An emerging second home destination
To date, residential development in Portugal aimed at the northern European market has centred on the Algarve. This started in the 1960's when international developers saw the potential of resort development aimed at foreign markets - examples being Sir Richard Costain in Vale do Lobo and André Jordan in Quinta do Lago.
The ingredients for these developments typically include both hotel and residential build, supported by a range of facilities and services. Over the last 10 years or so, the Lisbon area has attracted second home development and - continuing this trend - new areas of development activity are emerging - in particular the Alentejo region to the north of the Algarve and the island of Madeira.
Madeira has long been known as a travel destination, particularly for those arriving by sea. Currently, over 250 cruise ships call into Funchal each year, with a total of over 300,000 passengers. Arrivals by air (domestic and international) have increased significantly - up from approx. 0.5 m. in 1990 to over 1.17 m. in 2006. Around 50% of flight arrivals are international, with passenger arrivals (by country of flight origin) as follows:
Major investment has been made in new infrastructure, including a dramatic improvement in the airport (extended runway and new terminal building) and an improved road network with convenient connections via tunnels and soaring bridges.
Mountainous and dramatic, Madeira is a lush, fertile out-crop, with a semi-tropical climate that supports a broad array of horticulture and agriculture, from bananas to exotic flowers. It also grows grape vines, for the production of Madeira wine.
The population of the island is approximately 270,000, of which the majority live in and around Funchal. Most visitors also stay in Funchal, a lovely colonial-feeling old town, with fine botanical gardens and parks and a good array of shopping and eating venues.
In terms of visitor profile, Madeira is particularly appealing to the `baby boomers´ generation who are not particularly looking for beaches and nightlife but are attracted by a warmer climate and an active lifestyle. The island is criss-crossed with excellent walking and hiking trails, many of which follow the paths of the Levadas, small irrigation channels which carry mountain water to farming areas.
There are two golf courses in Madeira - Palheiro Golf and Santo de Serra, with a third course recently opened on the neighbouring island of Porto Santo.
There is much to see and do around Funchal, including cable cars from the town up into the surrounding wooded hills. Madeira is thought to be one of the best locations in the world for sport fishing, with regular catches of Atlantic blue marlin over 700 lbs. Dolphin and whale spotting is also a popular activity.
Madeira is part of the European Union, with the political and economic stability this brings. It is also known as a safe and secure destination.
The development of Funchal has been driven by two main factors - the needs of the resident population and the evolution of tourism.
As regards tourist accommodation, the hotel offer has expanded significantly in recent years, including construction of new 4 and 5 star hotels and the renovation of older hotels, including the famous Reid's Palace Hotel (now owned by the Orient Express group). The recent opening of a `designer´ hotel - Choupana Hills - has attracted considerable interest, as well as a cosmopolitan, younger clientele.
A number of smaller, upmarket `quintas´ (country houses) have also been renovated, including Casa Velha do Palheiro, a Relais & Chateaux hotel. As one writer recently put it about Choupana's chic boutique and Reid's gilded palace, Casa Velha represents the luxurious colonial lifestyle (J. Allason, Financial Times `How to spend it´ magazine, July 2005).
As regards residential property, the growth of new development has been driven by demand for primary homes. The net emigration from Madeira witnessed in previous generations has been replaced by a net gain as people are attracted back, both by improved living standards locally and as a result of political upheavals in countries such as South Africa (said to have a population of around 600,000 people of Portuguese origin).
The process of purchasing residential property is the same as mainland Portugal, including conveyancing costs (property transfer tax, notarial and registration fees).
The size and topography of the island (54 km. by 23 km, with the highest peak over 1,800 m.) leaves very little flat land available. In addition, 70% of the island is designated as a national park. The combined effects of extreme topography; protected zones; strict planning controls and fragmented land ownership result in a scarcity of sites suitable for property development.
These factors also help to explain why Palheiro Estate, with a land area over 100 ha, is currently the only resort development on the Island - 18 holes of golf, country house hotel, historic gardens and developable land.
The first two phases of real estate development are underway:
- Villa plots - 30 large villa plots (ranging in size from 2,300 to over 6,000 sq.m.);
- Palheiro Village - 35 apartments and 44 detached villas in a private condominium, with central clubhouse building including swimming pool, pool bar, viewing deck and residents reception and a full range of property management services available.
Supply and demand
Foreign visitors have been coming to Madeira for trade and leisure for over 200 years. Other than hotel accommodation (and more recently, the arrival of timeshare), only a very limited supply of purpose-built apartments and houses have been available for rent or purchase.
Planned as it is for the northern European market, Palheiro Village can be said to be unique in Madeira - at least for the moment! The development team represents a strong mix of local knowledge and international experience. The development manager, architects, engineers, construction managers, landscape designers, interior designers and corporate design consultants are all highly experienced, having worked on similar, high quality developments in the Algarve over many years.
As an indicator of demand, from launch in November 2005 nearly 40% of the units in Palheiro Village have been reserved or sold - far exceeding expectations.
Prices within Palheiro Village range from €320,000 for a 1-bedroom apartment to over €800,000 for detached 3-bedroom villas.
Interest is mainly from the UK and Ireland and to a lesser extent Germany, Scandinavia, Holland, Czech Republic and locally in Portugal.
Visit the website here: www.palheiroestate.com