ONE Select Properties Mag 2023

Second Semester Outlook - 2023

The first semester of the year provided an impressive testament to the robustness of the luxury real estate market in key global locations, particularly in Portugal’s Golden Triangle. The year 2022 proved to be exceptionally favourable for the real estate sector, regardless of price points, as a diverse range of investors engaged in property transactions, including first and second home purchases, VISA acquisitions, and strategic asset portfolio expansion. As the second semester unfolds, the outlook is intertwined with the dynamics of the market’s supply and demand. The persisting scarcity of offerings has contributed to a seller’s market environment, and early indicators suggest that this trend is poised to endure. The second semester’s trajectory will also be significantly influenced by global financial policies articulated by central banks and institutions like the Federal Reserve in the United States. Decisions regarding the circulation of money, interest rates, and expansionist or reserved stances will play a pivotal role in shaping the market’s performance. In conclusion, the first semester’s buoyant momentum in the luxury real estate market of the Golden Triangle sets a promising tone for the months ahead. With a continued focus on elevating services, infrastructure, and investor confidence, the region remains an attractive choice for investors seeking stable

and appreciating assets. The interplay between market dynamics, global financial policies, and local efforts will collectively influence the trajectory of the second semester, underscoring the need for agile strategies to navigate this evolving landscape.

José Carvalho COMPANY DIRECTOR

& A First Semester Review Second Semester Outlook

“ “ The second semester’s trajectory will also be signifcantly infuenced by global fnancial policies articulated by central banks.

The first semester of the year provided an impressive testament to the robustness of the luxury real estate market in key global locations, particularly in Portugal’s Golden Triangle. The year 2022 proved to be exceptionally favourable for the real estate sector, regardless of price points, as a diverse range of investors engaged in property transactions, including first and second home purchases, VISA acquisitions, and strategic asset portfolio expansion. The allure of this picturesque region, known for its luxurious offerings and unique appeal, captured the attention of a discerning investor base. As the second semester unfolds, the outlook is intertwined with the dynamics of the market’s supply and demand. The persisting scarcity of offerings has contributed

to a seller’s market environment, and early indicators suggest that this trend is poised to endure. The second semester’s trajectory will also be significantly influenced by global financial policies articulated by central banks and institutions like the Federal Reserve in the United States. Decisions regarding the circulation of money, interest rates, and expansionist or reserved stances will play a pivotal role in shaping the market’s performance.

In conclusion, the first semester’s buoyant

momentum in the luxury real estate market of the Golden Triangle sets a promising tone for the months ahead. With a continued focus on elevating services, infrastructure, and investor confidence, the region remains an attractive choice for investors seeking stable and appreciating assets. The interplay between market dynamics, global financial policies, and local efforts will collectively influence the trajectory of the second semester, underscoring the need for agile strategies to navigate this evolving landscape.

Expansionist or reserved stances will play a pivotal role in shaping the market’s performance. “ “

Trends & opportunities Which Questions Should You Be Asking

Of Your Luxury Portfolio?

The evaluation of existing portfolios is becoming increasingly crucial for investment managers dealing with limited liquidity, as well as for publicly traded real estate firms experiencing discounts in relation to their net asset value (NAV), and private equity investors holding positions in operational companies. Property acquisition has become one of the safest investment whether for the composition of financial portfolios or for the client’s own benefit. With this in mind, it is important that each real estate asset be evaluated independently and perhaps analysed against each of these questions:

1. How is my overall portfolio performing? Asses the overall financial health of each real estate investment and analyse the returns each asset is generating. Cash flow is a crucial factor for real estate investors as it determines the profitability and sustainability of their investments. Regarding property assets which are not generating cash flow, the best way to understand their performance is to undertake an updated market evaluation.

2. What is the occupancy rate of my properties? Knowing the occupancy rates of each property asset is the most recommended way to gauge income stability and potential vacancies.

3. How are market conditions affecting my portfolio? Are there any emerging risks or challenges in the market? Staying informed about local and global market trends is extremely important. Supply and demand dynamics, interest rates, and local economic factors that impact a portfolio’s value and potential returns. Understanding any potential risks, such as regulatory changes, market downturns, or shifts in tenant preferences.

4. Should I diversify my portfolio further? Investors may inquire about diversification strategies to spread their risk across different property types, geographic locations, or asset classes.

5. Are there any opportunities for expansion or acquisition? Identifying potential properties or markets that align with your investment goals is a great way to

“

“ Understanding any potential risks, such as regulatory changes, market downturns, or shifts in tenant preferences.

determine whether by yourself, or with your team, the best opportunities to seek out and grow your portfolio.

