The signs are everywhere. Above narrow streets, their crumbling walls peeling with paint and azure ceramic tiles, the town’s wrought-iron balconies are decorated with large placards. On each is printed VENDE SE – proclaiming the property up for sale.
A tiny Portuguese fishing village that straddles the Rio Gilão, Tavira is an hour’s drive from the Spanish border and was the last stop on our four-day drive down Portugal’s Atlantic coast and into the Algarve.
A vast area at Europe’s southernmost tip, sometimes the Algarve feels closer in spirit to North Africa than continental Europe; door knockers are fashioned in the shape of Moorish hands and baroque turrets peek out above terracotta tiles. When you avoid the swamped pockets of package holiday deals and golf resorts, sheltered lagoons give way to deserted surfing beaches and rugged cliffs, dotted with the cobbled streets of sleepy towns where locals greet you with easy grace and charm.
The “For Sale” posters, however, betray another reality. Just like in Tavira, many properties around the country lie empty, disused and in disrepair. In the capital, around a fifth of buildings are currently derelict and more than 4,000 properties have been left abandoned by residents who cannot afford to live there any more.
One of the stipulations of Portugal’s €78bn economic bailout was for it to phase out its illogical century-old rent controls, which had stubborn tenants living in prime real estate for less than €50 a month. Buildings were decaying as rental income couldn’t keep up with maintenance costs. Now the freeze has disappeared, so have the tenants.
International investors have grown wise to the opportunity, flocking to buy empty palaces and the former homes of aristocratic families before transforming them into luxury stores and residences. Last year spending on Portuguese commercial real estate tripled to €322m.
Today Portugal will be undertaking its first government bond auction since the crisis, hopefully a step towards re-entering global financial markets and convincing investors that it can stand on its own two feet again. In this context, there’s enormous potential for the country’s dormant real estate to help buoy up the still-struggling economy and stimulate growth.
The neglected buildings scattered throughout Lisbon, and indeed the rest of the country, offer a chance for city renewal and a sense of regained pride; a source of cautious optimism.
Several large-scale developments are already slated for the Algarve. This news should be welcomed but with a caveat – the government must work to ensure that this change doesn’t come at the cost of bartering charming villas for high rises and hotel chains. Because if Portugal gets this delicate balance wrong it could jeopardise the very qualities that have long made the country so alluring.
Alexa Firmenich is a researcher for Monocle.