Portugal Real Estate Investment: Insights from Keely Capel of Private Luxury Collection

In the competitive landscape of international real estate, finding a broker who prioritizes personal relationships over transactions can be transformative for investors. Keely Capel, owner and managing broker of Private Luxury Collection, has built her reputation in Portugal's Algarve region by doing exactly that. With nearly two decades of experience in the Portuguese market, Keely offers invaluable insights into the current state of real estate investment in one of Europe's most desirable locations.

In this comprehensive guide, we explore Keely's journey in the Portuguese real estate market, her unique approach to client relationships, and essential information for international investors looking to purchase property in Portugal's stunning Algarve region. Whether you're considering a permanent relocation, a second home, or an investment property, this article provides expert guidance from someone who has helped countless international buyers navigate the Portuguese real estate landscape.

Introduction to Keely Capel and Private Luxury Collection

Originally from the UK, Keely Capel relocated to Portugal in her twenties, giving her a unique perspective on the international relocation process. Her real estate career in Portugal spans nearly 18 years, during which she built up another agency into the largest independently owned national agency in the country before founding Private Luxury Collection.

"I have a deep personal connection to assisting people with the experience of relocating and handling international transactions," explains Keely. This firsthand experience with international relocation gives her particular insight into the challenges and considerations faced by foreign buyers.

Private Luxury Collection was born from Keely's desire to fill a gap in the market where personalized service was lacking. "The bespoke handholding customer care, like the concierge service, was missing in the business model I was working with previously," she notes. This realization led her to create a boutique agency focused on treating clients as individuals rather than transactions.

The Client-First Approach: Beyond Transactions to Relationships

At the core of Private Luxury Collection's philosophy is the belief that real estate is about people, not just properties. Keely observed a tendency in the industry for brokerages and agents to become fixated on metrics—number of transactions, sales targets, competition with colleagues—often at the expense of client experience.

"Especially when you're buying overseas, whether you're relocating or purchasing a second home or investment property, it's a whole new market for you," Keely emphasizes. "You don't know who the best plumber in town is, you don't know which accountant can help with your tax return, you don't know where to find specific groceries for your day-to-day life."

This recognition of clients' broader needs inspired Keely to build an agency that goes beyond the transaction itself. "For me, it's not just about selling houses—it's about building lifelong relationships," she says. This approach has proven successful, with many clients becoming personal friends and approximately 80% of the agency's business coming from recommendations and referrals.

To ensure consistent service quality across the team, Private Luxury Collection implements several key strategies:

• Selective Recruitment: "The people who work in my agency have a long track record of delivering that level of service to their clients," Keely explains. Even new agents are selected based on their client-focused mindset.
• Family-Like Culture: The team operates more like a family than a traditional business, with personal friendships among team members and extensive communication to ensure clients remain well-informed.
• Systematic Processes: Despite the personalized approach, the agency employs robust systems including automations, checklists, and scheduled follow-ups to ensure nothing falls through the cracks.

Building Private Luxury Collection: Origins and Challenges

Private Luxury Collection was officially incorporated in 2021, during the height of the COVID-19 pandemic—hardly ideal timing for launching a new business. As a single mother to two young children, Keely initially intended to take a break after leaving her previous agency. However, former clients began reaching out for help with both buying and selling properties.

"It sort of came about because people were saying, 'Keely, my son is looking to relocate here, he's currently trapped in this country due to COVID, he's lost his job, he wants to move here, can you help him find a house?'" she recalls. These personal requests from her network became the foundation for her new venture.

The pandemic presented unique challenges, including limited networking opportunities and mobility restrictions. Keely adapted by conducting virtual tours, not just of properties but of entire neighborhoods: "I would mount my phone on my dashboard and drive to the areas, showing clients, 'This is where the house is, this is how far it is to the supermarket, this is what your local coffee shop looks like.'"

This crisis-born innovation led to permanent improvements in client service. "We flipped over to things like doing our buyer consultations on Zoom. I think adding the element of Zoom meetings really helped build credibility and establish rapport—they can see who I am, I'm not just a random voice on a telephone."

Looking back, Keely identifies several lessons learned:

• Earlier Adoption of Technology: "In hindsight, I wish I'd moved into that model sooner and had more automation in place."
• Hiring Challenges: "I've made some mistakes along the way with several agents who weren't the right fit for our company and our clients. We've had to part ways, and sometimes it feels like taking two steps forward, two steps back."
• Client-Centered Decision Making: "I always try to put myself in my client's shoes—how would my client see this? What would my client think? How would they feel? That's my decision-making process for anything we do in the business."

