In February, Portuguese officials announced “the end” of the country’s popular, decade-old golden visa program. Since then, investors—and their advisers—have been scrambling to determine what it actually means and how to react.
“Unfortunately, it’s still not entirely clear what exactly it all means,” Dominic Volek, group head of private clients at Henley & Partners, told Mansion Global. “They made this announcement and didn’t release any actual wording or a legal notice. So everyone interpreted it as what they thought it meant, which, of course, always causes a bit of panic.”
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has become a hot spot for buyers outside of the European Union because of its safety, natural beauty and favorable tax regime. But the golden visa program is only one way to start a new life in the country, and those who are interested in living there full-time should not be deterred, according to agent Paulo Lopes with Casaibéria Real Estate/Luxury Portfolio International in Lagoa, Portugal.
Part of the reason there’s so much uncertainty is because Portugal’s announcement has not laid out many details, including when the program—which gives nonresidents the right to live and work in the country and potentially apply for citizenship in exchange for a real estate or other investment—would be terminated. Government officials also indicated the rules could be applied retroactively, affecting those who have already applied to the program. There’s also a chance parts of the program will remain, with new, updated policies attached to it.
“At the moment, yes, we have a problem with this because there’s a lot of uncertainty in the market,” he said. “But it is not the end of the world because we have several other visa programs, which, in my point of view, adapt better to the needs of an expat who wants to live in Portugal for a longer term.”
The discontinuation of the golden visa program was spurred by concerns that foreign buyers have driven up home prices and made buying property difficult for Portuguese citizens who can’t afford the same prices as some foreign buyers. However, experts said eliminating the golden visa program is unlikely to affect property values.
More than 11,000 have applied for golden visas through the program, according to Mr. Volek.
“So that’s 11,000 real estate purchases—because 90% of the investors are in real estate—over more than a decade,” he explained. “That’s about 1,000 real estate purchases a year on average. There’s quite a valid argument that that’s not necessarily going to shift the needle on the housing market.”
No specifics were given when the end of the program was announced, and that lack of clarity has definitely shaken some potential investors.
“That is not very good in terms of investor confidence,” Mr. Volek said. “There’s been quite a lot of uneasiness amongst clients who are two to three years into the process, clients that are just getting started and clients that are considering getting started.”
Virgolino Gomes, office director of Sotheby’s Vilamoura in the coastal Algarve region, agreed, but added that Portugal will remain a popular option.
“There are always people who need to feel 200% confident to make a decision,” he said. “Others need only 100%. … But I usually say as long as these fundamentals keep as strong as they are—the climate, the weather; the security; we have good infrastructure, good healthcare, good education, good internet access—investment will continue in a very natural way.”
However, most golden visa investors do not actually want to live in Portugal full time. To comply with the program, they only have to be in the country seven days out of the year, so many opt to invest in hotel residences or units within a bigger project.
Designed to bring in foreign investment after the 2008 housing crisis, the scheme also has a relatively inexpensive buy in—they can be part of the program for a real estate purchase of at least €500,000 (US$530,000) or €400,000 in rural areas, or by investing at least €350,000 (€280,000 for sparsely populated areas) in a residential property that is over 30 years old and in an area of urban regeneration, according to Henley.
But the lack of clarity on the golden visa program has already halted some large residential hotel developments, according to Mariana Carp, a partner and tax adviser at ILYA, a tax advisory firm based in Lisbon.
For example, in Comporta, a hot beach spot for the “rich and famous” that’s about 75 miles south of Lisbon, there were some “huge projects” being funded through the golden visa project and by Canadian companies, she said.
“Now, with the golden visa announcement, some of them were already canceled,” Ms. Carp explained. “So the main impact of the announcement of the end of the golden visa—and I’m talking about the announcement because let’s see what the approved law says—but the announcement of the golden Visa has already made investors stop, and the housing prices did not change a cent.”
Even without a timeline or specifics on the changes to the program, “it’s the end of the golden visa program as we know it,” Mr. Volek said.
It’s also not the first time the program has been altered—about two years ago, Portuguese authorities banned real estate investment in its two biggest cities, Lisbon and Porto, as well as in the popular Algarve region, according to Nuri Katz, founder and president of Apex Capital Partners.
Prices did go down. There were many factors at play, including the end of the pandemic-related housing boom and inflation, but property prices were up more than 18% in 2022, according to government statistics.
In addition, the golden visa program isn’t just for real estate investments. There are other ways of meeting the requirements of the program, including transferring capital to Portugal or investing in businesses that create jobs.
“[Buyers] will still have the option of getting the golden visa, but the investments they are going to be making will be investments in other kinds of financial instruments,” Mr. Katz said.
It’s true the changes to the program may send some investors to other areas with similar incentives, according to Nuri Katz, founder and president of Apex Capital Partners. That includes a number of countries in the Caribbean, Turkey, Greece, Spain and Italy, among others.
But Ms. Carp noted that many of these countries are facing similar issues.
“All those countries have been facing the same fuss about their golden visas and about foreigners moving to their countries and raising the cost of living because they have a much higher acquisition power,” she said. “What you are facing in Portugal is not that different from what you’re facing in all these other countries that have more or less the same policies.”
On the other hand, Ms. Carp is seeing more overseas buyers than ever in Portugal, particularly from the U.S. And they are not dependent on real estate investment to get a visa. In fact, there are several routes people can take to get a visa in Portugal, including programs for digital nomads and the non-habitual residents with jobs that are considered “high-value,” among others.
“The American community is growing as it never has before,” Ms. Carp said. “Americans are moving to Portugal and living in Portugal.”