Just before I bought my house in Portugal almost ten years ago, I was sitting next to an old Portuguese man on a flight out of Lisbon. When he asked what I was doing in Portugal, I told him: looking for a house, some property to buy. He suddenly looked at me hard, took a good grip on my forearm with one hand, and pointed at me with the other. “Now’s the time to buy in Portugal! Now! Do it! Buy now!” That was early 2013.
My plan wasn’t to “retire” in Portugal the way other Americans, and non-Americans alike, think about retirement: something like evenings out on the veranda, entertaining friends after a round of golf or a day of fishing with little more to do, or think about. No, I just wanted somewhere to live, a place I could afford with the very little money I had, and no mortgage in mind.
So, after a couple of trips within the same year to look at a variety of properties onsite, I finally found what I was looking for: a sufficiently habitable old farmhouse on a small plot twenty minutes’ drive from Coimbra with two floors, two bedrooms, one full bathroom, combined kitchen/living room, and a walled garden. I negotiated with the nice old British couple down from €50,000 to €43,000, and that was it. With my skills as a carpenter and a Portuguese friend, the house has since improved and expanded over the recent years for a mere pittance. Needless to say, the housing market landscape in Portugal, as well as the demographics, has since been changing dramatically.
Under the radar
One of the things that I found most appealing about Portugal at the time was that most people (besides the Brits who’ve pretty much been trying to keep the place under their hat since the Windsor Treaty of 1386) were hardly interested in it at all, especially Americans.
As a matter of fact, not many wanted to come to Portugal for much of anything really. As tourist hotspots go, Portugal didn’t even make the top 30 most popular countries for Americans to visit less than five years ago according to websites like ‘statisa.com’ and ‘loveexploring.com’. In terms of investment ideas, it was a “high risk” country, and very few considered it as a place to actually move to. The image of Portugal as the “backwater of Europe” was ensconced in the minds of many. Portugal was furthermore part of the EU “PIG” countries (Portugal, Ireland/Italy, Greece), which were in economic turmoil, terribly in debt, and crippled by stringent austerity measures. To the better-regarded EU members, and to that of America, these under-performing countries were akin to that “special needs” classroom of students you walked by in public school and wondered what their problem might be in relation to everyone else. In short, it was my kind of place: the marginalized kid few wanted to hang out with was always the one I gravitated to. The popular jocks and prom queens never carried much social intrigue for me.
In a nutshell, the height of the Portuguese financial crisis occurred from 2010 to 2014, which was part of the wider downturn of the Portuguese economy that started in 2001 and ended between 2016-17. Twenty years ago, growth stalled in Portugal as a result of internal economic crisis, which was exacerbated by the “Great Recession” that hit the country in 2008. Unable to repay or refinance its government debt, Portugal applied for bailout programs from the IMF, EFSM, and EFSF in April 2011 at the tune of 78 billion euro. However, with austerity discipline and good fiscal helmsmanship, Portugal exited the bailout in 2014, the same year positive economic growth reappeared after three years of recession.
By 2016, the Socialist government achieved a 2.1% budget deficit, which was the lowest since the restoration of democracy in 1974, and the next year saw the highest growth rate of the economy by 2.7% since 2000 when the nightmare first began to unfold.
Since 2018, Portugal has not only made a comeback, but has become somewhat of a celebrity star everyone wants a selfie with, the most coveted, talked about place in Europe to see and.… to move to. The quiet, shy kid in the corner of the playground has grown up to be the man everyone wants to shake hands with.
Americans don’t like to be associated with losers. They like a trend that comes with a bit of a guarantee. They’ll have sympathy for an underdog they don’t really know, but won’t wear the colors until they see a winning streak; and risk-taking is sadly no longer part of the American character it once was.
Following the worse of the financial crisis years in Portugal, the Americans that were living in Portugal at the time began an exodus out, and from 2013 to 2016, the numbers of Americans decreased along with some other foreign residents as well.
2015 was the lowest ebbing point for Portugal regarding immigration, and Americans were the smallest demographic of foreigners in terms of numbers on record to not be moving to Portugal for anything like a better quality of life and more opportunity. This is in contrast to other countries, such as Brazil, the UK, Cape Verde, Romania, Ukraine, Italy, and even China, that have had long-term relationships with Portugal. The citizens of those countries have been consistently patient in the face of Portugal’s economic adversity, and still respectively represent the most residents by demographic number from foreign countries living in Portugal today.
Rags to riches
Americans currently rank 25th, but that could be changing the way things are going as the number of Americans moving to Portugal more than doubled from 2020 (1,115) to 2021 (2,477), and almost quadrupled since 2018 (714) based on new residence permits issued. According to the statistical information, there were 6,921 Americans living in Portugal in 2021 as opposed to only 2,426 in 2013 when I got my proverbial foot in the door.
