As real estate has been dropped from the golden visa scheme in Portugal, investment funds are now expected to see a boost as the next best choice for wealthy foreigners to acquire residency.
1. Golden visas in Portugal
Portugal started issuing golden visas in 2012 with the aim of attracting foreign investors to the country. With several options, like buying property, investing in funds or investing in culture or research, the most popular option has been the real estate route. In 2022, more than 91% of the 11,535 residence authorizations for foreigners were provided under the criterion of real estate acquisition, whose equivalent investment was €6.041 billion.
With a minimum investment of €500,000 in real estate, golden visas, together with increased interest in Airbnbs, have led to a property boom followed by a housing crisis in Portugal. “The dark side of Lisbon’s property boom is that prices have risen so much that it is difficult for a young couple today to afford to buy a house in the city and have to move 20-30km away and face the traffic jams to commute”, Rui Faria da Cunha, President of the Belgian-Portuguese Chamber of Commerce, told Travel Tomorrow.
Trying to keep housing affordable and amid calls from the EU for the abolishing of golden visas across the bloc prompted by Russia’s invasion of Ukraine, the government put forward a proposal called “More Housing” in February 2023, which included the abolition of the golden visa scheme. With criticism from the Autonomous Region of Madeira and decreasing numbers of Americans, who, together with Brazilians and Chinese use the golden visas the most, Portugal decided to keep the scheme, but drop the real estate buy-in option.
2. Investment funds
With the real estate option gone, investment funds are the next easiest route and are expected to see a boom in the near future, according to Reuters. “Real estate has always taken the focus away from the other options”, said lawyer Vanessa Lima, from Prime Legal, which helps foreigners apply for the visa. “The main type of investment will (from now on) be in funds – there is no doubt.”
“The new regulations are wind in our sails”, added Alex Lawry-White, from Pela Terra, a sustainable agriculture investment fund. “The golden visa programme should have the community (…) at the centre of its focus”, Lawry-White added, highlighting that attracting foreign investment should not come at the cost of local communities, as it happened while real estate was still included in the scheme.
While there are no official numbers yet, three lawyers specialising in golden visas told Reuters that, with real estate out of the scheme, they expect investment funds to soon account for 80-90% of all the golden visa applications. On the other hand, they also expect interest in golden visas to decrease, not only as a result of the lack of a holiday home attached to the residency permit, but also due to uncertainty over the future of the scheme.