Quinta do Pateiro

Introduction

The development is an approved project on freehold land located a short drive from the ancient City of Silves in the Algarve, Portugal. The undeveloped site is located in the foothills of the beautiful mountains of Monchique. Set in an outstanding location with stunning views of the mountains and the surrounding countryside, Vale do Aguia offers a peaceful and secure alternative to the hustle and bustle of the traditional beach front resorts and therefore is of great interest to the more mature resident for whom the Algarve is becoming ever more popular. Numbeo ranks Portugal in the top 25 countries for quality of life, ahead of Spain, Italy and China.

Statistical information can be found here.

Investment Proposal

This development project is an ideal investment opportunity to buy a freehold property with full irrevocable planning approval and with the option to expand the size of the development on adjacent land. The Portuguese economy has now recovered from the recession and property values are beginning to rise. Construction costs are still relatively low and good terms can be negotiated. Now is the perfect time to invest in Portugal.

This development project is an opportunity for nationals outside of the European Union to have ownership of a freehold property and to be able to obtain residency status in Portugal and the Schengen Area of the EU using the Governments Golden Residency Permit (GRP) scheme. The Portuguese Government is also offering very favourable terms on taxation related to external investments.

Location

The site is located 2km north-west of the small City of Silves. The nearest beach resort of Carvoeiro is 20 minutes away. The mountains of Monchique are less than 15 minutes to the north and Faro International Airport is 45 minute’s drive away. There are many quality golf courses within a 25km drive from the site. There are good motorway links to Spain, the rest of the Algarve and the north of Portugal. There are only two roads giving access to the site, ensuring a peaceful and secure environment.

Silves

Silves was the ancient capital of the Algarve during the period when the Moors occupied the south of Portugal. Silves is dominated by the walls of the red stone castle built by the Moors to defend against attack from the Portuguese and Spanish enemies. The castle occupies the site of a former Roman citadel which was itself built on the site of a 4,000 BC Neolithic fortification. Consequently, Silves is steeped in history attracting many visitors to the castle and the City.

The Algarve

Local Economy

Silves has recently invested significantly in the city infrastructure, with improvements made to the castle, roads and public gardens and amenity areas. The picturesque River Arade, the City’s link with the Atlantic Coast, is now navigable from Silves to Portimao. Silves offers a wide range of sites of interest, good shops, cafes and restaurants and services.

The Algarve

The Algarve covers an area of 5,000 square km, extending just south of the Tagus valley to the southern coast of the Iberian Peninsula. Its highest point is Fóia, 902 metres (2,959 ft), in the mountain range of Monchique. It also includes some islands and islets. The region is also the home of the Ria Formosa lagoon, a nature reserve of over 170 square kilometres and a stopping place for hundreds of different birds. The length of the south-facing coastline is approximately 155 kilometres. Beyond the westernmost point of Cape St. Vincent it stretches a further 50 kilometres to the north. The coastline is notable for picturesque limestone caves and grottoes, particularly around Lagos, which are accessible by powerboat.

The Algarve is a popular destination for tourism, primarily because of its beaches, Mediterranean climate, safety, cuisine and relatively low costs. According to World Travel Awards, Algarve is the Europe's Leading Golf Destination 2013 and 2014. Algarve's mild climate has attracted interest from Northern Europeans wishing to have a holiday home or residence in the region. Being a region of Portugal, and therefore in the European Union, any EU citizen has the right to freely buy property and reside with little formality in the Algarve. British expatriates, followed by German, Dutch and Scandinavians, are among the largest groups wishing to own a home in this sunny region of Portugal.

The Weather

The maximum average temperature in summer is 32 0C and the minimum average temperature in winter is 6 0C. The lowest and maximum recorded temperatures are 0 0C and 48 0C. With an annual average of 3000 sunshine hours and over 300 days of sun a year, the Algarve is one of Europe’s sunniest places, sunnier even than California in the USA. The summer months will see 12 hours of sunshine per day on average and almost no rain.

