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Naturally, the weekly or monthly rent for different times of
You'll need professional management the year varies with demand.
to ensure your property is efficiently marketed to vacationers.
In summary, you should satisfy yourself that the vacation property you're considering is:
1. Near a beach;
2.
3.
Near a golf course; and,
Managed by professionals with access to the northern European market for rental accommodation.
The
A property with this combination of location and management will maximise returns by extending your peak season for rental demand to April through October--seven months of the year. property can also be let for the rest of the year--although January is a time of limited demand. You'll command higher ren- tals during those seven peak months--and at other times of the year--compared to properties with less favorable locations.
Possible returns
Prices for Portuguese property where demand is primarily from foreigners--as is the case in the Algarve--are normally quoted (and paid) in sterling.
Since 1979, well-located property in the Algarve region of Portugal has appreciated an average 15% a year, measured in sterling. In US dollars, property values were flat over the same period as sterling declined.
it was the
1974 to 1979 was a low period for this market: aftermath of the revolution in Portugal which ended Salazar's dictatorship and substituted a democratic government. were essentially flat over this time.
Prices
Given 15% annual appreciation in sterling over the past five years, we can conservatively anticipate an annual rise in capital values of well-selected properties in the region of around 10%. If, as I believe, the rise of the US dollar has reached (or is close to its end, appreciation measured in US dollars should be the same 10% per year--higher if the US dollar falls.
Regardless of the precise figure, the basis for expecting capital appreciation at some level is two-fold: