The Portugal Golden Visa, A Diminishing Resource
The Portuguese government is taking the view that property prices are accelerating too much too fast in the major cities of Lisbon and Porto in recent years. This is true. Property prices plummeted after the financial crisis in 2008 and were down 20% from the peak by 2012 to their lowest levels in many years.
Coincidently (or not) in 2012, Portugal introduced the Golden Visa Program to spur economic development primarily through real estate investment. The program requires a foreigner to make an investment in Portuguese real estate at minimum €500,000 and in 2014, an additional provision was written whereby an investor can qualify by making a €350,000 investment in properties more than 30-years old or located in areas designated for rehabilitation/redevelopment.
The program offers incredible benefits and flexibility. One investment qualifies the investor, spouse, dependent children of any age, and dependent parents of both the investor and spouse for a 5 year Golden Visa after which a passport can be conveyed. The investor can invest in real estate virtually anywhere within Portugal. The investor is only required to stay in Portugal 1 week per year to maintain the status. Upon receiving the passport, the investor can work, live, avail of public health care, avail of public school for children anywhere in the European Union.
The program was immediately snapped up by foreigners (read the Chinese) who started buying and by mid 2019, €4.8 Billion had come in from more than 8000 investors.
With no leverage allowed, the purchases are cash only – thus no real bank valuations are in place when foreigners buy. This has brought inflationary pressure to real estate especially in the major populations areas of Lisbon, Porto and the Algarve.
Property prices have risen dramatically. Starting in 2015, prices in Lisbon are now well above the pre-crisis levels with an average 6-8% annual growth. So much so, that the Portuguese government has been considering discontinuing the qualification of Lisbon and Porto properties from the Golden Visa and restricting investment to rural locations such as Madeira and the Azores. An announcement to this effect was made in January and the rule is expected to be implemented in 2020.
The core driver of any investment immigration program is to create an economic stimuli in the subject country. Purchase of existing real estate may bring temporary liquidity to the local market but does not in and of itself cause economic stimulus. However, new construction does.
Nysa evaluated the various visa programs in Europe and formally launched the Portugal program in late 2019. We partnered with a developer who offers a unique model – redevelopment of old buildings and/or new construction of hotels in historic zones qualifying under the €350K category with a guaranteed return and buy back after 5 years.
Nysa also has available direct property investment opportunities in Portugal, new development projects, and business investment opportunities that qualify.
The experience with any investment program is the best benefits and easiest-buy in are in the early years. As programs become more successful and achieve their objectives political pressure mounts so as to make the opportunity harder to achieve. Waiting lists form. Approval requirements become more stringent and the process more protracted. Take for example the US EB-5 program that at inception was at most a twelve month path to a green card and now takes upward of 5 years. Such is now becoming the case with Portugal.
The key is to get in early and cross the bridge before the traffic blocks it. The time is NOW for Indian investors. Contact us at +91 991 009 6169 or firstname.lastname@example.org for more information. Learn more from our immigration specialist and attorneys on the program, process, and projects.
-By Pankaj Joshi