Buy Smart in 2009 - you have the power!

As if the credit crunch and the impending recession weren't enough, the downside for Brits wanting to buy overseas has been compounded by the plummeting value of the pound.

In just 12 months, sterling's value has slipped from €1.45 to under €1.20 - a fall of almost 20%. Against the dollar, the decline has been even more dramatic. As recently as July you could get $2 for every pound; by late November that had fallen to under $1.50.

Psychologically, it's a serious deterrent for buyers, as it means you could be paying significantly more for the same property than you would have a year ago. What's more, the cost of living in most overseas countries has also gone up accordingly - so that pint of beer, restaurant meal and weekly grocery shop will all be more expensive.

There are a few countries outside the dollar and the euro where the exchange rate pain has not been quite so profound - TURKEY springs to mind - but by and large, overseas homes are less of a bargain than they used to be.

So what can you do about it? One option - if you believe that the pound will make a recovery - is to take out a mortgage in the local currency. Say you want to buy an apartment in France or Spain that costs €200,000, and you take out a Euro-denominated loan for €150,000. Then only the €50,000 deposit will suffer from the conversion at a poor exchange rate, and if sterling recovers in a year's time you could potentially refinance the property at a more attractive conversion rate. This works especially well if you will be earning rental income in the local currency to pay the mortgage interest; but it is a high risk strategy - after all, sterling could decline still further.

Another option is to look in markets where property prices have fallen significantly. Spain is the obvious example; in spite of official figures which purport to show that property prices are still rising, evidence on the ground is that prices have already fallen by around 20% on average, and with many developers on the Algarve, Costa del Sol or Costa Blanca in financial trouble you could get an even bigger discount, wiping out the effect of sterling's falling value. But don't buy just on the discount - after all, too many properties were over-priced in the first place.

Ask us how to save money on your new mortgage and buy smart in 2009.

Nigel Salmon

Vilamoura - Cidade Lacustre

Work is scheduled to commence next year (2009) on the new Cidade Lacustre project that Lusort will be developing in Vilamoura. Already making Portugal´s largest marina bigger, it will be built overlooking lakes and navigable channels. The buildings will rise up above the water and long footpaths will criss-cross the lakes linking the different commercial, tourist and residential areas with the existing Marina and the beach.

This will certainly be a unique and pioneering project in Portugal, the trademark not only of the new Vilamoura, but also of the national and international tourist scene. Located next to the existing Vilamoura Marina, Praia da Falésia and the Environmental Park, Cidade Lacustre is also surrounded by magnificent golf courses.

This visionary project, developed by Rafael de la Hoz’s prestigious architecture studio, ensures harmonious integration into the environment over a total area of 1.680.000 sq.m.

The project is set to keep Vilamoura at the very forefront of tourism and a real focus of where people will invest in for the future.

Western Algarve - property to race ahead?

Formula 1 cars returned to Portugal on Monday 15th December when Ferrari and McLaren christened the new Algarve Motor Park.The sport’s top two teams kicked off the first official F1 test at the track and will be in action for three days as both conclude their track testing programmes for 2008.The 4.7km circuit, situated near Portimao in Portugal’s holiday region, features 18 turns and Felipe Massa (Ferrari) and Gary Paffett (McLaren) were the drivers to try out the hilly layout for the first time.

Portugal last hosted a grand prix in 1996 but the new Motor Park looks set to become one of the regular destinations on the off-season F1 testing roster with another official test planned for January during which Renault will launch its new R29 car.

The new track has attracted a new speculative property investor to the area in the eager anticipation that it will be a permanent feature on the F1 circuit following in the footsteps of motor bikes. Easy access to the Motorway and new exciting developments close by are attracting new interest.

Recession - not here in Portugal

Whilst many European countries are in the grips of recession Portugal has yet to get there according to data released last week (Dec 08)by the National Statistics Institute.

Portugal enjoyed 0.3% gross domestic product growth in the second quarter, meaning the country so far is not in a recession – the technical definition being two consecutive quarters of declining growth. On an annual basis Portugal’s economy grew 0.6%, slightly below the 0.7% growth year on year reported in the second quarter.