Buy into 'the real Portugal'

The infrastructure is improving, and property prices are up - but it is still possible to snap up a bargain on the Algarve

Winkworth's Ian Wilson believes so. "There are areas where you can still get in at a good price and where you definitely won't lose money," he says. The Algarve is the first overseas destination for Winkworth, which began trading there nine months ago. It has four branches, with plans to expand further. Wilson first moved to this part of Portugal in 1987, working for another agency, and understands the area's special appeal for British buyers: "It has everything. It's not as built up as Spain, its beaches are way ahead of theirs and the climate is very temperate. The summers are lovely and hot, yet we still get Atlantic breezes, and it never gets particularly cold in winter."

Many Winkworth clients are older buyers looking to permanently relocate but, increasingly, younger buyers are putting a toe in the water with pure investment purchases and plans to move permanently at a later stage. A typical budget is around £250,000 which, in the popular tourist destinations in central Algarve such as Vale do Lobo and Quinta da Lago, now buys very little. It will get you more depending on how far east or west you are prepared to go.

Historically roads have been notoriously congested along the Algarve but a new motorway has substantially cut journey times, making the eastern stretch up to the Spanish border and the villages as far as the most westerly point, Sagres, more viable.

Million-pound properties are now commonplace in many areas, particularly those near golf courses, there are currently 29 on this part of the coast, and in frontline coastal spots but Wilson has this tip for bargain hunters. "Head west and north of Sagres to the area known as Aljezur. It's very rugged and unspoilt with many pretty bays and coves and you can still get a good three-bedroom villa with pool for under €250,000 [£179,000]."

And in the villages behind the coastline, you can also pick up apartments with reasonable price tags. Entry-level is around £60,000 to £70,000, two bedroomed apartments on good quality developments are currently available for £120,000 upwards, and detached villas with a pool cost from £250,000.

However, prices everywhere have risen dramatically in recent years and some agents are warning anyone buying as an investment to choose wisely. "Two years ago it didn't matter. Anything you bought would have gone up, but today's buyers must do their research," says Quadrant Properties' Connie Vito. She points to the eastern Algarve around Tavira, where the infrastructure is improving, as a good place for a bargain.

The infrastructure may be improving all over Portugal but many agents say that the lack of infrastructure appeals to some. A spokesman for Hamptons International says: "An increasing number of clients bought in Spain 10-15 years ago but now find it too built-up. They are selling up and buying in Portugal which is how Spain was 20 years ago. A lot of people prefer it as it feels like 'the real Portugal'."

The Algarve is also a popular holiday destination making it a good place for generating rental income. Hamptons' research suggests that that rental yields in the last year have been between 3.5 and 4.5 per cent, providing people buy in at the right price, although some developers are offering guaranteed rental of 4-5 per cent. Quinta do Martinhal is one example of this. Hamptons have also recently formed an alliance with CB Richard Ellis, where Frederico Clemente heads their residential department. Clemente points to Tavira in the east as a hotspot, the area inland just above the Algarve and the western stretches as far as Sagres and right up the Atlantic coastline to Lisbon as the next places to be discovered by British buyers.

The Vigia group's David Westmoreland has watched growing numbers of buyers base themselves in the western Algarve now that it is within 50 minutes of Faro. "Their primary reasons are a higher perceived quality of development, low crime rates, and the attraction of being able to immerse themselves in traditional Portuguese culture," he says. "At Parque da Floresta for example, we build low density housing, of no more than two storeys, on the edge of a nature reserve, set amongst the real Portugal, near sandy beaches and fishing villages that retain their character and charm. We are the exact opposite to the built up strips of Fuengirola and Torremolinos."

This part of Portugal may be less developed than much of central Algarve but it still boasts an abundance of golf courses. Golf was a major incentive for Mike Dash from Wells, Somerset, who first bought a share of an apartment in Parque da Floresta in 1996. He has recently bought outright a three-bedroom linked villa at the latest phase of Quinta da Encosta Velha, overlooking the eighth and ninth fairways. "It was important for us to buy into a good complex which makes you feel secure about your investment. Because of the golf and the excellent facilities you feel sure that this will be around for some time," he says.

Quinta da Encosta Velha houses start from€385,000 (£275,000) and villas from €630,000 (£450,000). Quarter shares are €119,500 (£85,000), which give owners 13 weeks of use annually. Historically, most golf courses have been in central Algarve but increasingly they are being built in less visited areas such as the western Algarve, attracting development. Oceanico Developments recently announced plans for a €400m (£286m) golf resort, Amendoeira, near Silves in the west, which will have courses designed by Nick Faldo and Christy O'Connor Jnr.

Contacts

Winkworth Portugal: www.winkworth-portugal.com

Quadrant Overseas Property: 01276 507513; www.quadrant-property.com

www.oceanicodevelopments.com Parque da Floresta 01223 316820 or 00 35 1 282 690 073; www.parquedafloresta.com.

Hamptons International Portugal: 00 35 1 282 789 336; www.hamptons-portugal.com

British Airways flies to Faro from London Gatwick. For more details visit www.ba.com