6. What is the long-term appreciation potential of my properties? This is a crucial factor to consider even when at the acquisition stage of any asset, most importantly within 3 different stages. What could be the property return and valuation in 5 , 10 and 20 years. Often the evaluation potential for property considers factors like location, market

trends, and future development plans.

7. Are there any tax planning strategies I should consider? Whether our clients are buyers or sellers, we always look to help in the best way possible, given our vast experience and local market knowledge. Nonetheless we always advise the consultation of professionals to explore tax-efficient strategies, cost segregation, or other tax incentives, specific to real estate investments.

Making Te Most Of Te Algarve Of-Season

The summer in the south of Portugal has long been known as the “crazy season”, where although you can enjoy wonderful long warm days on the beach or by the pool, the population seems to double and everything becomes slightly hectic. During the off-season period however, the Algarve has become a precious retreat with beautiful sunfilled days, moderate temperatures and stress free days. The winter and spring season have become fantastic months for those looking to get away from busy areas and enjoy wonderfully cooked fresh food, warm walks on the beach and delight in cherry blossom filled fields without having to look at your watch and think about any time consuming traffic. With this in mind, here are a number of ideas on how to make the most of this season in the Algarve:

1. Luxuriate in award winning spas in 5 star hotels like the Conrad Hotel, the Vilalara Thalassa Resort or at the Pine Cliffs Resort. All three offer sublime experiences promoting an enhancement to clients’ well-being, while equally feeling like you have the spa to yourself. Similarly,

“ “ The winter and spring season have become fantastic months for those looking to get away from busy areas...

the Algarve offers a unique spa experience in Caldas de Monchique. The only thermal spring water spa in the south of Portugal offers both an incredibly relaxing and healing journey.

2. Sample some of the best wines in the world in some of the Algarve’s best vineyards. Portugal is known worldwide among sommeliers for bodied, intricate and award winning wines. Interestingly over the years the Algarve has become increasingly popular for a growing offer of local viniculture producing wonderful wines. To make the most of this adventure you can either opt for a private tasting tour, or visit some of the well known vineyards such as Quinta do Vales, Quinta de Mata-Mouros, Quinta dos Santos and Morgado do Quintão.

3. Trekking through nature defying valleys with endless coastal views. Adventure your way through The Seven Hanging Valleys in Lagoa, or explore the Via Algarviana as you make your way from the Spanish bordering end of the Algarve to the coast kissing cliffs of Sagres. If you are looking tos any around the Quinta do Lago area, the Ludo trail is a fantastic way to admire the Ria Formosa Nature Reserve and find your way to the unique Faro beach.

4. Marvel at the Algarve on two wheels. The Algarve has some great offers on bike rentals or you can even choose to join a bike tour. Simply gear up and get ready to discover this region in a different way, at your own speed and making all the stops necessary, maybe even pack a picnic to take in some fresh air and unobstructed nature.

5. Seeking an adrenaline rush in a wide array of activities. This southern region of Portugal offers some exciting and heartpumping adventures, from speed defying driving experiences at the Algarve Autodrome, surfing and bodyboard lessons along the coast, paragliding to slowly admire the region landing on the countryside or the beach and skydiving from 10k to 15k altitudes and getting a unique birds-eye view.

6. Golf your way through some of Europe’s best championship golf courses. With over 10 golf courses to explore between Vale do Lobo, Quinta do Lago and Vilamoura there is much to keep you challenged in this area alone. If you are looking to venture into other golf courses, perhaps visit Salgados, Monte Rei, Benamor, Palmares or even the Nick Faldo designed golf courses.

Meet the team

José Carvalho

COMPANY DIRECTOR

José is well respected and liked on the Algarve real estate scene. He is a keen golfer, and equally passionate about his life and work here. He joined the prestigious resort of Quinta do Lago in its very early days in 1979, from there travelling to Switzerland and on to the US.

It was on his return in 1985 that he decided to settle and join the Real Estate team at Quinta do Lago SA. He became the Sales and Marketing Director as well as a Board Member. In 2009, he stepped down from this position to pursue his own ambitions. José’s knowledge and understanding of the real estate market here are second to none. He saw an opportunity to go One step ahead, and ONE Select Properties was born.

What does ONE Select mean to you? “To bring an entire new level of service to clients, whether they are buyers or sellers. People do business with whom they like and trust.”

