Over the past few years, the vast majority of people applying for the Portuguese Golden Visa, have done so through real estate acquisition as a preferred option to qualify for the scheme. This has resulted in a significant increase in property prices of approximately 5% to 6% year on year in Lisbon and Porto, making property unaffordable for many locals in these urban centres.
In early 2020, the Portuguese Government announced that it would be introducing restrictions to try and curb the rapid increase of house prices in desirable urban areas and to promote the development and new investment across the country. This means the restrictions will affect those accessing the Golden Visa via real estate purchase, however, this only applies when directly investing in property in these high-density areas like Lisbon and Porto.
While investors may be disappointed to hear of the new restrictions on real estate investments in high-profile cities within the country, Portugal citizenship by investment offers other attractive alternatives for anyone looking to apply for the Golden Visa programme. Additionally, it can bring multiple benefits and a level of security not necessarily found within the previous real estate investment scheme.
The Portuguese Golden Visa proposition will remain strong. There will be other, less expensive investment options as fund investment options are becoming increasingly attractive.
How to Benefit from Investment in Lisbon and Porto when Restrictions Come into Force?
When it comes to choosing the investment option for the Portuguese Golden Visa, make no mistake, investors are and will still be able to benefit and invest in Lisbon and Porto. However, not through the direct acquisition of real estate in the affected areas, therefore, those who purchase real estate in Lisbon and Porto will no longer be eligible for the Golden Visa Programme.
As mentioned, there are other ways of securing investment in Lisbon and Porto while applying for a Portuguese Golden Visa and these include investing through Venture Capital funds. Venture capital funds allow investments within the real estate sector as well as exposure to completely different industries inside and outside the affected areas. The restrictions, in this case, does not apply and with Lisbon and Porto being the more profitable areas for investment in the country, it is now making Investors turn their attention to venture capital and private equity funds as alternative and quicker means of acquiring a Golden Visa for Portugal.
The Golden Visa through investment funds has undoubtedly won many investors over, delivering all the same benefits investors would expect from applying for a Golden Visa through real estate and other additional benefits exclusive to the investment fund route:
- Option to invest in multiple locations in Portugal including Lisbon and Porto
- High Governance regulated by the CMVM and several service providers (fund managers, auditors, depositary bank, advisor and independent companies)
- Tax exemption for non-residents and 10% for residents
- The simplest and quickest way to qualify for the Golden Visa Portugal residency scheme
- Lower investment threshold
- Exemption from acquisition tax (6%)
- Exemption from stamp duty (0.8%)
- Increased flexibility in investments
- A shorter timescale for investment
- More diversified investment than purchasing one or a few individual properties
- Investors don’t have to scout and look for properties
- Save time and frustration by not having to deal with all the paperwork involved in acquiring real estate
- No time needed for the investor to manage the investment
Corporate experts manage investment funds in specific fields to identify high growth potential, offering a well-defined mandate that focuses on a variety of industries such as real estate development, technology, tourism, hospitality to name but a few, and as mentioned above, they can operate in multiple locations in Portugal including Lisbon and Porto.
The fund route is now more popular than the property route. Most investors are looking to achieve a high return on investment (most likely achievable within Lisbon and Porto) as opposed to investing in property in the countryside due to the new changes coming into effect.
What is the State of the Portuguese Property Market in 2021?
Despite the challenges facing property markets around the world in relation to the continuing pandemic, the Portuguese market is still rising, providing plenty of optimism for investors looking to take advantage of venture capital funds tied to the Golden Visa Scheme.
This is particularly true in Lisbon, where continued development is spurring growth in the real estate market. Previously, dilapidated structures and crumbling facades were ubiquitous in the city, however, today, some of its most beautiful and historical buildings are once again being returned to their former glory. The city is once again coming to life, and the property market is responding to this renewed energy with rising property prices and higher-quality construction.
Making your application now has the potential to reap good returns on a market that shows little sign of slowing, while also giving you access to the multiple benefits associated with the Portuguese Golden Visa. In fact, taking advantage of the Portuguese Golden visa scheme now may prove to be a prescient choice given the uncertain nature of Golden Visa schemes around Europe.
The State of Europe’s Golden Visa Programmes Today
At the end of 2020, the European Parliament set out to debate the alleged infractions by countries abusing the Golden Visa program. Most notably, these included Cyprus and Malta, with Bulgaria also on the list of those countries selling citizenship in violation of Union law.
Portugal has since had a much higher demand for the Golden Visa amongst non-European citizens mostly due to its high governance and compliance with the Golden Visa Scheme. There is, however, still no certainty if the European Commission will put the programme through further restrictions in the future. So, for investors looking to take advantage of the Golden Visa scheme in Portugal, now is the time to take action.
For more information on the Portuguese Golden Visa and its requirements, contact Planeur today.