The Algarve Tourism Board recently invited a group of journalists to attend the launch of the Portuguese/Spanish European Route of Discoveries project. A major part of the project was a ship called Victoria which was docked and open to the public for four days in February.
The ship was docked in the port of Baleeira in Sagres and is a replica of the first ship that successfully circumnavigated the world and which was under the command of Fernão de Magalhães. The replica ship is a part of a number of projects being planned, including the launch of a virtual museum.
The aim is to promote the route between Cape St. Vincent to Seville and to offer tourists something that’s a little different from the normal beach and golfing holiday. The hope is to combine the unique aspects of the Algarve that normally attract so many visitors with its more historical side.
The moment the project is still very much in the planning stage, but is being actively developed and promoted by the cultural and tourism boards in the Andalucia and Algarve regions. The aim is to raise awareness as to the immense historical heritage of these regions due to the explorers of the 15th, 16th and 17th centuries.
It’s expected that all planned activities will be operating by July this year, and that the Route of Discoveries itinerary will be complete. It’s also expected the virtual museum will be operational by this stage. The project has received a total investment of €450,000, three quarters of which has been financed by the Spain-Portugal Crossborder Cooperation programme.
Recently the Portuguese government stated that a plan to build a network of high-speed rail lines had been cancelled, and that some of the European Union subsidies for this project were to be redirected into freight transport.
This plan has led to the government managing to secure funding for a high-speed link between Lisbon and Madrid. Initially the European Union had withdrawn funding for the high-speed link between the two capitals due to Portugal’s decision to cease work on the project.
Apparently the Finance Ministry in Portugal has now received funding for the project through the European Commission’s Connecting Europe Facility funding, and the government has managed to hold onto the European Union funding for the link while reducing the percentage of EU funding.
The previous agreement has now been nullified, and new funding for the project has increased from 25% to 40%. However the plan for a high-speed passenger link doesn’t look as if it will be revived, as the emphasis is now on rail freight. The government is looking to link Lisbon with the rest of Europe, and expects a rail line could reduce costs to exporters by 40%, and could increase the capacity by up to 80%. Whereas a passenger rail link would have cost €4.276 billion, the freight line is anticipated to cost just €700 million, and the government only needs to find €175 million due to European Union subsidies.
This is obviously good news for exporters, and Portugal’s trade deficit narrowed during the last quarter to €.58 billion compared to €3.12 billion a year earlier. Exports increased by 1%, while imports decreased by 3%.
Estate agents in Portugal now believe the market is stabilising, having experienced several years of falling prices. Immediately after the financial crisis prices dropped by up to 30%, but last year the market began to correct itself. Property prices for luxury homes dropped considerably less, falling by 15% to 20%. This is probably due to the fact that wealthier buyers are less likely to have mortgages, while others reliant on funding would have found it more difficult to obtain a loan due to tighter lending restrictions.
Luxury apartments in the centre of Lisbon currently cost between €5,000 and €6,000 per square metre, while apartments in less upscale neighborhoods currently go for around €5,000 per square metre. Older apartments in Amoreiras are likely to cost between €3,500 and €4,000 per square metre, while newer apartments could cost as much as €5,500 per square metre. The Estoril Coast, just half an hour’s drive from Lisbon is popular amongst surfers and for its casinos. Apartments here can cost as much as double as those in the city.
Most overseas buyers are looking for property in Lisbon or the Algarve, and around 60% of buyers in the Algarve are international. Most are from Britain, although the area is also popular with buyers from Spain, Italy, Scandinavia and Germany. The market in Lisbon is a little different, as it’s not so heavily dominated by the British, and just 15% of the property is sold to overseas buyers. Purchasers include those from Western Europe and Russia, as well as buyers from Angola and Brazil, as these countries are Portuguese speaking.
Portugal’s finance minister thinks it will take years to produce the country’s budget deficit. The World Bank and IMF are currently evaluating whether further spending cuts are necessary. Next year will see the implementation of additional spending cuts of €4 billion which are on top of next year’s budget. These cuts include the largest tax hikes in Portugal’s recent history.
These spending cuts weren’t part of the country’s original €78 billion bailout from the IMF and the European Union, but have been presented by the government as a way of guaranteeing the long-term sustainability of its austerity plan.
Vitor Gaspar, Portugal’s finance minister thinks it could take several decades to reduce Portugal’s debt to GDP ratio to below 60% and that there are still considerable risks to be overcome. The debt ratio level is expected to peak next year at 124%.
Portugal is currently facing its third year of recession, and although the public initially accepted the need for austerity measures during the first year of its bailout, protests have been increasing against the latest measures.
At the moment the government is anticipating a 3% decline in GDP this year, and a 1% decline next year, but many economists think this prediction is too optimistic. Lisbon has asked the World Bank and the IMF to help identify places where spending cuts can be made as they often give technical assistance to help countries reform their public finances.
It’s expected spending cuts will be identified during the current review of the economy which is due to begin at the end of November. These spending cuts could lead to more opposition as they might include the cuts to benefits including health and welfare.
Landlords in Portugal are now able to carry out background checks on tenants as a new system has just been launched which is been fully endorsed by the National Data Protection Committee. The aim of the system is to stimulate confidence within the rental market, as it should help reduce the risk of damage to the property or missed payments.
The background check service was launched at the beginning of the summer, and it’s hoped it will attract more investors and property owners to put homes into the rental market. There are two types of tenant checks available which are Expressed References and Complete References.
The first type of report detects possible problem areas using public information from Social Security and other related services. The second report carries information about the tenant’s employment status as well as any references from former landlords.
Apparently the service, Renda Protec doesn’t breach any privacy rights as the information is only given with the tenant’s permission. Such information is already commonplace in countries where the rental market is more fully developed. For example a survey a couple of years ago carried out in the UK found 98% of tenants who had received a positive reference reports went on to be problem free, while 83% of those who had defaulted on payments hadn’t undergone any professional background checks.
At the moment Portugal isn’t particularly popular amongst investors as it has a history of ineffectual eviction processes and is relatively high risk, something that it is seeking to change. Tenants are also able to purchase their own referral reports, enabling them to negotiate more effectively when choosing a new rental home.
For the first time ever Portugal has recorded a positive trade balance during the first eight months of this year, with the overall balance of capital payments and trade turning positive. The central bank in Portugal reported an overall surplus of €751 million and the balance of payments turned positive to the amount of €4 million. This is the first time this figure has been in the black since the Bank of Portugal began collecting data in 1996.
Although the figures slipped back into the red in August with a deficit of €220 million this is minute compared to last year’s deficit of €7.3 billion, and the deficit for 2009 which was €17 billion. According to the bank, exports of services and goods have increased by 6.7% to reach €43.2 billion, giving a non-financial trade surplus of €315 million.
These are important figures as they have shown international partners and markets that the business sector within Portugal has been able to respond to the structural reforms in a positive way. Especially important is the fact that the improvement is due to an increase in exports rather than a drop in imports.
Exports increased by 55.9%, while the drop in imports was 44.9%. During the first eight months of this year Portugal had a negative trade balance worth €5.53 billion which has been offset by a €5.845 billion surplus in the service sector.
One of the products produced in Portugal for export is tomatoes, and the country’s second only to California in production. This year production was in excess of 1.2 million tonnes, and 95% were for export. However the situation next year might be quite different, as reforms in agricultural policies could lead to a 40% decline in the area cultivated due to a reduction in EU funding. If the reform is approved then many producers may feel it is advisable to grow tomatoes in the future. The business is estimated to be worth around €250 million annually.