Sofia Castro

COMPANY MANAGER

One to One. That’s what attracted her to this partnership in excellence. “Working with the best real estate the Algarve has to offer, based on an understanding of total professionalism. Listening to the client. Building trust.”

Originally hailing from Oporto in the north, she soon was won over by the Algarve’s unique charms. She also settled in the Quinta do Lago and Vale do Lobo areas and made a name for herself on a wide range of interior design projects. An eye for details that count.

Like José, she is excited about the Algarve’s future, and how ONE Select Properties can become the One name you remember in a bustling property market.

Te buying

process

The ONE Select Properties team will always work with you in order to find the property that matches all your requests. Once the right property is found, your representing agent will act as a mediator in the negotiation process and after a mutual value is agreed, a proposal is outlined by the vendor’s representative.

As price and timing is agreed upon, both parties will usually appoint a local lawyer and formal property documentation will be sent to the buyer, in order for the representing lawyer to perform due diligence and prepare the buying contract.

Private Ownership

1

Promissory Contract Signing

When looking to purchase property in Portugal the buyer must acquire a Portuguese Tax Number, which can be done with the aid of the appointed lawyer. Once drafting and agreeing upon the terms and conditions of the buying contract, the promissory contract can be signed. This is signed by the buyer and the vendor, or their representatives, which is also normally accompanied by a 10% deposit based on the total purchase value agreed. At this stage a deadline is usually set for the signing date of the final deed. If either party defaults in the completion of the final deed, a compensation is then in place with this deposit.

2

Final Deed Signing (escritura)

Before signing the final deed, which usually takes place in a public notary, the buyer must pay IMT (Property Transfer Tax). Both parties can either be present or give power of attorney to their legal representative. Upon signature of the final deed the buyer will pay the remaining property purchase balance, alongside notary and registration fees.

3

With the purchase and deed complete, the representing lawyer will help the buyer complete their registry in the Land Registry, as well as changing all utility bills to the new owner’s name.

1

Structure Due Diligence Corporate Ownership

With the required legal documentation shared, your appointed representative lawyer will preform the essential due diligence. This will allow for the buyer and the lawyer to understand the exact status of the company to be acquired, in regards to matters like, maintenance fees practiced, ongoing costs, warranties, company legal representation as well as present procedures followed.

2

Share Purchase Agreement Signing

When dealing with the purchase of a corporately owned property, a Share Purchase Agreement is drafted and agreed upon by both parties. Once a consensus is reached, both in regards to the property value and the terms and conditions of the agreement, a 10% deposit is transferred from the buyer to the vendor. At this stage a deadline is usually set for the signing date of the final deed. If either party defaults in the completion of the final deed, a compensation is then in place with this deposit.

3

Remaining Purchase Balance

Upon agreement of the final terms and conditions of the Share Purchase Agreement, the remaining balance can either be transferred to the buyer’s lawyer’s account or via any other agreed form of payment to the vendor, completing the transfer of company ownership

4

To complete the new company proprietorship, the appointed company management team will transfer the shares of the ownership to the new UBO (Ultimate Beneficial Owner). Any other remaining tasks will be organised by the management company.

Te buyingcosts

IMT is a municipal real estate transaction tax, which occurs when there is an alteration to the property ownership. This tax varies according to the type (country or urban), location (mainland or autonomous) and purpose of the property (permanent or second home). To calculate the IMT, the below formula can be used; applying the relevant rate and portion to be deducted, that can be consulted further on the Portuguese Tax Office Portal.

IMT = Property Value noted in Deed

* Tax Rate

* Tax Deductions

IMT STAMP DUTY, NOTARY & REGISTRATION TAX RATES

Stamp duty in Portugal is currently at a fixed rate of 0.8% on the agreed sales value. Notary and registration fees can vary dependant on the chosen lawyer, however should amount between €1,000 to €2,000. These values are to be paid by the purchaser prior to signing the notary deed and registration of transition into the new buyer’s name.

Costs On Purchase

IMI CGT

MUNICIPAL PROPERTY TAX

The Municipal Property Tax is an annual fee appraised and updated by each municipality, dependant on property location. Urban properties are levied at a rate between 0.3% and 0.5%, whilst rustic properties have a rate of 0.8%. The appraisal value is registered by the Portuguese Tax Authorities and the overall total property tax value payments are done in instalments.

CAPITAL GAINS TAX

On the sale of property, in Portugal, there is Capital Gains Tax (CGT) to be paid at a rate of 28% for non fiscal residents and 25% on nonresident companies. Residents are taxed 50% CGT, which is then included in the individual’s annual income tax return. If the funds are reinvested for a permanent residence, within 3 years of the date of sale, anywhere in the EU/ EEA area, CGT will not apply.

