Property associations fight back over Golden Visa scrap plans
Property associations in Portugal are to launch a charm offensive to persuade the Portuguese government to modify plans to scrap Golden Visas in return for property investment in Lisbon and Porto.
The government argues that the scheme was originally introduced to kick-start Portugal’s ailing property market in 2012 when it was introduced but says that now the property market has recovered, the scheme encourages real estate speculation which prices ordinary Portuguese families out of the market.
Developers and associations will argue that the move will simply discourage foreign investors from investing in Portugal and who want to be in Lisbon and Porto. Instead, they will argue, these investors will simply apply via schemes in other countries like Cyprus or Malta as they do not want to buy property in cities in the interior of Portugal.
Local associations say that foreign investors would be discouraged from investing in Portuguese real estate as other cities are widely perceived as less-investor-friendly.
The Government will have until the end of this year to amend the State Budget 2020 which could result in property investment under the scheme being reserved for Portugal’s secondary cities like Braga, Viseu, Coimbra or Beja and the islands of Madeira and Azores which are badly in need of investment and often overlooked by wealthy investors.
The Executive Vice-President of the Portuguese Association of Real Estate Developers and Investors, Hugo Santos Ferreira says, “I think there is a big probability that the Golden Visa legal framework would suffer some amendments and some fine-tuning.”
The Golden Visa programme grants successful applicants the right to live, work and study in Portugal, along with visa-free travel in 26 countries in the European Union, and eventually legal residence. Under the present scheme and individual is eligible for a Golden Visa if, among other options, they invest at least €500,000 on property and associated costs and fees.
But property purchase is not the only path to get a Golden Visa in Portugal, and it is to other investments that the Government now wants to concentrate on as criticism mounts that the scheme brings nothing to the Portuguese economy other than short-term speculative gain.
The government now wants to encourage the Golden Visas in return for €1 million capital investment, or a €250,000 donation to artistic productions or even rehabilitation of national cultural heritage or by creating a minimum of 10 new jobs.
Latest government statistics show that investments from overseas buyers have pushed up house prices in Lisbon by around 10.3% (Index increase of 143.12 in the third quarter of 2019, from 129.72 a year ago).
However, how much of this Index rise is actually down to Golden Visa applicants — which are falling in numbers — rather than Lisbon simply being trendy for tourists, with both locals and European investors cashing in by turning properties into B&B guest houses, is difficult to gauge.
Rafael Ascenso, General Manager of Christie’s International Real Estate estate agency Porta da Frente told the South China Morning Post, “If this change does occur in legislative terms, the market may experience a price adjustment,” adding that the Golden Visa sector accounts for around 10% of its business.
Hugo Santos Ferreira says that investors would only be persuaded to invest in interior cities if local authorities improve property licensing processes like planning permission and make them shorter than one year, the usual time it takes for a project to be approved in Lisbon.
“We have to persuade the local councils to create this friendly environment for investors and if they are able to do so, we might then just be able to mitigate the risk in investing in the interior,” he adds.