The Quinta do Pateiro Project

Site

The development site is 62Ha. of undeveloped freehold land 2km north west of Silves. The site is within the Area de Aptidao Turisdica No. 2 (AAT-2). A zoning designation that allows residential development on agricultural land that was protected. Access to the site is by a single road along the southern boundary of the site that starts on the north side of Silves and finishes on the N124 near Falacho. Planning approval has been given for a development of 154 villas and additional amenities on 40% of the land. An additional 90Ha of land is available to the west of the site.

Project Configuration

The project has been laid out to offer a choice of accommodation ranging from a one bedroom attached unit to a three bedroom detached unit with private pool. There will be various sports facilities and amenities within its 62 hectares. A brief description of the approved configuration is as follows:

Villas:

Type 1 - 20 x 1 bedroom attached houses (Type: A / B)
Type 2 - 80 x 2 bedroom attached houses (Type: A / B)
Type 3 - 14 x 3 bedroom villas
Type 3 - 40 x 3 bedroom villas with private swimming pools

Sports facilities:
Driving Range
Putting Green
Tennis Courts
Bowls Green
Gymnasium
Snooker and Pool Room
Sports Clubhouse with Bar and Restaurant

Amenities:
Reception & Management Office
Communal swimming pool
Paper Shop & Convenience Store.
Children's Play Area
Business Centre

Development Schedule

We have prepared an indicative schedule of sales values and development costs to illustrate the potential of the project to realize a significant return on the investment in addition to the tax and residency benefits being offered by the Portuguese Government. We have an experienced locally based project management team that can advise and assist you in carrying out the development. This includes the professional consultants that are needed to obtain the remaining approvals and permits for the project.

Planning

Planning

Portugal has a sophisticated centralised zoning and planning system controlled in Lisbon. Planning Approval is a slow process and can take years to complete. There are six separate planning departments each focusing on different aspects of a development. All six departments must approve the PDP or Detailed Zoning Plan before an area can be re-zoned. The re-zoning is passed into Law by being published in the national press.

Quinta do Pateiro is an approved project for 154 villas along with various sports facilities and amenities. 50% of the units can be permanent residences, the remaining units must be short term holiday accommodation. The Quinta do Pateiro development site is one of only three that are available on the Algarve with a planning approval.

The development project has 50% of the properties eligible for sale as separate freehold titles with full time residency. The remainder of the properties can also be sold as separate freehold titles but must be rented out as short term holiday accommodation. The shared facilities, roads and infrastructure can be retained by a separate company that levies a service charge or the site can be run as an owner’s condominium.

Approval

The Project land consists of 62 hectares of freehold land purchased by the current holding company between 1986 and 2007. The Planning for this development site has taken 12 years and was published into Law on with the following approval references:

Municipality of Silves City Council
Date: 12.12.2003   Proc. A.A.T. No. 2
Commission of Coordination and Regional Development of the Algarve (CCDR Algarve)
Proc. No. PP-08.13.07/3-03 
Entry No. 1329/03
Note No. DSGT 008368 of 21.10.2003

General Direction of Tourism
Ref. DSPOT/DOPF/No.2003/50
Proc.No. 15.06.03/134 17.03.2003

Regional Direction of Agriculture of the Algarve
Ref. 11/RAN/03
No. 001237 04.02.2003

Further approvals are required for the infrastructure plans (roads, sewers, services, etc.) and for the final design plans for the houses and villas. The project consultants have indicated that the infrastructure plans will take 90 days to complete with approval expected within 90 days of submission and the design plans for the houses and villas will take 180 days to complete with approval also expected within 90 days of submission.

