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  • Writer's picturePaul Rees

Investing in rural Portugal

Rural Properties does business in the central region of the country, which is attracting more and more investors. Paul Rees explains in an interview by Leonor Santos, from Idealista.

Read the original interview in Portuguese HERE.

He discovered the wonders of central Portugal after decades in the Algarve, realizing that its beautiful rural areas are increasingly on the radar of those who, for one reason or another, prefer to avoid tourist centers and cities. It was in this forgotten region of the country, where depopulation is evident, that the co-founder of Rural Properties , Paul Rees, decided to invest. He buys, remodels and resells country houses (many of them empty for decades), working with investors who finance the renovation of the properties, then sharing the profits. According to him, the central region is full of “fabulous” abandoned properties that allow the company “to succeed without the competition found in the most pressured market sectors of the Algarve, Lisbon and Porto”.

The majority of renovated run-down rural properties are resold as main housing, holiday homes or for rent, with foreigners being the strongest audience, particularly coming from the United Kingdom, Germany, France and (more recently) the USA, as many nationals already have access to inherited properties in rural areas ”.

The objective of Rural Properties , which operates in areas experiencing an unexpected renaissance, is, within this logic, to offer turnkey properties, in a process in which buyers do not need to worry about anything. In practice, investors can capitalize on the growing demand for rural properties without the anxiety and bureaucracy of selecting, purchasing and renovating the spaces themselves. In this business model, as explained by the person responsible, whoever invests can receive a fixed interest rate or choose to share in the profits.

Graduated in marketing and involved in business development and fundraising in the United Kingdom for two decades, Paul Rees says that all the properties acquired to date by the company have been empty, sometimes for decades, and that the only difficulty in developing a business in Portugal is access to capital, “with banks naturally cautious after the period of excesses before the 2008 crisis ”. For this reason, he says, the company has used private capital and intends to continue to do so.

Historic property Albergaria de São Pedro, Pedrógão Grande
Historic property Albergaria de São Pedro, Pedrógão Grande

The businessman recalls that investment in rural Portugal “has as much to do with lifestyle as it does with owning real estate”. “Why spend so much money living in cities when the interior of Portugal is accessible and working from home has become acceptable? This doesn’t suit all occupations, obviously, but it pleased enough people to have had a positive impact on rural property sales,” he says.

In this interview written for idealista/news, the manager explains what Portugal's strengths are in relation to other countries and why he decided to invest in this business model in the central region; detailing how it works and what the advantages are; what type of properties customers are looking for and what the price ranges are; but also how the current context of uncertainty and Government measures will (or will not) have repercussions on this project in the area of ​​real estate.


When did you found Rural Properties?

RPF Portugal Lda, which operates as Rural Properties, was created in 2019 after I spent most of the summer travelling around the Central Region of Portugal.


What is your objective and business model?

The company's objective is to buy old properties in rural areas, villages, towns and cities, renovate these properties to current standards while maintaining their inherent charm and sell them.

The business model is simple: investors lend funds to the company through a Participation Association contract and, when the property is sold, they receive the original capital, plus an agreed percentage of profit sharing.


Why did you choose Portugal to implement this project?

I have had family in Portugal since 1982 and moved full-time to the Algarve in 2003, so I have a good knowledge of the country and its systems. I have been involved in the real estate sector in Portugal since I emigrated, so I understand many of the dangers and opportunities.

At Rural Properties we know the bureaucracy, the pitfalls and the systems, which can be managed in a better way to reduce risks.

Our construction teams are managed by a highly qualified and motivated contract manager who knows the central region well. Rural Properties' business model is unique in this growing market sector, allowing the company to progress without the competition found in the more pressured market sectors of the Algarve, Lisbon and Porto.

House in Vale do Rio, CM-Figueiró dos Vinhos (before and after)
House in Vale do Rio, CM-Figueiró dos Vinhos (before and after)

What are Portugal's strengths compared to other countries? And what are the biggest difficulties in developing the business in Portugal?

Portugal's strength lies in its long-standing acceptance of people from other countries, especially perhaps the United Kingdom, with whom it celebrates the 14th-century Treaty of Windsor. Portugal has been a member of the European Union since 1986 and has used the euro since 1999, which has simplified investment, trade and tourism. Air connections and internal infrastructure are good and the health service, also in rural areas, is professional and accessible.

Some complain that services are slow, but in the interior of Portugal the team found that rural councils are encouraging, finance is efficient and legal services are provided by highly qualified solicitors, lawyers and notaries.

