While the tourism in the Algarve showed a positive development during the summer of last year the numbers for the winter tourism were tremendously failing. In December 2010 the Algarvian hotels registered a drop of 19% in sales and 14% in occupation. In the areas of Vilamoura and Quinta do Lago these figures were even worse, and resulted in a decline of 39% in comparison to December 2009.
If we believe the "Entidade Regional de Turismo do Algarve (ERTA)" the 2011 hotel room occupation will be less than in 2010 or with some luck equal to 2010. Due to the planned toll on the Algarve highway "Via do Infante", the cancellation of the winter schedules by Thomas Cook and TUI as well as reduced quantity of flights during the winter, this negative expectation may come true. The raise in VAT and many other taxes seems to have no effect in the opinion of the respondents of this enquiry.
Ironically, the riots in Tunisia and Egypt may have a positive effect on the Algarvian tourism, and many operators in the area are "hoping" that the riots will go on for a while. Just follow the latest advertisements of some of the local tour operators and you will see that the word safety is used more often than in the last years.
Of course, the reduction of overnight stays has also its effect on the real estate market and who would expect anything else than a negative effect. Furthermore, the new law about the national budget for 2011 will reduce the possibility for the Portuguese consumers to buy new homes. The market was already reacting last year buy a reduction in prices for new and second hand homes. The banks reacted by reducing their loans to home owners and also reducing the evaluation values of homes.
But the market reaction was not enough. Less capital, less possible purchasers from Portugal as well from abroad will once more strike many home-owners and constructors. Of course, special locations like Quinta do Lago or Vale do Lobo will not suffer massive price reductions as the property owners rather will not sell, if they don't achieve the price than put their price down. But the prices will also not raise as they did since 1999. The time of annual price increases of 8% or more stopped already last year in the Golden Triangle, and we can be sure we will not see any sales price increases this year.
But many other areas in the Algarve do not have this luxury and if owners have to sell, they must evidently cut the asking price, because the only properties which will sell in 2011 will be the ones who are in a perfect location or the ones who are very cheap in comparison to the average price achieved in the last years in the area.
The person, who is interested in purchasing property in the Algarve, can only be congratulated. It is the period in his favour, the time of choosing in between many offered products, of stock picking and tough price negotiations. The cherries will hang a lot lower in 2011 than in the years before and be assured, most of them are sweet and not sour.
