Two developments in December suggest the forecasts for the Portuguese economy may soon be revised upwards.
Boris Johnson’s landslide victory in the 12 December UK election in particular should prove very positive for the Portuguese economy. UK share prices have already risen sharply, and pundits are talking of a ‘Boris boom’ as the end to the UK’s political uncertainty unleashes a wave of foreign and domestic-sourced investment.
Brits are Portugal’s largest group of tourists and a key driver of the property market with sterling’s significant fall following the EU referendum in June 2016 hurting the Portuguese economy. The number of visitors from the UK, the largest source of foreign arrivals, fell 5.3 per cent in 2018 from a year earlier.
Sterling has now jumped by over 10 per cent since hitting a low against the euro in mid-2019. It could continue to climb next year if Johnson, as seems likely, seeks a close relationship with the European Union.
A stronger pound should see the number of British tourists swiftly recover and could give a further lift to the property market as more British overseas property investors look to buy in Portugal.
Silves estate agent Minita is certainly positive on the outlook for Silves and the Algarve, saying: ‘A number of British buyers on my books put their plans on hold ahead of the election but they could well now press ahead.’
In Silves, builders swarm over grand but crumbling buildings, symbols of the wealth once generated by the cork factories that provided the town’s main source of employment. Many are now being converted into short-stay apartments as foreign money gushes into Silves, lured by lavish tax breaks and a lack of accommodation for the tourists that throng the town year-round.
Meanwhile, apartments and townhouses are being snapped up by foreign buyers. Minita, who owns the Minita estate agent in the town, describes business as ‘very good’, adding that the main problem is a shortage of saleable accommodation as demand outstrips supply.
The factors driving foreign demand for real estate in Silves are the same as those in the rest of Portugal, namely “low crime and an absence of terrorism, a pleasant climate, tax breaks, attractive prices, the ease and security of buying property, as well as amazing food and culture’, explains Minita.
It seems the Portuguese economy is once again on the up.