One could say it’s precisely something like Portugal’s resurrection that Americans have been desperately looking for; a feel-good, rags-to-riches story they can gather around and be part of.
For the most part, America has become a broken country for its citizens, on the verge of becoming what appears to be a downright failed state for many. Income earnings and wages have not kept pace with the exorbitant cost of living that has been ever on the rise. Housing has become untenable for most Americans whether trying to buy, or merely rent. The approximate cost of a home in the San Diego area in 1996 for example was $300,000. The same house would sell for $1,288,994 on the given market calculated for 2021.
Rents in the larger metropolitan areas of the U.S. for an average apartment are anywhere between $4,000-$5,000 a month (This, as opposed to monthly rent in the very heart of Lisbon for about $1,100 in comparative dollar amount). And then there’s the healthcare system, which really isn’t a “system” for healthcare at all as much as it’s a big for-profit business that most Americans don’t want to have to use in any way for fear of losing any savings they have, or going into serious debt. Indeed, the great majority of Americans are just barely surviving. The response of many to these circumstances can be seen on websites like ‘InternationalLiving.com’, where the traffic on their “How to move out of the US” page jumped to 1,676% between June and November 2021 alone. According to Internal Revenue Service records, more than 6,000 Americans actually gave up their citizenship in 2020 (compared to 2,072 in 2019), the highest figure in at least a decade.
Influx of Americans
As a direct result of all this, the influx of Americans into Portugal is of two types: older Americans who are retiring and want to get the most out of their savings, and a younger crowd, the so-called “Millennials”, who recently discovered new opportunities and a lifestyle in Portugal that America appears to no longer offer.
Generational differences aside, the shared appeal Portugal has for these Americans is the cost of living, a better quality of life, an advanced medical health care system that works, a moderate climate, tax incentives, and … the growing American expat community itself with which they can all identify as part of a group of “intrepid” individualists who are “breaking the mold” with a mutually shared sense of “adventure”. That’s the way Americans tend to think anyway. However, the local impact these two groups have on the Portuguese and how they’re affecting the economy is where they start to diverge. Indeed, the effect each of these generations of Americans is imparting on Portugal is different, and not all of it is good.
Attracting foreigners was part of the plan to help Portugal rise out of its recession and austerity in the early part of the 2010s.
When Portugal started its Golden Visa Program in 2012, it had issued 734 Golden Visas by 2014 that generated more than 440 million euros. The Chinese were the first out of the gate to grab onto Portugal’s Golden Visa Program. By 2018, the number of Golden Visas issued went up to 6,498 with the top recipients being the Chinese at 3,963; followed by 581 Brazilians, 259 South Africans, 236 Turks, and 227 Russians according to an Economic and Trade-Cooperation website. At that time, the Americans weren’t showing themselves as a high-net worth consideration for Portugal. Now, however, with their sudden arrival on the scene, the recipient Golden Visa demographics are changing.
Americans are now competing evenly with the Chinese for residency. Chinese investors currently are still first in Golden Visa applications, but are slowly being overtaken by Americans. More Americans than ever received residency rights with Portugal’s Golden Visa Program in 2021. In November of 2021, Americans took the #1 spot, and in the next month of December, the Chinese just barely retook the spot with a 14 to 13 approval over the Yanks.
Benefits for Portugal?
This, of course, is good news for Portugal’s real estate industry, the Portuguese Securities Market Commission, as well as the Ministry of Finance, but the more working-class, or low- and average-income, Portuguese are not necessarily benefitting from the Golden Visa Program themselves. In fact, they’re rather being economically marginalized by the inflation of property values it’s creating. Essentially, many Portuguese feel that the money being brought into the country by even more recipients of the Golden Visa Program is just for the benefit of the “rich people” themselves, and not for the average Portuguese at the local level.
On the popular “Americans & FriendsPT” Facebook page, where Americans share information, cultural sentiments, ideas, good feelings, as well as even complaints about Portugal, one American vented her frustrations about the paperwork involved regarding the four properties she recently bought in Portugal. Stories like this give me pause to think of the benefits my fellow Americans are bringing to the Portuguese as some move in and take more than they need.
These Golden Visa Americans are not, of course, part of the newer generation of Americans making their way into the fabric of the unfolding Portuguese foreigner scene. The Millennial crowd of younger Americans can’t afford a Golden Visa. However, they’re a resourceful and skillful group within this world of digital tech that dominates the job market world-wide, and they’ve recently discovered that Portugal is the new, hip place to be.
“California of Europe”
Whether or not these younger Americans could actually locate Portugal on a map ten years ago is beside the point. However, I’m sure that the notion of Portugal being considered by some as the “California of Europe” might have something to do with it, and the fact that most Portuguese of this same generation speak English makes it easier for these younger Americans to acclimate as they move within the circles of their own age group.
