The government program grants residency to non-EU residents, willing to invest in property of at least €500,000 in value or create a minimum of 10 jobs in the country. The scheme has been a success so far, attracting investments of over 5.2 billion euros between 2012 and May 2020 from a pool of almost 9 thousand investors. As a result around 20,000 individuals and family members have been granted Portuguese residency.
Securing residency in Portugal allows individuals visa-free travel in the European Schengen Zone as well as the ability to apply for Portuguese citizenship after 5 years of residency. Portugal is a desirable location in the EU, with a sound educational and healthcare system and low crime rates. Due to its location, it is a preferred destination for holidaymakers and those seeking a more relaxed lifestyle.
Even though the Covid-19 pandemic is causing havoc on international trips and travel plans, investors are still seeking real estate assets overseas. Portugal offers a stable market with good long-term potential in its tourism and business sector and is a preferred choice for passport entry into the EU.
Similar programs in effect in Spain and Greece have not attracted as many investors in recent years. The number of years required before residency and days per year spent in the country are also higher than in Portugal. Specifically, in Greece individuals will need to wait 7 years and spend at least 180 days per year in the country. Spain offers a similar scheme, with a 10 year period and a requirement to live in the country for at least 6 months in any one year. The requirements in Portugal, in comparison, are set for a five year investment period and a minimum stay of only seven days during the first year, and no less than 14 days in every subsequent 2-year period.
In addition to real estate investing, there are options for venture capital funding, donations towards Portugal’s national heritage or R&D activities and business investments. Properties, businesses and all other investments can be liquidated after residency is acquired and the time period is completed.
Government officials have emphasized that only necessary changes will be put into effect that make sense due to the current movement of the real estate market. Tiago Antunes, Assistant Secretary of State for the Prime Minister has stated that the adjustments will not impact current plans or lead to the cancellation of on-going business projects from overseas investors.
What is changing?
Investors and international citizens aiming to buy property in Portugal under the Golden Visa Scheme may have fewer options in terms of locations. Specifically, properties in Lisbon, Porto and other coastal municipalities might no longer be eligible locations. If it passes, this plan will be excluding most coastal regions in the country and major touristy and urban centres. In addition, minimum capital investment and the number of people needed to employ (for the business investment option) may also be increased.
Existing investments will not be affected. The global pandemic has delayed the rate in which changes can be applied and amendments to the initial scheme will not come into play until at least 2021.
While no official announcements have been made yet, increases in the minimum value of investment across Portugal (currently 500,000€) and the southern region of Algarve (currently 400,000€) are projected to increase.
For those interested in entering the Portuguese real estate market this would be the time to seek professional advice. On-going projects that have submitted their GV application and been approved will not be impacted. Another possibility is to move ahead with a transaction before the end of the year Certain developers will allow for back-out clauses in case the GV application is declined due to proposed changes, so make sure to speak to the experts.
Chinese nationals have invested more than €37 million in the second quarter of 2020, double the total amount spent last year and the same period in 2018. Inquiries for properties in Lisbon and Porto are skyrocketing as the tight deadline and travel restrictions imposed by Covid-19 are forcing investors to move faster or risk missing out altogether.
Overall, China has been a dominating presence in the program, holding more than 90% of visas issued for a total of 4,467. In comparison, Brazil obtained only 863 visas since 2012.
The preferred option in 2020 has remained the same, with most investors taking the real estate investment route and pumping more than 500,000€ into residential properties in Lisbon and Porto.