The Golden Visa and Portuguese Property Market

lisbon night

It is known that the disappearance of the Silk Road was the main driving factor for Portuguese explorations of the Indian Ocean, including the Sea of China. These intrepid Portuguese looked for a way to reach the prosperous Chinese empire through another route which resulted in the arrival in 1513 of the first European trading ships to the coasts of China, under Jorge Alvares and later under Rafael Perestrello.

As a result formal commercial relations between the Portuguese Empire and the Ming Dynasty were opened during the reign of the Zhengde Emperor, and, today, 500 hundred years later, we have the Golden Visa attracting considerable Chinese interest.  From West to East and now East to West!

Portugal was listening when Warren Buffet declared that the key to economic recovery was a strong housing market: so when the revised Golden Visa Scheme was released in January 2013 it was immediately perceived as a sensible and accessible migration programme”

said Rosemary de Rougemont Senior Partner of the Anglo-Portuguese law firm NDR who has been assisting foreign clients since 1987.

The Golden visa is a fast track to getting residence permits. In most cases a visa can be obtained in a period of three months.  The conditions for the granting and renewal of visas are sensible and not onerous: no criminal record and 7 days’ annual stay.  There is a choice of investing €1 Million in a public or private company or fund, setting up a business and creating 10 new jobs, or buying property, which can be any type: commercial, residential or land for a minimum value of €500,000.

A resident of Portugal is entitled to travel throughout the Schengen area, work and provided he registers with Social Security, to enjoy the same social benefits as the nationals. After five years residence, permanent residence can be obtained and under general nationality laws; six years´ residence allows an application for naturalization.

And for any European investor scheme to be sustainable, it must comply with European legislation. Cecilia Malmstrom, the European Commissioner for Internal Affairs, in response to a question put by a Dutch EU parliament member in respect of the Golden Visa, declared that the Portuguese Programme complies with European Regulations and cannot be confused with other less clear programs in the business of selling passports to nationals of third countries.

With around 787 visas issued representing inward investment of €472.87M to the end of March this year, together with an upward trend in property sales coming from the United Kingdom, the traditional foreign investors in Portugal, the property market in Portugal is moving.

APEMIP the Portuguese Real Estate Association have revised their initial estimate of €500M inward investment in the property sector during 2014 to €1000M. Paulo Portas the Deputy Prime Minister who made the Golden Visa Scheme his personal mission believes the Scheme to be an important instrument in the country´s economic recovery.  And the Scheme had the full backing of the opposition parties so it is here to stay for the foreseeable future even if there are elections in 2015.

Of the 787 issued visas, reportedly 622 are Chinese nationals with the balance being nationals from Russia, Middle East, Brazil, South Africa and other countries.

The Golden Visa Scheme benefits not just sectors immediately concerned with real estate but also the construction and service industries.  The unemployment rate in Portugal has been falling for the last ten months and has stabilised at 15.3%. Economic growth rate predictions are now not just positive but have been re-assessed – from 0.8% to 1.2% for this year and upwards of 2% for 2015.  This, after three years´ of recession.

There was a welcome increase in government revenue: IMT (Property transfer tax) receipts were up last year– the first such increase in 5 years, and with economic sectors beginning to stir, income and corporate tax too, allowing the Government to balance its books.  The foreign investment which the Golden Visa is generating is responsible for the increase in confidence internally in the market.


Chinese investors are known to be cautious looking for proper returns on their investment and realistic yields. Portuguese real estate is competitive and was never the aim of speculative investment as was seen in Ireland, Spain, and the USA and certainly not in the last ten years.

A report regarding the sustainability of the sector by consultants working under the auspices of UNECE the Economic Commission of the European Union, in January 2011, at a time when the euro was crashing and State debts high, concluded that there was no bubble attached to property in Portugal, and that the sector had a very positive image of transparency and confidence.  Consequently, one can conclude that the sector can continue to grow without the shadow of past sins all of which is very attractive in the eyes of the foreign investor.

Prices in Portugal are competitive generally. In fact official sector reports disclose average urban prices in Lisbon are up to six times less than other European capitals. And Portuguese construction is renowned for its quality.

Increases in prices of buildings currently being marketed are also being reported, which is very good news. Properties in the cities had been devalued, not because of the burst of a property bubble – there was never one in Portugal – but because of lack of movement. This did not actually benefit anyone.

Lisbon river view

But Portugal is one of the few countries in Europe where the two principal cities still have enormous potential for capital appreciation in urban regeneration. This phenomenon is due to a Twentieth Century marred by urban degeneration and neglect due to lack of maintenance of constructed buildings and restrictive rental laws.

In the last year, the Municipality of Lisbon launched its own programme called “Regenerate first, Pay later” designed to engage private companies and individuals to rebuild and refurbish its decaying properties with the added benefit of injecting new life into the capital and turning this attractive city into one of Europe’s great destinations. Sale is by public auction at a figure set by the Municipality and payment of the purchase price is deferred  until the end of the agreed contractual term or when the re-built property is offered on the open market.

New policies resulting in the passing of changes to the rent legislation allowing for old rents to be updated has put new life into the rental market and with it, renewed interest in the property sector. APEMIP report increased interest in property acquisition in the two main cities: there are 25% more applicants in Lisbon and 30% more in Oporto.  There is no over supply of property in Portugal, as is the case in Spain, either. Stocks in the best areas will substantially diminish this year and should be absorbed by the end of the first half of 2015 say APEMIP.

Portugal is a welcoming and safe European destination where respect for foreigners is total.  Quality of living is high at a very reasonable cost. Education is good and some Master Degrees are taught in English; in fact English is widely spoken or at least understood.  Another Portuguese Programme called “NHR- The Non Habitual Residence” was equally brought in to attract highly skilled and high net worth retired individuals to come and live in Portugal.

Under this scheme, and for a period of ten years, foreign individuals satisfying the residency test and who have not been resident in Portugal for the previous five years, can enjoy a reduced tax rate of 20% on their Portuguese source income and total exemption of their foreign source income providing it is taxable under a Double Taxation Agreement or OECD model agreement in the other contracting state. This has been particularly appealing recently with Europeans living in countries with aggressive tax policies against the middle classes such as France, Sweden and Holland.

Portugal is the secret of Europe. It is a small, but beautiful country, with a temperate climate. A safe haven for investments with a favourable tax regime for foreigners.

For further information contact NDR

Rosemary de Rougemont: [email protected]

Francisco Salgueiro : [email protected]

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