Investment Opportunity

This development project is an ideal investment opportunity to buy a freehold property with full irrevocable planning approval and with the option to expand the size of the development on adjacent land. The Portuguese economy has now recovered from the recession and property values are beginning to rise. Construction costs are still relatively low and good terms can be negotiated.
Information - Property Market.
Now is the perfect time to invest in Portugal. OECD figures show Portugal in a very favourable light for property investment. They indicate that property values are significantly undervalued. (Link to Information – Global Property Comparisons)

This development project is an opportunity for nationals outside of the European Union to have ownership of a freehold property and to be able to obtain residency status in Portugal (and the Schengen Area of the EU) using the Governments Golden Residency Permit (GRP) scheme. (Link to Information – Golden Visa) Over €1bn of external investment has already been realised under this scheme.

The Portuguese Government is also offering very favourable terms on taxation related to external investments. (Link to Information - Taxation)
The European Central Bank has recently announced a policy to make available €1tn for economic growth. As the owners of a mature company, the investors will be able to participate in any measures instigated by the ECB and Portuguese government. This usually takes the form of matching funding from the government to any private investments.

Ownership

The freehold interest in the site is held by a Portuguese registered company that has been in existence for over 10 years and is classed as a mature company under Portuguese law. Among other things, this allows the company to conduct business with fewer restrictions and regulations and it is eligible for favourable tax breaks.

The shares of this Company are held by Holding Company A (51%) and  Holding Company B  (49%). Acquisition of the project will be by way of the purchase of the shares of the two holding companies.

Company Valuation
The valuation of the company holding the freehold property and the planning approval has been done by an authorized entity under Portuguese law and is a true value. The €17,500,000 valuation of the holding company is based on the valuation of the land with the planning approval. Planning approval is a long and difficult process that can take between 2 and 8 years. The land owned by the holding company is only one of three of undeveloped sites of this size with a current planning approval on the Algarve.

Villa Types

Types 3A & 3B

Information

Development Details

EXPLANATORY NOTES

Sales Values

The GRP Qualifying Units must have a have a sales value exceeding €500,000 to qualify for Golden Residency Permits. The value is verified by the sale contract or promissory note, both legally binding documents in Portugal. Purchasers of these units will be given a GRP as soon as the contract or promissory note is signed and registered. The GRP confers full Portuguese residency rights. This also includes immediate family members. The unit must be held for 5 years (the permit is renewed annually) after which full Portuguese citizenship can be obtained.

Company Acquisition

The €17,500,000 valuation of the holding company is based on the valuation of the land with the planning approval. Planning approval is a long and difficult process that can take between 2 and 8 years. The land owned by the holding company is only one of three of undeveloped sites of this size with a current planning approval on the Algarve.
The European Central Bank has recently announced a policy to make available €1tn for economic growth. As the owners of a mature company, the investors will be able to participate in any measures instigated by the ECB and Portuguese government. This usually takes the form of matching funding from the government to any private investments.

Planning Approval

The planning approval for the site is for 154 units in total with a mix of sizes and occupancy / bedrooms. Half of the units must be retained by the site owners as short term rental units. The thinking behind this is that this will encourage tourism and provide local employment servicing the units and income into the local economy from tourist spending. This mix and status of the units can only be changed by a further planning application.

Infrastructure Project Fees

The planning approval includes a requirement that all services are available to the site. The design of services layout, roads, sewers and drainage has to be completed and submitted for approval before work can start on site.

Architectural Project Fees

The number, size and location of each unit is set out in the planning approval. The design and appearance of each unit must be completed and approved before work can start on site.

Project Management Fee

A project of this size is normally done through a project manager who will co-ordinate the various contractors, obtain all the required permits and be responsible for compliance with the regulations. All contractors, some suppliers of materials and anyone who has any design input must be licensed in Portugal. The project manager will also be responsible for ensuring all licenses as required are in place.

Construction Costs

The figures shown are indicative of the rates available for the work. With some negotiation, these figures may come down, given the current depressed state of the construction industry in Portugal.

VAT

This is an indicative cost to complete the development, net of VAT. VAT will have to be paid on most items of expenditure, but as the holding company is a mature and VAT registered company, all eligible VAT can be reclaimed.