Portugal's Golden Visa: this isn't the end | Athena Advisers

Portugal’s Golden Visa is not over


Portugal's Golden Visa programme will be ten years old this October and over 27,000 people will either be on the path to gaining European residency or will have already achieved it. Yet the last 12 months have probably been the most tumultuous in the programme’s history, with a raft of changes coming into effect at the start of this year. During such a critical phase of the programme, we asked Athena Advisers' Managing Director of Portugal, David Moura-George about the Golden Visa opportunities in 2022 and his expectations for the Portuguese property market.

"Right now I believe Portugal's Golden Visa programme has gone from being the most popular investment-for-residency programme of its kind in Europe, to possibly the most misunderstood."

The programme, which at the end of November 2021 had attracted over €6bn in investment, with 90% of this being via traditional real estate investments, changed significantly at the start of this year, but not so significantly that demand disappeared.

Broadly speaking it has been like the property market version of Y2K. The same way people expected all computers to stop working at the start of the new millennium, international investors had come to believe the Golden Visa programme would cease to exist as the clocks turned midnight on December 31st 2021.

The reality, just as it was over 20 years ago, was very different and we have seen right from the beginning of the year that the demand for the Golden Visa persists. However, there is a greater level of understanding needed from those interested in the programme.

If the misconception was that it had finished, David, what do you think caused this and what were the actual changes that came into effect?

The misconception that Portugal’s Golden Visa programme has finished came from what is probably the biggest of the many changes that happened at the start of the year: the inability to tie a Golden Visa application to a traditional real estate investment in high-density coastal regions.

Our two biggest cities - Lisbon and Porto - are obviously coastal and now no longer qualify as eligible for a Golden Visa application through normal residential property purchases. This is the one change that has made many people mistakenly think the programme has come to a complete stop.

The reality is that traditional real estate investment is still allowed for Golden Visa applications, but only in certain areas. Comporta, the beautiful region an hour south of Lisbon is coastal, but real estate investment here can still be tied to a Golden Visa application. The islands of Azores and Madeira are coastal too, yet again real estate investment is allowed here for the purposes of an application.

Three people cycling by the river Tagus in Lisbon

The change with the most impact has been the removal of Lisbon and other higher density coastal areas from the Golden Visa eligibility lists, but there have been other amendments as well. The minimum amount required for a fund investment rose by €150,000 to €500,000 and the lesser-used routes such as capital transfer or investment in science have also increased.

After real estate, investment via funds have been the most popular route over the last 12 months and as the benefits investors will receive remain the same, it just means the minimum investment is now in line with that of real estate investment, so it is not a huge change at all.

And finally, investing in commercial property or touristic residences - for example, hotel units or serviced apartments that must be managed by a rental company - still remain in place as Golden Visa investments throughout the country.

Thanks David, we’ll come back to the investment fund topic as that saw massive demand last year. But these changes to where investors can purchase property for a Golden Visa, how big will it be for the market?

Any programme of this nature that runs successfully for almost a decade and then sees a change like this is going to see some misunderstanding. The scale of this comes from the history of this market beyond that of simply the Golden Visa programme.

Lisbon’s evolution as a tech-first and entrepreneurial city geared towards growth and evolution has been attracting people in great numbers since 2013. The combination of an affordable capital city property market, low cost of living, high quality of life and incentives like the tax-efficient NHR programme were alone enough to attract worldwide property investors and people wanting to relocate.

Add in the ability to use a traditional real estate investment to put you on the path to Portuguese, and consequently European citizenship, and it is easy to see why we’ve seen such a demand from non-EU investors. Particularly those who are from nations where there has been some discourse in government. You only have to look at some of the highest volume nationalities that have entered into the programme - such as Chinese and Brazilian - and you can see that the programme is also connected to geo-political events and movements. One area for growth of applications for a Golden Visa has come from UK buyers and investors post-Brexit in January 2021. There are many UK citizens who wish to remain part of the UK for family, tax and lifestyle reasons and view the Golden Visa as a pathway to preserving EU citizenship.

So, for many years now, for an international investor looking to gain some form of residency and potentially a European citizenship legacy for their family, there has been this easy way - almost the perfect way - to go about it. Investing in a growing property market, getting on the path to residency quickly, generating some income via rentals and, for those staying here for at least half of the year, significantly optimising their tax through the NHR programme.

Everything I’ve mentioned still exists; Lisbon’s growing property market, the relative cost of living and quality of life. The difference for those targeting the Golden Visa is that they have to think differently and align the new options to their requirements and long-term plans.

Can you explain that a little further, David? How are Golden Visa investors changing their strategies? 

Well, with our help, investors are selecting from the new options that are on the table and making sure these work within their overall plans outside of the Golden Visa, such as wealth preservation or income generation.

It’s simply about what someone wants to do. Traditional real estate options are available, just not in Lisbon, Porto or the Algarve. So does a client want that pied-a-terre that they can use and visit in addition to getting a Golden Visa, or was it more about the Golden Visa itself? Both are still available, they’re just no longer connected and we’re already seeing clients package their Lisbon property investment with another type of qualifying investment for a Golden Visa. This is obviously dependent on budget, but it is still possible. 

For the investor, who isn’t relocating and wants to invest and get on that path to citizenship quickly, the investment fund route is becoming extremely popular. Last year many funds that focused mostly on real estate in Lisbon and across wider Portugal saw hundreds of investors close their applications before the threshold rose to €500,000 from €350,000. We are already seeing continued demand in this investment type not only from investors but also from people who are relocating and want to get on the path to citizenship quickly whilst also accessing a product that is linked to the country's property markets and that has a clear exit strategy in five to seven years from the point of investment.

Investing €500,000 or more in commercial property is another attractive route for these investors as it allows them to generate strong rental yields and they can still target high-density areas like Lisbon and Porto. With long leases and many opportunities with AAA tenants in-situ, there are many compelling reasons to invest in commercial property in Portugal right now. 

For more information about the Portugal Golden Visa opportunities available in 2022, please visit Golden Visa: A New Dawn.