Here comes a turning point for the RCBI industry. Portugal Golden Visa, the most popular residency by investment program in Europe, is about to undergo some major changes as of January 1, 2022. Real estate investment will see geographical restrictions, while the investment amounts for capital transfer and fund investment will increase. The demand from the investors had already increased when the first announcement was made but now as it’s almost the end of the year, applicants have been rushing to complete their applications. Hopefully, those who haven’t left it to the last minute will make it, but some investors will need to make it under the new regulation.
My colleagues and I have been pondering on how the investors will react to these changes for a while now. Will they turn away from Portugal? Will their interest still keep on going strong? Well, inquiries are expected to decline in the first few months. Many investors haven’t still digested the prospective changes and it’s expected that it’ll take some time for them to digest them. But the interest will stay, with some “expected” alterations.
Focus Will Shift to Low-Density Areas
For many people, buying a house in Portugal directly translates as buying a house in Lisbon. Fair enough. Most of the investors aren’t familiar with the country and haven’t had the chance to explore it. This is about the change though. With the upcoming restrictions, investors will be able to buy residential property only in low-density areas, as Lisbon, Porto, and coastal towns aren’t going to qualify anymore.
However, these low-density areas are specific and investors will need to be careful in their quest for a property that qualifies for Golden Visa. Also, when investing in a low-density area, they will need to think closely on their exit strategy. Some low-density neighborhoods are on the rise and could be a good investment, while others may be less enticing when it comes time to sell.
This is why interest in the property investment for Portugal Golden Visa might decline at the beginning as investors will take their time to investigate these spots closely. Working with independent advisors is crucial as an independent advisor will point out all the possible outcomes.
Funds Will Require More Vetting
With the upcoming changes, the investment amount for the fund subscription will rise to €500,000 from €350,000. This might sound like a big increase, however, when considering the benefits and comparing it to other programs in Europe, this amount is still low.
As the investors are becoming more familiar with Portugal Golden Visa investment funds, they’ll learn how to vet the funds properly. They’ll learn to analyze the fund managers better, inquire about the fund’s strategy, assess the risks and returns more carefully. Plus, as more funds are expected to be introduced, the competition is going to get aggressive which makes it vital to work with independent advisors. Independent advisors walk side by side with the investors, rather than pushing them for particular funds.
The Other Investment Routes May Come Forward
Real estate investment and capital transfer have always been the most popular routes to Portugal Golden Visa. However, other less popular investment routes might shine out until the changes have been fully absorbed. €250,000 contribution for preserving national heritage in Portugal is one of these methods. As it requires a less investment amount, it might be attractive.
Still, as it’s a “donation” and doesn’t promise a financial return, I don’t think it can replace the real estate investment or fund subscription. However, it is definitely worth keeping track of.
What Else To Expect?
As I’ve mentioned, it’s normal that the program might stagnate in the beginning. However, I don’t think that the interest will completely disappear. Here is why.
Flexible Residency Requirement
Hands down, the low stay requirement is the biggest advantage of Portugal Golden Visa, when compared to its European counterparts. Most residency by investment programs offered by EU countries lead to citizenship after full-time residence, usually minimum of five years. For some it may go up to 10 or more.
Under Portugal Golden Visa, you don’t have to relocate to Portugal to be eligible for citizenship. Staying in the country for seven days on average per year is sufficient. This is a huge benefit for investors who have business interests outside Portugal. They get their Golden Visa, travel to Portugal during the year, and become eligible for Portuguese citizenship only after five years.
No Government Contributions
Most residency and citizenship programs require a government contribution along with the investment. This is a deterrent for many investors as they want to make an investment which brings profit. For investors who have other options, government contributions sound bad.
There is no government contribution requirement under the Portugal Golden Visa scheme. Your funds go to your investment and you get a return. Making a profitable investment with an exit strategy is another highlight of the program. Your property generates rental income while fund subscription is a hands-off investment that generates a good return. Simple.
Please feel free to contact us with any questions you may have about the Portugal Golden Visa. My colleagues and I at Get Golden Visa will be pleased to answer any inquiries you may have.
Charles Taylor Harris
Executive Director, Get Golden Visa