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Investors Cut A Slice Of Madeira Property Cake

May 20, 2009Article by Ray Withers

The vintage charms of quaint Madeira property are still luring British investors. Life seems to slow down when you step off the plane – but this is one of the many attractions of this genteel island.

Madeira’s real estate popularity with investors and second homers rests on several factors:

  • Year-round sunshine and a sub-tropical climate, with temperatures ranging from 16 – 22C degrees throughout the years
  • Direct flights from the UK take about 3-4 hours
  • Improving tourist facilities like golf courses and spa hotels
  • European style architecture and fabulous scenery

Several developments are underway on the rocky, volcanic mountains overlooking the capital, Funchal. Half of the islands 240,000 population live in and around Funchal because they are within easy reach of the city and the sea but also because that’s also the side of the island that gets all the sun. Madeira is one of the few tourist European resorts with continuing development in the recession, reflecting confidence in prices and the island as a destination for visitors. Of course, the current global economic difficulties are affecting Madeira, but because of strict planning controls and investment in infrastructure like a new motorway linking outlying suburbs to Funchal, values are not dropping through the floor like in many other countries.

This is because development is typically Madeiran – discrete and considered.  The island has no oversupply of trendy flats and high-rise apartment buildings are banned. Prices in some areas have increased about 30% in the past three years. Expect to pay from £222,000 for a one-bedroom studio on a new development overlooking Funchal. Many investors rent out their properties as holiday homes – receiving a 6% yield. If you want to go more upmarket, four-bedroom villas with a pool on a golf estate come with a £1 million price tag.

Madeira property investors should remember that as part of Portugal, Madeira has the same rights of ownership for EU citizens and is in the Euro currency zone. An annual property tax of 0.7% is levied on assessed value of property and transfer tax is 8 to 10%. Portuguese is Madeira’s first language, but English is widely spoken.

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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