Sub-tropical splendour with a cool price tag
Madeira's reputation as an exotic destination for wealthy retirees has been turned on its head by a clutch of new developments, says Chiara Cavaglieri
Sunday 05 June 2011
Portugal's economic problems might be enough to put many overseas property buyers off, but the Portuguese island of Madeira is still proving popular with home-seekers from all over Europe.
Wealthy retirees have long had a love affair with the place, but now budget airlines are providing affordable flights, London is just three hours away, its attractions are being discovered by a new generation of visitors.
"For many years Madeira was considered a popular destination for the 'blue-rinse brigade', largely due to the year-round sub-tropical climate, and they tended to holiday in the capital city of Funchal.
"However, a concerted effort to attract younger couples and families has resulted in new facilities including golf courses, marinas, entertainment parks and even a man-made beach," says Connie Vitto, of Quadrant Overseas Property.
In February last year, Madeira hit the headlines after severe floods devastated the south of the island but it didn't taken long to pick itself up and entice visitors back. Although famed for its wine, cake, embroidery and footballer Cristiano Ronaldo, the island is still something of a well-kept secret and with 67 per cent of it made up of protected land and forests, it isn't over-developed.
The developments that are there tend to be high-end villas which boast some of the island's most exquisite views. The Palheiro Estate, for instance, which is located just outside Funchal, has been owned by the British Blandy family since 1885, and provides the perfect example of what Madeira has to offer: stunning gardens which attract over 40,000 visitors a year, a luxurious spa and an 18-hole golf course voted by Golf World magazine as one of the top 100 golf courses in Europe.
Property prices at Palheiro Village, part of the estate, range from €295,000 (£260,000) for a large one-bedroom apartment and €395,000 for two bedrooms, up to €595,000 for a three-bedroom villa and €1.65m for a four-bedroom villa with a garden and a pool.
The village operates a full management service but this doesn't come cheap; the annual infrastructure and basic service charge starts from €2,492 for one-bedroom apartments and rises to €8,993 for the top-end villas.
"The property market in Madeira is very much a niche market compared to the mainland of Portugal, most particularly in our segment of the market – that of luxury integrated resort developments. Whereas in the Algarve (or Silver coast), for example, there are a larger number of similar developments, here on Madeira, Palheiro Village is the only completed resort development with this type of property on offer," says Palheiro Real Estate sales manager, Anne Marchington.
The good news for anyone looking for a holiday home in Madeira is that, unlike many other areas of Europe, the tourist season lasts all year round. If you wanted to rent out your Palheiro Village home, typical rental values on a two-bedroom apartment would be around €900 per week during the standard season, €1,000 in July and August and €1,250 during the peak season over Christmas and New Year.
Ms Marchington says that a fairly conservative estimate of 24 rental weeks could yield around €15,810 once you've taken 15 per cent off to cover the rental commission (unless you decide to rent it out yourself) and another 15 per cent for the rental services package, which pays for cleaning, laundry and utility costs. Property running costs of around €6,950, which includes local property tax, the service charge and home insurance, will bring the margin down to €8,860 – equating to a 2 per cent return on a purchase price of €430,000.
"Some purchasers who originally did not think of renting out now have decided to do so, as their own situation may have changed, they are unable to spend as much time as they would have liked in the property, or feel that the property is better looked after when used rather than sitting here empty," she says.
Outside of the luxury developments, buyers tend to concentrate on the busy tourist favourite Funchal, where prices range from €80,000 for a brand new one-bed flat without facilities. If you want a pool and garden you could pay from around €125,000 and €150,000 for a two-bedroom flat.
However, experts say that new areas are opening up in the sunny south- west of the island, with towns such as Ribeira Brava, Ponta do Sol and Calheta being of particular note. Price-wise, the lay of the land means you can expect a sea view without the premium you might pay elsewhere in Portugal.
"Many of the properties are built on inclines due to the dramatic mountainous landscape, which means that the average villa or apartment has superb views of the coast, sea or Funchal Bay.
"But despite this, prices still tend to be lower than the mainland. As with most European countries, the recession has had an affect on prices and stock but they have definitely not crashed, possibly because Madeira was not as reliant on the British market as the Algarve," says Ms Vitto.
When it comes to raising finance, seek independent legal advice from a local solicitor before signing anything, so that you know exactly what your commitment is. Buyers are obliged to pay fees of up to 8 per cent of the purchase price, which includes IMT, a property transfer tax, the top rate of which is 6 per cent, notary public fees, a land registry fee of a few hundred euros and legal fees, which are normally in the range of between 1 and 1.5 per cent of the purchase and sale value. Ongoing costs include an annual property tax of between 0.2 and 0.8 per cent and capital gains tax for non-residents is 25 per cent.
"The easiest way of buying in Madeira is for cash, with many Britons releasing equity from their UK home to buy on the island. This is straightforward if you can prove that you can afford the mortgage and have enough equity in your home. The downside is that you will raise the funds in sterling and then have to convert them into euros, the local currency, so this can be expensive because of the current exchange rate," says Melanie Bien, director of independent mortgage broker Private Finance.
Alternatively, says Ms Bien, you can take out a euro mortgage from a Portuguese lender but be prepared to put down a large deposit.
"Maximum loan-to-values tend to be lower than in the UK so you will need at least 25 per cent of the purchase price to put down, plus you must also prove that you can afford the repayments, so your existing financial commitments will be taken into account by the lender," she says.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
- 1 Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
- 2 Greece crisis: Alexis Tsipras accepts troika bailout proposals with conditions
- 3 German ethics council calls for incest between siblings to be legalised by Government
- 4 French woman dies in freak bungee jumping accident
- 5 Facebook rainbow profile pictures likely being tracked by social network
The moment a Queen's Guard soldier lost it and drew his gun at annoying tourist
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Pentagon accuses Russia of 'playing with fire' over nuclear threats towards Nato
They are neither a 'state' nor 'Islamic': Why we shouldn't call them Isis, Isil or IS
iJobs Money & Business
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...
Day In a Page
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.