Costs After Purchase

AIMI INHERITANCE TAX

ADDITIONAL MUNICIPAL TAX

Created in 2017 and applied to those who own more than 1 property, it is different to the IMI and to be paid separately, in a single instalment usually in September. AIMI is levied on the combined total value of the rateable value of properties, applicable on all urban residential property or land destined for construction. For corporately owned properties a flat rate of 0.4% is applied, whereas for privately owned properties there are 3 different classifications of AIMI:

Between close relatives there is no inheritance tax in Portugal, i.e. parents/ children and spouses. However on gifts, 0.8% stamp duty is calculated based on the Property’s Rateable Value. Any other situations of inheritance or gift will be subject to stamp duty at a rate of 10.8% of the Property’s Rateable Value.

Te golden visa

In 2012, the Golden Residence Permit, otherwise known as the Golden Visa was devised to attract money into the country by granting residency, in exchange for a variety of approved investments.

Investing in real estate in Portugal is a popular choice among Golden Visa applicants. This is partly because property prices in Portugal have typically been lower that in many other European countries – providing investors with a greater opportunity for capital growth. In addition, the minimum investment required is set at a very affordable level.

Following amendments to the Portuguese 2021 State Budget, the Golden Visa scheme changed as of January 1st 2022, particularly for citizens looking to invest via a real estate acquisition. This amendment to the visa scheme was introduced so as to “boost” investment in cities within the interior of Portugal, which in the Algarve does not include the most sought after touristic parishes.

APPLICATION ELIGIBILITY

All citizens outside the Schengen Area with intent of conducting an investment activity, as an independent entrepreneur or through a company setup in Portugal, may apply by one of the following routes:

- Transfer of funds of more than € 1ML

CAPITAL INVESTMENT

- Transfer of funds of more than € 350k for scientific research activities

- Transfer of funds above € 250k for artistic or cultural activities

- Transfer of funds above € 500k for capitalisation of small or medium sized companies PROPERTY INVESTMENTS

- Acquisition of property worth over € 500k within designated “lower density” areas, or if it is classed as a touristic property (Alojamento Turístico)

- Acquisition of property worth over € 350k if property is more than 30 years old or located in areas of urban renovation

JOB CREATION

- Creation of at least 10 permanent jobs

REAL ESTATE PURCHASE ELIGIBILITY

With the changes applied in 2022 to The Golden Visa scheme, the real estate purchase route was limited to:

- Property purchase worth over € 500k, within the designated “lower density” areas

- Property purchase worth over € 500k, classed as a touristic property (Alojamento Turístico)

- Acquisition of property worth over € 350k, if property is more than 30 years old or located in areas of urban renovation

Not eligible for Golden Visa “Lower Density” areas eligible for Golden Visa

BENEFITS OF THE GOLDEN VISA

A residence Visa waiver for entry in Portugal;

Parishes eligible outside of “Lower Density” areas

The possibility to live and work in Portugal, conditioned to staying in Portugal for 7 or more days in the first year, and 14 or more days in subsequent years;

Visa exemption for travelling within the Schengen Area;

Family residency;

Future possibility to later apply for Portuguese Citizenship and/or Permanent Residence.

Please Note: The tax rates, scope and rules may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should take personalised advice.

Te non-habitual residence

Introduced in 2009, when choosing to move to Portugal a resident would enjoy a 10 year long highly advantageous tax arrangement, under the Non-Habitual Residency Scheme.

A Non-Habitual Resident can benefit from a flat 20% income tax rate, if/when employed in Portugal, instead of the hefty 45%+. Nonetheless, an individual’s professional qualifications must fall within the specifications of the regime, further explained in the Portuguese Authorities Portal online.

If eligible for the NHR scheme, most of an individual’s income from a foreign source is tax exempt in Portugal for 10 consecutive years. This means that expatriates can maximize any rental income outside of Portugal, capital gains on foreign real estate, interest and dividends.

TAX ON A FOREIGN PENSION

Until April 1st 2020, the scheme allowed for income from foreign pensions to be received tax-free in Portugal.

However the 2020 Portuguese Governmental Budget, introduced a new flat 10% tax rate on foreign pension income. All individuals that applied for the scheme prior to the 1st of April 2020, are still eligible for tax exemption on pension income.

Exceptions are applied to all foreign pension income on individuals who performed service professions, including local authority, army, police, teaching, fire service and national health service.

