After a long run of success for Portugal with its Golden
Visa programme in the last ten-plus years the market in Europe is likely
to see a shift in fortunes in 2024 as other European options begin to
soak up the demand.
The Portugal Golden Visa programme
has seen huge success since its launch in 2012 bringing inward
investment of over €7bn into the economy with over 90% of those funds
channelling into the commercial real estate market fuelling major
developments such as hotel projects. These hotel developments, built on
equity capital not debt, would further fuel economic growth in a country
that is largely dependent on tourism. In 2022 inward investment from
Golden Visas alone represented over 2% of GDP for Portugal. Much of this
investment was now coming from American investors as the US had risen
from nowhere to become the largest source country for HNW investors
seeking a second residency in Portugal.
The benefits of such a programme were clear to see. But in 2023 the
government, under severe pressure from a domestic housing crisis, did
what far left of centre governments do best. Making a decision based on
ideology rather than sound economic principles the government
effectively ended any golden visa investment in real estate from October
of that year. The minimum investment rose from €280,000 to €500,000 and
international investors now had to commit their capital to Venture
Capital or Private Equity funds. Little over a month later Portuguese
Prime Minister António Costa who had instigated the Golden Visa
programme change, left an economic trail of destruction behind him as he
submitted his resignation due to a corruption probe into Lithium
exploration schemes.
“Our clients are having to take far more time in considering the new
Portugal options”, says Paul Williams CEO and Founder of La Vida Golden
Visas one of the largest Invesment Migration Consultants offering golden
visa options throughout Europe. “They now have to understand the merits
of Private Equity investment in an international context in order to
gain residency, as opposed to real estate which is far simpler for the
average investor. This immediately puts up barriers to clients familiar
with real estate, stocks and shares, but unfamiliar with a more complex,
riskier and less liquid investment class”. The switch is likely to see a
huge reduction in the amount of capital channelled into Portugal
through the programme. In 2023 investment into VC or PE funds for the
Golden Visa in Portugal, while growing year on year, was still less than
25% of the total inward investment generated by Golden Visas.
Portugal has become far more of a niche investment for those seeking a
Golden Visa since the change. While many investors are still attracted
to the benefits of Portugal’s programme, in particular its path to
potential citizenship after five years, others are looking to
alternative markets. La Vida has seen a significant shift in demand
driven in many ways through product innovation and other countries
taking advantage of the gap in the market.
La Vida is now offering a commercial investment for the Spanish Golden Visa
which with up front rental yield can effectively reduce the investment
from €500,000 to €350,000. The commercial venture is attractive to
passive investors who do not want the burden of owning a home in Spain
and wish to see returns on their capital. Demand for the Spanish Golden
Visa has been strong since its launch in 2013. Over 2000 main applicants
each year invest a minimum €500,000 into real estate to gain the
Spanish Golden Visa. Similar in size to the capital investment generated
by Portugal it is a far lower percentage of overall GDP for Spain as
its economy is roughly three times the size. Spain is tipped by many to
be a big beneficiary of capital investment seeking an alternative to
Portugal for residency investment.
The Greek Golden Visa
has had tremendous success and now attracts over 7500 main applicants a
year. Over half the applicants are from China. Not disimmilar to
Portugal in the early days where China initially the dominant demand,
gave way to the USA. Greece may well be the economy to benefit from the
demand which Portugal experienced from the USA in recent years.
Meanwhile one of the first commercial rental yield offerings is
available in Greece. Here the investment for a Greek Golden Visa can be
reduced from €500,000 to €250,000 due to its location. The investment
into student accomodation offers an attractive yield and again an
opportunity for passive investment for those looking for a golden visa
without the burden of home ownership.
Meanwhile Hungary has announced its new golden visa programme starting in 2024. Through the Hungarian Golden Visa
applicants will gain residency through investing either €500,000 into
real estate or €250,000 into a property fund. All three countries,
Spain, Greece and Hungary offer the benefits of EU residency, Schengen
free travel and no minimum stay requirement avoiding the need for tax
residency.
The future looks exciting for Golden Visa investments across Europe
as countries and developers innovate with their offerings. “We’ve seen
huge growth in investment migration in the last 10 years” says Williams.
“The market is still growing strongly and we expect it to continue into
2024 with further double digit growth. When demand is there suppliers
will fill the gap. We see a healthier market with more rounded choice
for our clients going forward in Europe and look forward to an exciting
year ahead.”
What was once a market dominated by one standout choice (Portugal and
Real Estate) is now one that has multiple competing options.
Governments and suppliers are rising to the challenge of offering
innovate and attractive investment options that will help them take
advantage of the demand shift resulting from the Portuguese government’s
decision.