Essential Traits of a Successful Real Estate Broker

When asked about the most important traits for success in real estate, Keely emphasizes resilience and commitment to ongoing education.

"Tenacity and determination are essential, especially in markets that we've seen—and I think this is international, not just Portugal. The market has been so up and so down, so abruptly in recent years that you really need determination to avoid losing your mind," she explains.

Keely also highlights the importance of realistic expectations about the profession: "I see a lot of people come into this industry thinking they're going to make a lot of money very quickly, not appreciating the level of work required. Those who make the real money are in the top 1% of agents—everybody else is working the grind to make ends meet."

Continuous learning is another critical factor for long-term success: "You need a mind for education because there's always something new. Laws change, regulations change, markets change, and you have to be aware of that and educate yourself. Otherwise, you'll get left behind and do a disservice to your clients if you don't know exactly what the market is projecting or what the latest laws, regulations, or benefits are."

The Portuguese Real Estate Market: Current Status and Trends

Despite global economic fluctuations, Portugal's real estate market—particularly in the Algarve—remains robust. "The market here is strong," Keely states. "Portugal as a whole, but particularly the Algarve, is a very stable real estate market. It doesn't fluctuate massively when it comes to price."

The pandemic initially hindered market activity, followed by record sales volumes in 2021-2022. This started to slow in late 2023 due to several factors:

• Global Geopolitical Tensions: "With things going on in the world such as wars and politics, it does impact whether people decide to make that move now or wait and see."
• Regulatory Changes: "Portugal made a lot of changes at the end of 2023 regarding certain regulations in the property market. They changed the AL licensing process for rental properties, ceased the Golden Visa program, and reworked the Non-Habitual Residency tax scheme."
• International Economic Factors: "For myself and many in the Algarve, it impacts us because our main clientele is international—they're coming from the UK, the US, or Canada, where we've had elections and budgets and various other things take place."

Despite these challenges, Keely notes that prices have remained stable due to continued demand: "The supply started to level up with the demand, so there were more properties available, but the demand has never gone away. We've never been in a situation where the property market is in a major correction or deflation. We're still seeing increases—I think the last increase was 13% quarter on quarter."

Some price corrections have occurred, but primarily for properties that were listed at unrealistic prices during the post-COVID boom: "Those who are now in positions that they want to sell are correcting their pricing to more realistic levels. I'm confident in saying that the value you see today is a true reflection of where we're at because we still have more demand than properties available."

Vilamoura: Portugal's Premier Coastal Destination

While Private Luxury Collection serves the broader Algarve region, Keely has a particular passion for Vilamoura, which she describes as "one man's dream." Founded by André Jordan, this planned community has evolved into one of Portugal's most prestigious coastal destinations.

"The best way I describe it to people is to think of Quarteira as the main city and Vilamoura as the suburbs," Keely explains. "The new owners of Vilamoura have an extensive plan to really lift its status on the world stage—I've heard someone say they plan to make it the Monaco of the Algarve."

Vilamoura offers an impressive array of amenities and attractions:

• Marina: Recently expanded to accommodate larger yachts, surrounded by high-quality restaurants and boutique shops
• Golf: Five championship golf courses, including Victoria, which is being transformed into Portugal's first Ills Club (private golf club)
• Beaches: Award-winning blue flag beaches including Falesia Beach, which extends from Vilamoura Marina to Albufeira
• Natural Beauty: Extensive boardwalks and nature trails connecting to the Ria Formosa reserve
• Sports Facilities: An equestrian center undergoing renovation, tennis academy that hosts world championships for paddle tennis, and extensive cycling paths
• Lifestyle: Co-working spaces, coffee shops, and family-friendly residential areas

For Keely, who lives in Vilamoura with her family, the area offers an ideal balance: "I have the best of both worlds because I live in a beautiful residential area where the tourist aspect is on my doorstep, but when I'm at home, it's calm and peaceful. They ran a campaign years ago that said, 'Vilamoura—I wasn't born here, but it's where I belong,' and for me, it totally resonates with how Vilamoura makes me feel."

Understanding Portuguese Property Regulations: AL License, NHR, and Brexit Impact

International investors in Portuguese real estate need to understand three key regulatory frameworks that have undergone significant changes in recent years: the AL license for short-term rentals, the Non-Habitual Residency tax scheme, and the impact of Brexit on British investors.