WHO CAN APPLY?

If an individual has not been a resident in Portugal in the previous 5 consecutive years, all nationalities (including non-EU/ EEA citizens), can apply for the NHR scheme.

For eligibility an individual must meet the Portuguese Residency rules, alongside spending 183 days a year or having a main residence in Portugal.

BENEFITS OF THE NHR

All Portuguese employment income, considered as qualified within the scheme is taxed at a flat rate of 20%; 10% tax rate on foreign pension income.

Almost all foreignly sourced income is tax exempt;

Inheritance or gift tax are tax exempt on possessions outside of Portugal, given that these are transferred to spouse, descendants or ascendants. If transferred to other individuals these are taxed at a flat rate of 10%;

Exemption from wealth tax, in Portugal or abroad as well as any tax on funds settlement;

Dependant on the Double Taxation Treaties signed between Portugal and the respective country, owning a Portuguese company means the possibility to take advantage of EU rules and directives on mergers, dividends, interest and royalties;

If an individual is interested in foreign investment, when owning a Portuguese company these can benefit from the participation exemption regime on dividend or capital gains obtained.

Selling your property

ONE Select Properties offers 35+ years of luxury real estate experience, with proven results to make the sale of your property as easy and effortless as possible. We do all that we can to ensure that the process suits your needs.

AN UPDATED MARKET APPRAISAL

The ONE Select Properties team will visit you at your property to meet and discuss your intended goals and priorities, resulting in an informed and competitive valuation. The more information you can give us at this point, the better we can help in meeting your objectives. We will openly explain how we work and share with you our thoughts on how we can best achieve your required results.

We will follow up with you on the next convenient business day with confirmation of our valuation and discuss further your property and needs. You will receive a ONE Select Properties seller’s letter/email confirming our conversation in writing.

PREPARING YOUR PROPERTY

There are various details that can be thought and considered to enhance your home and even improve the sale price. Such as:

De-clutter as much as possible;

Complete any outstanding maintenance and repairs that can be obvious to potential buyers;

Gardens, landscaping and pool area looking their best.

Before undertaking any major renovations you can choose to consult with ONE Select Properties, who will advise if these are necessary or if you could be over-capitalising – some buyers may prefer to make big alterations themselves.

THE ULTIMATE MARKETING PLAN

At ONE Select Properties, we pride ourselves on the high quality of our photography and videography that displays each property at its best. We will arrange for a professional visual portfolio and a detailed description. Furthermore, we will work on displaying your property information on the ONE Select Properties website and present it to our select network of estate agents and clients, as well as, on major property portal sites to give your property, the best exposure and publicity.

Alongside, we will communicate with our vast network of registered buyers and local search agents, together with, print media and property columnists. However, if you would prefer a low-key, off-market sale, our experience is also second to none in bringing this type of transaction to a satisfactory conclusion.

Throughout all the marketing activities and process, we will keep you updated so that any necessary changes can be swiftly implemented. Fair Market Value Evaluation

Property/Corporation Documentation Review

Updated Market Overview

Home Enhancing Guidance

Print and Digital Media Presence

Exposure In 30+ International Real Estate Platforms

Daily Updates on Potential Buyer Visits

Comprehensive Reach To Buyers Worldwide

Continuous Link Between Lawyers, Financiers and Notaries

Personalized Marketing Plan

Select Property Portfolio

Villa San Lorenzo

QUINTA DO LAGO

Townhouse Eva

PINHEIROS ALTOS | REF. 2361

Aluminium Shutters

Ceramic Floor Tiles

AREA

ARDEN, PATIO D

CONSULT QR CODE

Double Glazed Windows

Underfloor Heating

Open Plan Living Area

LED Lighting

Condominium Pool

Renovation Year: 2023

Golf Title Included

Apartment Maya

LOULÉ | REF. 2336

Alarm System

Getting in contact

We do more than simply help you buy and sell real estate. As an independent real estate agent we provide a personal service for property in the Algarve that makes the ONE Select Properties team a pleasure for you to do business with –whether you are a buyer or a vendor.

We know that people prefer to do business with those they like and trust. Many of our clients from around the world who come to us to talk about Algarve property remain friends long after their sale or purchase has been successfully concluded.

Quinta ShoppingSales Ofce

+351 289 143 940

info@oneselectproperties.com marketing@oneselectproperties.com

+ 351 918 542 871 jose@oneselectproperties.com

351 919 614 687 sofia@oneselectproperties.com