilities.

What is on offer?

The signature apartments, which are in the process of being built as we speak, will benefit from sea or estuary views once complete, enjoyed from individual private terraces. To continue the theme of fitting in with its surroundings, the one and two-bed apartments will embrace the colour and texture of the natural environment, coming fully-fitted, equipped and ready to move in to.

Alternatively, investors can choose to purchase and then rent their apartment directly through the resort, allowing guests to benefit from all resort facilities. The signature apartments start from €400,000 and go up to €740,000.

There are also ocean-view plots available. Options include choosing a turnkey design by Pritzker Award-winning RCR Arquitectes, for instance, a golf-front and ocean-view show villa with four bedrooms and four bathrooms, due for completion in summer 2021, which is available for a steeper €3.4 million.

Investors can also buy a plot with a preliminary architectural study, with prices beginning from €780,000, or custom-build their own home, with an average indicative construction cost of €1.3 million.

Homes at the resort include annual golf membership for two people, for the development’s 27-hole golf course, designed by renowned American architect Robert Trent Jones Jr.

Palmares is a 10-minute drive from Lagos, one of the most characterful and cosmopolitan cities in the Algarve, and just moments from the 4km-long Meia-Praia beach (one of the longest bays in Europe). Alvor – a charming traditional village – and the working town of Portimao are also close by. The Alvor estuary is famous for its fish and seafood and includes an oyster nursery.

The Western Algarve, Filipe says, is less reliant on the British market, so may have been less affected by Brexit and Covid (which has led to significant travel restrictions between Portugal and UK for much of the last year). Lagos, for example, has a large population of French, Belgians, Dutch and Scandinavians.

Location, location, location

Filipe insists this is still the top priority for investors, and Palmares certainly has an unrivalled location. It is right on top of the ocean and on a sunny day the views are glorious. Even on a half-sunny, half-cloudy day, with plenty of wind, as is the case when we visit, the views are still breath-taking, the sea looking almost unreal in its sparkling brilliance.

According to Filipe, investors are attracted to Portugal not only by the weather and the chance of dazzling ocean views, but also the safety and quality of life it offers. Capital appreciation is a big factor, too. “They can see the vision – the villas, the apartments, the hotels, the restaurants, the golf. They can see the added value.”

She says early birds benefit the most, with those getting in early likely to see the greatest capital gains over time.

But Filipe isn’t afraid to take an honest, pragmatic and realistic approach to her interactions with clients. She says she won’t hold reservations forever if buyers sit on the fence for too long, and she tries to work with fixed prices as much as possible so everyone knows where they stand. She also encourages buyers to go and see other projects and resorts to compare and contrast and then make the right decision.

“Does it fit their priorities, does it fit what they want? If it doesn’t, it could be time wasted for both parties further down the line,” she adds.

An increasing number of investors, however, are choosing to invest sight unseen because they can’t currently fly to Portugal to view in person.

“It’s been purely digital this year. We recently sold a villa for £1.2 million, sight unseen. We did the tour on the phone, showing them round. No virtual tours or fancy 3D tours, we wanted to show them the real thing. If it’s wind, rain, sun, we still show them, to give them a real indication. It won’t always be perfect weather.”

Filipe says that, for some, the pandemic has accelerated their investment, particularly younger couples and families looking for a change in lifestyle. These demographics are likely to be more comfortable with a digital-first approach, which could help to explain the increasing number of sales that Kronos has been seeing from a purely digital perspective.

Who is buying there?

The investor base is very international, Filipe says, and also includes Portuguese as well as overseas buyers. A quarter of the buyers are domestic, with an eagerness to attract young entrepreneurs and those who are partners in high-profile companies. 

Brits also make up 25% of buyers at Palmares, while an increasing number of American and Canadian purchasers are choosing to invest in the resort, with a 250% uplift in leads from these two nations.

With the Algarve often being known as the ‘California of Europe’ for its regular sunshine, favourable surfing conditions, excellent local food and wine, and friendly, welcoming people, this increase in interest is perhaps no surprise – particularly when you factor in the political and safety concerns in the US in particular in recent years.

US residents represent nearly 30% of sales at Palmares, with Kronos Homes saying leads from the US increased by 321% from 2019 to 2020, as Americans increasingly seek out Portuguese holiday homes.

“Interest from the US and Canada has ramped up significantly over the past 12-15 months. Despite the complications that have arisen as a result of the pandemic, leads from across the Atlantic are continuing to rise as 2021 unfolds,” Filipe says.

Canadian leads, meanwhile, grew by 125% between 2019 and 2020. For Canadian residents Ann and Kevin Hudson, who purchased a home at Amendoeira in 2020, the Algarve’s combination of sunshine, outstanding golf facilities and warm, welcoming people made them want to buy there.

“We were really well looked after and made to feel very welcome by all of the staff. We loved both golf courses and found everyone very friendly. The transition and move were very smooth, and easy. We have properties in Canada and in Florida; we follow the sun to the golf. We did all of this during Covid, there were obviously some restrictions, but with Kronos’s help, we managed very well under the circumstances.”

Portugal is home to around 6,600 American expats and 882 Canadian nationals, a number that is expected to increase as remote working becomes more established. According to the ‘Return to Travel’ study published by HomeToGo, 92% of US respondents said they intended to visit an international destination the same or more frequently after receiving the Covid vaccine.

A new destination?

Filipe says the desire is for Palmares not to be just about golf. Kronos wants it to be a new trendy destination, drawing people from far and wide to visit the restaurants. To that end, the Clubhouse restaurant was opened in late 2019 and is run by Michelin-starred chef Louis Anjos. Young, humble and more than happy to interact with customers and clients, Anjos won his two Michelin stars at the Bon Bon restaurant in nearby Carvoeiro and will be hoping to do the same with the fine dining restaurant – Al Sud – that will be opening in June 2021.

Restaurants have only recently been allowed to reopen after Portugal’s lockdown, but on the day we attend, the Clubhouse is busy and has a nice ambience. The food is, of course, excellent (and with proper portions), but isn’t overtly pretentious or over-the-top. However, it’s the spectacular views (which take in Alvor, Lagos and Portimao as well as Meia-Praia beach) and the uniqueness of the architecture that really stand out. 

Algarve investment – is this the region’s next major destination?

Filipe says companies used the minimalist and modern space for their Christmas parties last year, and there is a desire to turn it into a real destination of note.

“We took on the masterplan when it wasn’t developed. It only had the boutique hotel and 12 villas. We have repositioned and rebranded it to turn the whole resort into a new trendy destination,” Filipe says.

The project is expected to be nearing full maturity in 10 years’ time, but Filipe says there is still a lot to be done.

“This is a long-term project and we are here for the long-term. We want to forge new communities, with projects that complement their natural environment always,” she concludes.

This post has originally been featured in Property Investor Today.