The lowering of Portugal's Golden Visa investment limit from €500,000 to €350,000 is expected to boost housing sales in the country by up to 20%, writes Heather Landau
The programme, already the most popular throughout Europe, is set to receive renewed interest after the Portuguese government reduced the entry level requirements in an attempt to increase urban renewal in designated districts across the country.
Following the global recession in 2008 a number of areas, particularly the capital Lisbon, fell into disrepair as both businesses and people left the city. In recent years both the government and developers have targeted these areas, upgrading real estate to international standards that attract overseas investors.
Since the programme started there has been a total of 2,290 visas granted with most of them going to Chinese investors, however the amount they invest is often less with investments staying close to the minimum amount required for entrance into the programme. By comparison, Brazilians and South Africans have been found on average to invest more, frequently buying more than one property. One purchase may be for personal use with others used as a buy-to-let investment.
With regard to location, some Golden Visa investors have looked to the Algarve and Silver Coast, but Lisbon’s city centre has been the main target due to the value and potential for capital growth. Prime properties are around a third of the price of their London and Paris equivalents, with well-located apartments in Lisbon’s regeneration areas going for under €200,000. The changes to the programme has enticed investors to create small portfolios that weren’t previously possible under the previous $500,000 threshold.
In addition to the new €350,000 investment requirement, three non-property categories have been included under the scheme, covering investment into scientific or technological research activities, artistic production, national cultural heritage or small and medium businesses.
The news is a welcome relief following The Portuguese Foreigner and Borders Service (SEF) suspending the programme earlier this month following a scandal surrounding the interior minister, Miguel Macedo, for his alleged role in money laundering that also implicated the former head of border police.
Since the reinstatement of the programme, overseas interest is expected to gain momentum with property investors encouraged by the possibility of profit. In its June 2015 report, the OECD (Organisation For Economic Co-operation & Development) predicted that the Portuguese recovery is projected to strengthen on the back of strong external demand, a weaker euro and lower oil prices, with business investment projected to pick up further in 2016.
With Portugal entering a new cycle of growth, with the economy being one of the most competitive in Europe, now is proving to be an ideal time for investors to register for the Golden Visa programme and take advantage of the expected rise in real estate values.
Just like any other holder of a residence permit in Portugal, Golden Visa holders can apply for a family reunification permit that enables their immediate family to also acquire a Golden Visa. After five years the investor and any immediate family may then apply for a permanent residence permit.