AL License (Alojamento Local)

The AL license is required for legally renting properties through platforms like Airbnb. Recent regulatory changes have affected the process of obtaining these licenses:

"You can still apply for an AL license, but for apartments, it's more difficult than previously," Keely explains. "It will be down to the local municipality whether they approve a new license. Condominiums of apartment blocks will not have as much control as before—they can raise concerns but won't be able to totally block it."

For investors focused on rental income, Keely advises: "If you're looking at investment property and have the budget, you're safer going with an independent house than an apartment, as the process could get blocked for apartments."

A positive development is that licenses are now transferable: "Initially, when you sold the property, you couldn't transfer your license to the new owner. Now AL licenses are transferable, which gives an extra benefit to sellers if they have a license that the new owner can take on without starting the process again."

Non-Habitual Residency (NHR) Tax Scheme

The NHR program was designed to attract foreign residents to Portugal through tax incentives. Originally offering extremely favorable tax treatment (including 0% tax on some foreign income), the program has evolved:

"It allowed people with pension income to get initially 0% tax on their pension, and income sources from overseas potentially as low as 10% taxation on global income," Keely notes. "They revised it a few years back so pensions were taxed at 10% and other earnings up to 20%, which is lower than the normal Portuguese tax rate of 28% flat rate and up to 48% on income."

The most recent changes have made the program more targeted: "It is still available but now linked to specific industries the government sees as needing investment. If you invest in research and development, scientific research, arts and culture, or an investment fund in Portugal, you will qualify for NHR on all your global income."

The shift represents Portugal becoming "a little bit smarter" with tax incentives: "If you want tax savings, you can get them, but we want something in return—skilled workers in specific areas or investment that will benefit Portugal as a whole, as opposed to just retirees who may not drive the economy as significantly."

Brexit Impact on British Investors

British and Irish investors have historically been the primary international buyers in the Algarve. Brexit created challenges for British property owners due to new restrictions on length of stay:

"The Brits stepped back after Brexit because it changed the landscape for them. Whereas they could come and go as they pleased, they were now restricted to 90 days, which is confusing because it's a continuously rolling 90 days. For every day you're out of the country, one day drops off of the days you've used, but it's not easy to track."

This led some British owners to sell their properties. However, in the past two years, British buyers have returned with a different focus: "They are coming back in force, but what I've seen is a total change—about 90% are now looking at relocation, not holiday homes or primary investments. They're looking at getting out of the UK."

International Buyer Demographics and Property Preferences

The profile of international buyers in the Algarve has evolved significantly in recent years. While British and Irish investors have returned to the market, there's been substantial diversification in buyer origins.

"The market has definitely shifted from being a second home/investment property market in the Algarve. There is most certainly an increase in the number of people relocating permanently," Keely observes. "It's not just the British and Irish—we're seeing a whole shift around the world, including South Africans, Israelis, and buyers from as far as Australia and New Zealand."

A particularly notable trend is the surge in North American interest: "America and Canada have gone from a very minuscule number of transactions to becoming one of the top nationalities, alongside Germans and Brits."

Regarding property types and price ranges, Keely notes:

• Median Price Point: "The median now sits at around €650,000-700,000."
• Highest Demand Segment: "If I had the supply of houses at €400,000-750,000, I would probably sell one a day because there's that much demand. The reality is there's not a lot of property in that price range."
• Apartments: "Two-bedroom apartments somewhere in the region of €250,000-500,000 are in huge demand."
• Villas: "For villas, prices start from €500,000 to millions."

Price per square meter varies significantly by location: "In Vilamoura, you're looking at somewhere between €4,000-6,000 per square meter. In premium areas like Carvoeiro or Vale do Lobo, it could reach €10,000 per square meter. If you step slightly outside to emerging areas, you're looking at about €2,500-3,500 per square meter."

Construction activity is responding to this demand, though not keeping pace: "We've seen a mass explosion of construction and renovation of properties to be put back on the market. A lot of it is sold before work has even begun, sold off-plan because there's such a shortage of property."

Recent regulatory changes have improved the development timeline: "The government brought in the 'Simplex' which should speed up the planning process and allow construction to start happening within about 90-120 days from submission. It's slowly becoming more fluid in terms of new construction actually starting and reaching the market quicker."

The Property Buying Process in Portugal: Tips and Pitfalls

For international investors considering a Portuguese property purchase, Keely offers vital guidance on navigating the process and avoiding common pitfalls.

Her first recommendation is finding a reputable agent: "Do your homework, meet a few agents, have conversations with them. There are people like myself who've done this a long time, are fully licensed, and really know their stuff—and there are also opportunists who may not have the level of knowledge an agent should have to represent an international client."

