Recently, it has been reported that the municipality of Grândola may curtail or cease the issuance of new licenses for tourism projects.
Portugal’s recent high growth in tourism and in its related real estate sector, which included the Comporta area (under the municipality of Grândola), has led to speculative excesses and environmental stress. These negative factors have been the focus of significant media attention and the adverse public opinion, voiced especially through social media, have pressured politicians at a national and local level to take action to avoid negative repercussions.
(The well-known designer of luxury hotels Alexandra Champalimaud, mentioned in this article, is my neighbor bordering my property on the eastern side with her 210 Ha estate).
As a result, the mayor of Grândola, a member of the PCP (the Portuguese Communist Party), was pressured by his party's national leaders, to remedy this situation which was compromising the party's image.
In a municipal assembly that took place on December 23, 2021, the council of Grândola deliberated to suspend the approval of all pending tourism projects and block permanently the granting of further licenses in its municipality.
This decision to permanently stop the issuance of licenses for tourism development projects, which was sponsored by the mayor of Grândola, was supposed to be ratified by the municipal assembly on this past February the 18th, but it was rejected.
As a result, we took advantage of this window of opportunity and immediately filed an application for our “hotel rural” with the CMG.
Our “Hotel Rural” which has already been approved by Turismo de Portugal comprises of 6 villas, each with a swimming pool, a total of 46 tourist beds (2 pax/bed), a total covered area of 1.866m2 (37,98%), including common and service areas, against a total of 4.913m2 of buildable area available.
Because of the uncertainty deriving from the local political turmoil and for other bureaucratic factors, at the moment, it is difficult to predict the timing for the approval of our project. At a minimum, it will be spring 2023.
Once a license to build has been granted, the governing rules allow for the project to be altered radically, provided that the main parameters and guidelines are respected. It’s even possible, to change the classification from “hotel rural” to “casa de campo” (country houses).
Our plan has been to implement the change in category, mentioned above, from “hotel rural” to “casa de campo” so to avoid meeting a long list of requirements. This strategy greatly simplifies the project, significantly reduces costs, and provides other benefits. For example, the accommodation units are planned to be fully self-catering, thus eliminating the need to build and operate a restaurant and provide for other service areas which are mandatory in a “Hotel Rural” but not in a “Casa de Campo”.
This strategy essentially yields a low-density high-end gated community of only 6 villas.
Our business model assumes a structure whereby the buyer has the right of use of a specifically indicated luxury villa, enjoys the convenience of having it managed by a third party, and benefits from a rental income when he/she does not use the property. Accordingly, the buyer will have the right of use for six weeks throughout the year and the remaining time it will be available for rent. Rental revenues, net of cost, will then be split 70% to the unit owner and 30% to the management company.
Real Estate Market Survey and Monte da Gala Property Evaluation
The Comporta “brand” has been the key to the tremendous success of the municipality of Grândola. The name Comporta has attracted top-quality tourism and real estate development and, especially in the last five years, it has made the Grândola municipality one of the most exclusive and sought-after tourist destinations in the world.
The drivers of such success can be found in the selection of international press articles linked below:
Comporta’s success was also helped by the positive trend that Portugal enjoyed in recent years which is depicted in the articles linked below:
Grândola Municipality Map
In the above map of the Municipality of Grândola, I have identified 7 market areas which I indicate in order of interest:
1
Zone D extends from Muda to Praia de Aberta Nova, leaving the mega golf projects of Costa Terra and Pinheirinho just to the north, to continue along the coast through Melides to the most southwestern point of the municipality's territory and then return towards the interior to cross the Serra de Grandola on its NW side with Sobreiras Altas following the route of the EN 120 Santiago-Cruz João Mendes-Grândola.
From a real estate point of view, this is the most interesting area to invest in at the moment but it is a premium area and so are the prices.
Compared to the overdeveloped Comporta and Carvalhal Zone B, here the plots tend to be much larger reaching hundreds of hectares with a lower density very much appreciated from high-end investors.
My property sits on the NE side of this Zone D, on the same line of Hotel Sublime.
Less than 15-minute drive, 14,8 Km,
from beaches like
Melides,
Aberta Nova,
Galé,
Pinheirinho,
Praia da Raposa
2
Zone E is the second most interesting and sought after area that embraces the raised areas of the Serra de Grândola, also here, especially due to the restrictions given by the PDM which significantly limit the possibilities for development, we find a very low density, beautiful landscapes, and extended views but a scarcity of freshwater resources, less practicable and often with uncomfortable accesses.
More affordable than Zone D but,
in the case of sea-view or extended country view plots,
prices easily rise to zone D level and higher.
