In Portugal, the real estate market has been booming for several years now, mostly impacted by an increasing interest of foreigners looking to buy properties, mostly in the metropolitan areas of Lisbon and Porto.
One specific characteristic of the Portuguese market is the possibility for non-EU citizens to apply for a Golden Visa through different routes of investment, being the most popular one, through property investments that can qualify for the program. That's not unique to Portugal within the EU or worldwide, as other countries have such options, through their Golden Visa programs. But recently, the government introduced new rules for the program. The new rules, which came into effect on 1st January 2022, are somehow more restrictive, especially regarding the regions and cities which enable you to invest through the real estate route of the program.
Let's look into the recent changes to the golden visa regime in Portugal and how they have affected the real estate market.
A Quick Look Into the Recent Changes
As far as real estate is concerned, the changes to the golden visa regime are mainly related to the revision of the minimum investment amounts for the purpose of obtaining a visa, from 350,000 euros to 500,000 euros, in the case of the acquisition of participation units in investment and venture capital funds, and also the territorial restriction of the regime's application.
Regarding the restrictions of the regions where it's possible to apply, only some municipalities are now covered by the regime. So, with a few exceptions, the Lisbon and Porto Metropolitan Areas and the Algarve have been removed from the regime.
However, these territorial exclusions only concern the acquisition of real estate assets for residential purposes, excluding all other market segments (offices, commerce, logistics, hotels, etc.).
Why Such Changes?
Much has been discussed about Golden Visas programs. Most of such discussions are occurring in Europe, and Portugal isn't different. There is a common sense that in Portugal, this regime inflated housing prices, especially in Lisbon and Porto in recent years. And due to that, there was also some push for visas to be restricted through housing investments in these areas.
Some Facts and Stats from the Impact of the Program on the Real Estate Market. (all stats are from SEF - the official Portuguese entity for the Golden Visa regime -source)
Between 2013 and 2020, investment in real estate for obtaining a golden visa had a weight of around 4% in the total amount of house sales in Portugal;
Even if all sales for Golden Visas were concentrated in the Metropolitan Areas of Lisbon and Porto, they would represent just over 6% of the total real estate sales;
Lately, the weight of Golden Visas' investment in the residential market has been decreasing. It now represents between 2% to 3%, whereas, in the first years (around 2014), it represented almost 9% of 2014 (mostly due to the Chinese investment in Portuguese properties by that time)
From those stats, we can conclude that the golden visas alone, can't be causing such inaccessibility to the real estate market in Portugal.
How Are the Recent Changes Impacting the Real Estate Market?
If it was really the Golden Visa that caused an increase in housing prices in the areas now excluded from this regime, they will naturally produce the same effect in more inland territories of Portugal rather than Lisbon and Porto alone.
One would think that this limitation now implemented in the Golden Visa regime will promote such balance and guarantee access to housing in decent conditions for all. If the objectives were to stop the rise in prices in Lisbon and Porto and to promote real estate investment in the interior of the country, from the first months af