The buying process follows a familiar structure but with important local considerations:

1. Reservation (Optional): "You may or may not be asked to do a reservation. For new builds, a reservation is often required; for resales or private sales, not so much."
2. Promissory Contract (Critical Stage): "One of the biggest things people need to be aware of is that signing the promissary contract is legally binding and has financial penalties. You really want to do your due diligence ahead of signing anything."
3. Due Diligence Period: "If you're going to do a home survey, get an inspector in before you sign. If you're getting a mortgage, make sure the bank will approve you before signing."
4. Deposit Requirements: "On a promissary contract, you could be depositing from 10% upwards of the overall buying cost. If you break the contract as the buyer, you forfeit that deposit—it's not held in escrow, it goes to the seller. If the seller breaches the contract, they must reimburse your deposit and compensate you the same value."
5. Final Deed: "The deed can happen the next day after the promissary contract or in six months' time, depending on the availability of moving for both parties and the availability of funds."

Keely advises clients to expect a timeline of 3-6 months from offering on a property to receiving keys, though she notes, "I've seen properties exchange in two weeks, so it can go much quicker depending on all parties concerned."

For budgeting purposes, buyers should anticipate additional costs: "There are buying costs and tax involved in purchasing property in Portugal. I tell clients to budget around 10% of the purchase price to cover all tax, stamp duty, notary and legal fees, and any mortgage or inspection costs."

The property purchase tax varies based on price point: "You could be looking at 2% or up to 8% property purchase tax, about 1% for a lawyer and notary, and probably about €500-1,000 for an inspection."

Mortgage Financing for International Buyers

International buyers often wonder about financing options for Portuguese property purchases. Keely clarifies that most overseas buyers will need to obtain local financing:

"Most UK banks will not finance something overseas. Getting a mortgage in Portugal as a non-resident is very easy—there are multiple banks, and most of the main Portuguese banks will offer finance to international clients."

The application process is straightforward, requiring similar documentation to home-country mortgage applications: "The main extra thing you would need is a credit report, such as an Experian report. If your documents aren't in English, you may need to have them translated into Portuguese."

Portugal offers numerous banking options for international buyers: "You have UCI, Deutsche Bank, Santander, Millennium—there's a huge selection of banks in Portugal to finance a property purchase."

Regarding loan-to-value ratios, Keely explains: "They will normally lend up to 70% of the acquisition price. It's loan-to-acquisition, not loan-to-value, so if you're buying at €100,000, they'll lend you €70,000. If you're buying with a mortgage, you need a 30% deposit available."

Interestingly, there's generally no interest rate premium for international buyers: "The only difference would be sometimes more flexibility as a resident or Portuguese citizen in terms of longevity of the mortgage. The maximum age they lend to is 75, so they tend not to lend more than about 35-40 years depending on your age."

Beyond Real Estate: Keely's Coaching Initiative for Working Mothers

In addition to her real estate expertise, Keely is a certified coach with the International Coaching Federation (ICF), focusing particularly on helping mothers in the real estate industry balance their professional and personal lives.

"This job is 24/7, very demanding. Clients are buying houses, they want to see them in the evening when they're not working, they have questions on the weekend, they can only view on weekends—and as a mom, that's really challenging," Keely explains, drawing from her own experience.

Through her coaching, she helps women "find that balance where they can be a rockstar real estate agent but also be home and present with their kids, not letting their business jeopardize their time with their family."

Keely has developed a trademarked methodology called the "Three Freedom Method," but she shares two key strategies that can help any working parent in real estate:

1. The Wheel of Real Estate: "Look at the areas of your business and the areas of your personal life, marking yourself from 1 to 10 on how you think you're doing. This quickly identifies which areas of your life need rebalancing."
2. The Eisenhower Matrix: "Determine what is important and has to happen, what is important but you'd like to do, and what can you delegate. Is there anything in your life you're doing that you could pay someone else to do that would return value, whether in time or the ability to generate more money?"

Connect with Keely Capel

For those interested in exploring real estate opportunities in Portugal's Algarve region or seeking more information about Private Luxury Collection's services, Keely can be reached through the following channels:

• Website: Private Luxury Collection
• Email: keely@privateluxurycollection.com
• LinkedIn: Keely Capel

Disclaimer: This comprehensive guide is intended for informational purposes only and does not constitute financial or real estate advice. The Portuguese real estate market and regulations are subject to change. Consult with qualified professionals before making any investment decisions.