3
Zone C extends on the NE side of EN 120 from Muda to the area of Aldeia do Pico, therefore oriented towards the interior.
The area behind Muda, flat and with extensive pine groves, with sandy soil with very light colors often whitish, is in great demand and expensive and is reaching saturation limits even if the properties are rarely less than 10 hectares.
4
Zone B, Comporta, Carrasqueira, and Carvalhal up to Praia da Galé with Costa Terra, this is the nest of the Comporta Brand but it's well on the way to overdevelopment, usually, I don't even take it into consideration for my market surveys.
High-end shoppers have diverted their interest to Zone D, some like Christian Louboutin and Philippe Starck fled Carvalhal to land in Melides and Sobreiras Altas.
5
Zone F and G are inland, mostly flat and arid but you can find some interesting plots, prices are lower but still they tend to ask a bit too much for what it is on offer.
6
Zone G idem as above.
7
Zone A, the Troia peninsula, is a separate market totally distinct from the rest of the municipality which enjoys the Comporta brand as a driving force.
Troia residents are seen by the people of Comporta as aliens.
Therefore this area is not taken in analysis.
The spreadsheet here below analyzes the real estate market on a yearly basis taking into consideration all the zones of the municipality excluding Zone A, Troia, while Zone B, Comporta/Carvalhal, is not taken much into account except for a few occasional exceptions.
We have selected and analyzed 80 plots offered for sale by a number of real estate agencies for the 12 months ending August 31st, 2021. The average asking price was € 183,389/Hectare (E20)*.
In the survey update of the end of August 2021 through the online portfolio of 8 agencies, we have selected 204 new listings (C20)* and the price is € 149.800/Hectare (E22)*, with a growth of 22,42% (E26)*.
* indicates cell reference in the spreadsheet.
A significant number of the sample plots used in this analysis have no "preexistência" ruin or building listed in the land registry thus they don't carry a building right, their grounds are in wild condition, and the access is poor or inconvenient. In addition, obtaining a connection to the electricity grid requires cost and time (presently there is a waiting time from 1 to 4 years depending on the circumstances of each plot) and water availability is left to the chance of drilling a successful well since there is no aqueduct serving the area. These are critical factors to evaluate when considering purchasing land for development in the Alentejo region.
One could argue that the best plots of land have been sold and that the ones indicated herein are mostly leftovers.
Despite the increasing prices, the market consistently kept a dynamic growth.
Below please find the monthly sale charts starting from September 2021:
Financial Feasibility Analysis
Here below the asking prices for the 6 units:
With a building cost of € 2.750/m2 and a total investment of € 4.782.000 plus the purchase price of € 2.000.000, the net earnings from sale will be € 3.254.713, a 138,32% ROI.
N.B. With this project configuration, we are only building 1.546m2 (31,47%)
of the 4.913m2 available to be built.
Here below we can have a look at some of the major projects in the area:
One of our contacts has forwarded this market study which analyzes some of the major projects under development in the area. Please note that not all the information is correct. We provide a summary that illustrates in the following spreadsheet how our property and related project relates to other projects. We compare a number of other parameters including density and the average asking price:
This list of nine developments includes some of the very large projects that, due to their environmental unsustainability, have caused public outrage and have drawn the attention of the national press, great opposition from environmental associations. The local politicians have been forced to react as a result of the negative publicity.
As a consequence of this, the PDM (Plano Diretor Municipal) of the Grândola Municipality is under review and new projects with these characteristics will no longer be admitted.
As for the rental market benchmark, we sampled for analysis Le Collectionist website with a total of 36 Comporta and surroundings listings,
divided into three groups of 12 villas in order of descending price, considering as benchmark only the first group with high-end prices, as depicted in the pictures below.
Mid Prices
We adopted the average daily rate per room of the "higher prices" chart above, thus the rental income for each of our units is projected as follows:
The 30% share of the net rental income reserved for management is
€ 462,458, assuming a 56,83% occupancy rate.
Please note that these rough figures are purely indicative
and do not exempt you from careful and thorough verification.
Same goes for all the rest stated on this page.
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Introducing the SAMA Comporta,
a luxurious villa in the idyllic village of Muda, Comporta.
The 16 villas within a lot of 9Ha,
offer a perfect balance of modern luxury and natural beauty
with stunning architecture inspired by Comporta, Ibiza, and Morocco.
Ranging from 2 to 5 bedrooms,
each villa is uniquely designed and built
on plots from 1,975 sqm to 11,050 sqm.
Prices range from €1,650,000 to €4,365,000.
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