British people planning to retire in Portugal in 2014 should be extra careful about how they use their pension, after a report last week has shown that annuities may not be good value for money.
Many British expats in the Algarve rely on regular income from an annuity after cashing in their pension pots, but unrealistic expectations about what today’s annuities deliver could lead to financial hardship once you’ve moved to Portugal.
The report by the Financial Services Consumer Panel highlighted how hefty fees charged by some annuity brokers can eat into a pension pot. For retirees living in Portugal, these effects can be compounded by a swing in exchange rates, when expats’ pounds buy them less euros. Portugal Property Sale recommends that British people planning a move to Portugal speak to a financial planner that specialises in helping expats.
Meanwhile, good news for anyone planning to purchase a property in Portugal in 2014 is the strengthening pound. As the year comes to an end, the pound is not far off levels last seen in January with £1 worth around €1.19 – compare this to the start of August when the rate had fallen to a dismal £1/€1.14. The effect of this is cheaper property for UK buyers. For example, a €219,000 apartment in the Algarve is around £8,000 cheaper than it was at the start of August, purely down to movement in the exchange rate.
Property buyers are advised to send payment to Portugal using a currency exchange specialist, they consistently offer better exchange rates than banks and can assist with making regular payments between the UK and Portugal, such as pensions.
Travelling by high speed train from northern Spain through Portugal as far as the Algarve could be a reality by 2017, according to a statement made at an Atlantic Axis cross-border conference in December.
Portugal has confirmed investment, including EU funding, worth €100million to upgrade a stretch of line in the north of the country which will open its rail network. The Atlantic Axis is an association that represents the 34 biggest cities in Northern Portugal and Galicia, Spain.
“The data we have from the Spanish government shows that at the beginning of 2015 the Galicia high-speed train track will be fully operational, said Xoán Mao, Secretary General of the Atlantic Axis. “On the Portuguese side, everything indicates that work on the Minho track will be complete by the end of 2016 and that tenders for the work are being launched at the beginning of the year.” Improvement in access to the Algarve will be welcomed by owners of property in Portugal.
Elsewhere in Portugal, a new charter airline called Windavia launched in December, choosing Beja Airport in the Alentejo as the place for its inaugural flight.
According to Windavia, it has more than 4,000 flights contracted with main tourist operators to fly from Lisbon, Madeira and Paris to other main sun and beach destinations in Europe, such as the Algarve, Madeira, the Canary Islands, the Greek Islands and northern Africa, starting from December this year until 31 December 2014.
Golfers with property in Quinta do Lago have welcomed the news that one of the resort’s three stunning golf courses is to be upgraded, with a re-opening scheduled for next autumn.
Quinta do Lago has announced plans for a major overhaul of its North Course, in order to bring it up to the championship standard of its other two courses, namely the South Course and the Laranjal. Homeowners in the resort will soon have three exceptional golf courses on their doorstep, only adding to the value of their property in Portugal.
Laranjal was voted ‘Best Golf Course’ at the Portuguese Travel Awards (Publituris) in 2011, while the famous South Course, eight-times host of the Portuguese Open, was included in Golf World Magazine’s ‘Top 100 Golf Courses in Europe’ in 2012.
Work on the new North Course began in November and expected to be completed by October 2014, with the new plans designed by American golf architect Beau Welling in collaboration with European Ryder Cup captain Paul McGinley.
John Dwyer, CEO of Quinta do Lago, said: “This is a very exciting time for us, our members and residents. This renovation will allow us to further reduce the impact on the environment by using recycled water and solar energy to maintain the course. The reduction of grassed areas will lessen the impact on the environment and the new design will include the creation of some new animal and plant habitats.”
Launched in 1972 and located amongst 2,000 acres of the Ria Formosa Natural Park, Quinta do Lago is a globally acclaimed golf and residential development in the Algarve. since opening in 1972.
Just 15 minutes from Faro airport, Quinta do Lago boasts a sought after year-round temperate climate, and in addition to golf, offers all types of lifestyle and beach activities.
Signs that the Portuguese property market is close to turning the corner come from the October housing market survey from RICS, which supports the idea of stabilising sales market conditions, alongside relatively flat lettings market activity.
In the sales market, the agreed transactions series remained stable in October, while the new buyer enquiries data maintained positive momentum for a third month running.
RICS Senior Economist, Josh Miller said: “The October survey results again convey the message of a stabilising sales market and while recent economic data has also been encouraging, this will have to be sustained through 2014 before we are in a position to talk about a genuine residential property market recovery.”
That said, this month’s confidence reading is still fairly close to the series high level. Although house prices continue to fall, the net balance indicates the pace has moderated significantly since the back end of last year. Alongside this, sales expectations for the coming quarter are still positive. On balance, the current market dynamic appears to be much less negative than at any point in the survey’s three year history.
In the lettings sector, tenant demand appeared flat whilst new landlord instructions fell. Meanwhile, lettings volume expectations point to little change occurring over the next quarter. Results in recent months point to more subdued lettings sector activity on the horizon.
In keeping with recent surveys, rents continue to fall and respondents are still anticipating rents to deteriorate over the coming quarter, albeit to a lesser degree than was the case six months ago. In terms of the regional outlook, Lisbon appears to be leading much of the improvement in the sales market. In contrast, the lettings sector in Porto has seen some firming, with tenant demand and landlord instructions particularly strong relative to the headline results.