Indeed, Portugal, particularly Lisbon where these younger Americans are congregating, is getting known for its “startup” scene, especially in the tech industry. Funding to startups headquartered in Lisbon reached almost 181 million euros in 2021, and 33% of founders for these startups are non-Portuguese according to a Portugal Startup Outlook Report.
These younger Americans are now looking for a place at this banquet table in order to dive into the opportunities that are up for grabs. And who can blame them really? However, a more relevant question that should be asked is at what cost to the Portuguese are these young upstart, startup entrepreneurs attempting to settle into the urban fabric of Portugal’s capital city? One only needs to prudently look at what happened to San Francisco in the decade and a half when it radically changed after 2000 as a possible analogy for what may lie in store for Lisbon.
San Francisco sprang up from the 1849 Gold Rush when opportunistic Americans flocked west in droves to mine its newly discovered gold. After all the gold that was once abundant in the northern California hills and streams was depleted, San Francisco eventually settled into an identity famed not for business, but as a bohemian place, known for its artistic and counter-culture lifestyle. This all changed after its rebirth in the 2000s with the new Tech Boom Gold Rush that irrevocably changed the city into something almost unrecognizable from what it once was.
Startups, not unlike those occurring in Lisbon now, transformed San Francisco from a reasonably affordable city where locals and their families lived for generations to a place where they could no longer afford the suddenly pricey neighborhoods, the exorbitant cost of commercial and/or residential property to rent, much less own. Many people who identified with San Francisco as their home, the place they were born and raised, had to move as they were economically cleansed out. The trend continued into the 2010s as the rising cost of living in San Francisco forced out the city’s teachers, artists, small businesses, as well as ethnic diversity, to be replaced by computer engineers, startup companies, and the more financially secure “1%” that were drawn by the tech boom. The effects of this sudden inflationary change in the cost of living soon began to ripple out and adversely impact smaller parochial areas in the wider San Francisco Bay Area where even more local residents had to move out because of the rising cost of the so-called gentrification imposed on once affordable communities by a younger generation of more ambitiously successful entrepreneurs.
The Lisbon comparison
This combination of a booming economy with little housing development became a uniquely extreme and damaging situation, and the seeds of this same trend are beginning to be seen in Lisbon now. However, the players in this particular drama are not solely young native Portuguese nationals moving in from the countryside with plans for a better life, but foreigners, a growing number of them young Americans, moving in from across the ocean with plans of a better life outside of their own national borders.
Depending on who you talk to, some see Lisbon as getting a new lease on life and the result of foreign residents coming in is a better city, more career and social mobility, jobs, and better quality real estate emerging from “dying” neighborhoods. However, others are seeing many locals and small businesses being priced out with rising rents as many Portuguese have to close with new foreigners building new ventures. While neighborhoods are being transformed into startup districts for new businesses, much of old Lisbon is being stripped away, and according to one executive for a European sales company, many Portuguese, especially before the pandemic when tourism was booming, were already fed up with what’s been happening to the city.
More than economics
This is not just an economic issue, but a spiritual one, a cultural one. What’s the price of change as a more laidback, purely Portuguese lifestyle, a rich cultural identity, and formerly entrenched ways of making a living give way to a growing economy based on foreign entrepreneurship? Such a freelance economy takes the form of social Darwinism as teachers, municipal workers, small business owners of native-born Portuguese descent have to take on new jobs as baristas, waiters, and Uber drivers to service this new influx of foreign “landed gentry” in order to stay in the neighborhoods they grew up in.
The late American poet, Lawrence Ferlinghetti, an icon of Bohemian art and life who came to San Francisco in 1951, later complained of the “soulless people” newly inhabiting his city, a “new breed” busy on their laptops and iPhones with a knack for business occurring in places other than the one in which they happen to standing at the moment. One can only wonder what the Lisbon-born poet Fernando Pessoa would think if he could see the place his beloved city is rapidly changing into.
Needless to say, it would be both unfair and inaccurate to throw all the blame, or the credit, on the dramatic transformation that Portugal is undergoing these days solely on newly arriving Americans. However, to be honest, it’s difficult to remember (if at all) the positive impact large numbers of Americans have had on any place outside of their own borders.
Personally, if I had wanted to be anywhere among Americans at all, I would’ve stayed in America. Be that as it may, one can only hope that Portugal and the Portuguese will influence the Americans more than they’ll influence the Portuguese in any way.
Generally speaking, the attention span that Americans have for anything isn’t very long, and their interest in most things doesn’t have profound longevity. They have a tendency to get bored quickly with most things. Whether or not they’ll stay in Portugal, or for how long, is something only the future will tell.