“Investors receive a fixed interest rate or can opt for a share in the profits of an individual venture.” Can you explain?

For those investors who prefer to receive a fixed annual interest rate on their funds, this option is open. However, to date, 100% of investors have been enthusiastic about the business and profit-sharing model, taking pride in seeing the revival of old properties.

They buy rural houses and remodel them to sell later. What kind of houses are these? What characteristics should they have?

All properties acquired to date have been empty, sometimes for decades. The company acquired village houses, isolated country houses, an old mill, two houses that were joined together and needed separation, and several historic properties, the oldest of which dates back to the 15th century.

Does Rural Properties handle the entire process? From looking for houses to rehabilitation?

The team pre-selects, visits, analyzes and determines which properties to buy; This is a fundamental skill. Much depends on the projected final value of a property and the estimated cost of renovation. We often see beautiful old properties in idyllic locations, but if we feel like it won't work, we leave.

They chose the central region to expand the business. Why?

The central region, like other rural areas of Portugal, has been subject to decades of depopulation, leaving behind thousands of empty and unwanted properties, so there is a wide variety to choose from.

There are no critical labor shortages, both skilled and unskilled, and specialist subcontractors and suppliers are well established and reliable.

Adding to this mix the increase in the number of people choosing to move to the beautiful regions of the interior of Portugal, a new generation of buyers has emerged who are happy to pay for quality.

Why invest in rural properties? What are the advantages?

The owner of a rural property will see its value increase over time, along with the general property market, while avoiding price fluctuations that can affect the luxury market sector.

Many people who move to the interior of Portugal learn to relax, crave a more self-sufficient lifestyle, delight in paying 40 cents for a cold glass of wine, and marvel at the lack of traffic on the well-maintained road system. For those who educate their children, what better place is there in Europe?

In what price range do these rural properties fall?

Sales prices are less than €400,000. The property with the lowest price currently for sale is €75,000; an old country house being redeveloped as an AL investment property, just 150 meters from a river beach.

At the other end of the scale, (€360,000-€400,000,) is a 200 square meter (m2) historic house where works begin later this month. Located in the historic area of ​​Pedrógão Grande, Albergaria de São Pedro has a 600m2 garden and a hidden staircase that dates back to its original use, a hostel/hospital for pilgrims and travelers, managed by the Church.


What type of customers? Portuguese families or investors, foreigners, from which countries?

Buyers and interested parties come from the UK, Germany, France and (more recently) the USA. We have interested Portuguese, but many nationals already have access to inherited properties in rural areas. Foreign buyers trust Rural Properties to provide fully modernized and beautifully renovated homes, as many foreigners have little experience buying in Portugal.

Riverbeach Cottage - Horta Cimeira (under reconstruction)
Riverbeach Cottage - Horta Cimeira (under reconstruction)

What type of properties are investors looking for?

Buyers have different types of needs, but they are all looking for a property with heating, insulation, fiber optic internet connection, telephone signal, new bathrooms and a new kitchen. Some want a house with land, others don't.

Village houses are especially popular. Additionally, we are working on three properties in historic areas to expand the choice to those who want to live in small towns.


Do investors look for rural homes to invest in or to live in and/or second homes?

Buyers can be grouped into three types:

  • The first and most popular type is those who want to live in Portugal full time and are looking for a family home.

  • The second type is those who already live in Portugal and are looking for a property to rent to have additional income.

  • The third type are those looking for a vacation home.

Did the pandemic boost the business? Are more people wanting to move and live in the countryside?

The pandemic changed the market and its dynamics. Many Portuguese people, with existing second homes or unused family homes in the countryside, moved from cities and got used to working in the countryside.

Foreign buyers were unable to fly to Portugal to view properties, which certainly decreased the number of sales transactions, while prices remained stable.

The pandemic generated some demand, but overall, the change in lifestyle and thinking has been established - why spend so much money living in cities when the interior of Portugal is accessible and working from home has become acceptable? This doesn't suit all occupations, obviously, but it pleased enough people to have had a positive impact on rural property sales.


What effects does the current context of uncertainty have on business in Portugal?

The current Mais Habitação decrees relating to Local Accommodation will have little effect, as Rural Properties operates outside of high-density areas.

The proposal to dismantle the non-habitual residents regime is a blow to Portugal's international credibility as a stable investment and lifestyle destination. Whether this tax regime is eliminated in 2024 or not, the damage has already been done with international headlines reporting critically on the Portuguese government's intentions.

The consensus is that ending this regime will do nothing to help create housing for people with no or low incomes.

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