A round-up of the latest news from Portugal: excitement for the Med Games 2027, a property market update, changes to tax breaks and more.
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Algarve to host Mediterranean Games
Gorgeous Lagos is set to host the 2027 Mediterranean Beach Games.
Resorts in the Western Algarve are celebrating after Portugal won its bid to host the 2027 Mediterranean Beach Games. Launched in 2015, the four-yearly event sees top athletes from countries bordering the Med compete at the highest level in water and beach sports.
Portimão and Lagos have been confirmed as host cities for the 2027 Games, which will take place from 11th to 18th September that year. The Algarve’s regional development commission (CCDR) broke the news on 9th September, after a meeting with the International Committee of Mediterranean Games (ICMG) in Heraklion, Crete, host to the 2023 Mediterranean Games. The first two Games were hosted by the Italian city of Pescara in 2015 and Patras in Greece in 2019.
The ICMG recognised the strong credentials of the Algarve, praising the region for its: beautiful beaches, good choice of hotels, tradition of hosting large international events, extensive sports infrastructure, support for national sports federations and easy access via Faro Airport. The CCDR has confirmed already that Praia da Rocha and Alvor (Portimão), Paia Grande de Ferragudo (Lagos) and the Rio Arade estuary will feature in the Games.
The Mediterranean Games currently has 26 participating nations, including teams from European, African and Asian countries, and attracts around 1,500 athletes. Events that take place on the beach include volleyball, handball, football, tennis, karate and wrestling, while water sports include open-water swimming, canoeing, rowing, kite-boarding. Not forgetting triathle, a hybrid of pentathlon that combines swimming, running and shooting.
The Games undoubtedly will be a boost for the Algarve, but in particular the event will showcase the two charming cities of Portimão and Lagos and the fantastic beaches and first-class leisure amenities across the two municipalities. Property-owners can expect heightened interest in rentals and look forward to a general sprucing up of public areas in preparation for the event. Definitely something to look forward to!
Limited time to benefit from Portuguese tax break
Looking forward to moving to Portugal and benefiting from the country’s special regime that enables foreigner to slash their tax bill? If so, you need to be quick after the Portuguese Government announced its intention to abolish its foreign residents tax break next year.
Under current rules, Portugal’s non-habitual resident (NHR) regime allows qualifying foreigners to enjoy highly favourable tax rates when they move to the country. This includes a flat 10 per cent rate on foreign pension income, tax exemption on foreign income, including dividends and rental income, that is taxable in its country of origin, and a flat 20 per cent rate for professionals coming to Portugal to work in specified ‘value-added’ jobs.
The NHR regime was introduced in 2009 as an incentive to attract high-net-worth foreigners to Portugal. By 2020, an estimated 50,000 overseas nationals had taken up the scheme and in 2022 an estimated €1.5billion was saved in tax by them.
In tandem with Portugal’s Golden Visa, which has been drastically scaled down, the NHR regime has been blamed for fuelling foreign demand in the Portuguese property market, driving up values in popular areas and outpricing local people. Lisbon and the Algarve have been the areas most affected.
As part of the government’s initiative to make domestic housing more affordable, Prime Minister António Costa’s revealed plans to ditch the tax break during an interview on 2nd October. Mr Costa said it would happen in 2024 but no precise deadline was given. He confirmed that the scheme would continue for those people already qualified before the cut-off date. More details were expected to be released in the Portuguese budget on 10th October.
Market watch – end of year slowdown
Is 2024 a good time to buy?
Could early 2024 be a good time to buy? The Portuguese property market appears to be softening in the final months of 2024, with a drop in buyers and tighter mortgage availability expected to trigger a dip in prices, according to headline data.
Month-on-month new buyer enquiries dropped 25 per cent across Portugal in August, according to the latest RICS/Ci Index, and in the Algarve alone enquiries fell more than 40 per cent. Figures from Portugal’s National Statistics Institute reveal a 23 per cent decline in property transactions for the April-June period this year compared to 2022.
The RICS/Ci Index points to anticipated price falls across all key regions – Lisbon, the Algarve and Porto – in the next three months, with the Algarve seeing the steepest falls.
The good news for property owners is that Portugal has a resilient economy and should react quickly once interest rates are steady or start rising again.
Said RICS Senior Economist Tarrant Parsons: “The general economic outlook across Portugal remains more resilient than that across the eurozone more broadly, with national GDP still anticipated to rise by over 2 per cent this year. Should the ECB find themselves in a position to begin loosening monetary policy later next year, this would likely be accompanied by a recovery in domestic housing market activity.”
Taking a 12-month view, currently only Lisbon is expected to see price rises, according to the RICS/Ci Index. For buyers, of course, a cooling off of the market could mean better deals over coming months!
Crowned Europe’s best destination – again!
Passadiços do Paiva (Arouca UNESCO Global Geopark) – Europe’s Leading Adventure Tourist Attraction.
Portugal concreted its reputation as a world-class leader in tourism by being voted Europe’s Leading Destination for the second year running at the coveted 2023 World Travel Awards.
The country swept up a raft of accolades at the awards ceremony, which took place in September. Among the Portuguese prize winners were Passadiços do Paiva (Arouca UNESCO Global Geopark) – Europe’s Leading Adventure Tourist Attraction, Pestana Porto Santo – Europe’s Leading All-Inclusive Resort, Verride Palácio Santa Catarina – Europe’s Leading Boutique Hotel. Especially commendable were the Algarve being voted Europe’s Beach Destination and Lisbon named as Europe’s Leading City Destination.
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