The Algarve, Portugal, has been attracting expatriate retirees for some time.  Located on the very southern end of this enticing country, the region (85 miles by 23 miles) is known for its delightful climate, excellent golf, colorful, fertile landscape and its magnificent coastline that consists of long stretches of white sandy beaches interspersed with majestic cliffs and grottoes.  This small section of the world has been occupied by the Phoenicians, Celts and Romans (and by an occasional pirate) and was the last part of Portugal to be re-taken from the longest occupiers, the Moors, in 1297.  As a result, the Algarve still offers hints of a Moorish past, including wonderful whitewashed buildings that dot the idyllic countryside.  Warm waters, fig trees and almond groves, wild orchids and orange tree stands, quaint fishing villages and tourist centers, medieval ruins and modern architecture all find a home here and beckon to retirees seeking the good life.

Portugal is not a cheap country, but it is one of the less expensive countries in the European Union, and overall, the  cost of living is about half of that in France or Germany.  The Algarve is essentially a string of beach towns with some  inland country and may be the most expensive area in Portugal, aside from Lisbon, because it attracts international tourists and vacationers.  Solid numbers are hard to come by, but the cost-of-living in this region is roughly the same as in Boston, which is about 30% higher than the U.S. national average.   Life in the Algarve, however, includes a stunning coastline, sumptuous seafood and wonderful weather, something Boston definitely does not have.   One's living habits and location within the Algarve also have a large  impact on living costs.

The most expensive item in the Algarve is, of course, housing.  Foreigners (and retiree residents) can buy property in Portugal; indeed many are doing so right now, and buying real estate can almost be easier than renting it.   Long-term rentals along the coastline can be difficult to find.  Most seaside rentals are short-term, catering to vacationers, and they are expensive, averaging in the $2,000 per month range and higher.   And a foreigner must have a Portuguese guarantor, ensuring that payments will be made, in order to enter into a long-term lease agreement.

When buying real estate costs include the property price, notary fees, property transfer tax, land registration fees, mortgage charges (if any), surveyor’s fees, connecting to electricity and water providers and architect fees as applicable.  Buyers need a personal fiscal (tax) number, which can be obtained at a local tax office after standing in long lines (it will also be needed for opening a bank account, entering into a long-term rental agreement, etc.), as well as numerous contracts, certificates and tax documents.  It is recommended that anyone buying property work with a government licensed real estate agent to avoid problems.

The coast is dotted with historic, scenic towns and there are reasonably-priced (but not necessarily cheap) properties available in many of them.   Lagos (population 27,000) boasts some of the Algarve's most beautiful beaches, including Praia de Dona Ana and Meia Praia, and has one bedroom apartments (essentially condominiums) in new buildings, with a pool, for sale starting at $170,000.  This mellow village comes to life at night and was once the capital of Portugal until much of it was destroyed in the 1755 earthquake; hence, most buildings date from the 18th and 19th centuries.  Lagos also is the site of a new retirement apartment complex, The International Retirement Club, scheduled for completion in 2009.  Prices are not yet available.

In Armação de Pera, a popular beach town, small, simple but modern apartments start at $149,000.    Spacious town homes overlooking the sea in Alvor, a touristy spot with great beaches (but some unattractive highrise buildings), are selling for $292,000.  Similar prices can be found up and down the coast; of course, more luxurious and expensive real estate is available, too.   

Further inland, old stone cottages and farmhouses, many in need of work (but isn't that half the fun?), are selling for $170,000 to $350,000.   Similar properties in central Portugal sell for $75,000 to $165,000 (and general living costs are equal to or less than the U.S. national average).  Prices throughout Portugal are fairly stable, but in the Algarve, they are rising 10%-15% per year, which is bringing in some real estate speculators.  Towns to the east of Faro, the provincial capital and home to an international airport, tend to have fewer tourists and less expensive real estate.

The Algarve, Portugal, Continued....