Pela Terra
Sponsor
As markets tumble and the media frenzy around a possible US recession increases, potential investors in the Portugal Golden Visa could be questioning their decision. After all, does it really make sense to be investing €500,000 into a foreign economy during such a turbulent period?
To understand this properly, we need to look beyond the media hype and understand what is really going on. Is a recession in the US likely? And if it is, then does my level of risk increase or decrease with investment in Portugal’s economy?
We’ll answer these questions and shine a light on one particular investment that could provide you with the perfect hedge against both recession and inflation while creating the security of a path to European citizenship for your family.
How likely is a recession in the US?
There are daily headlines in our media at the moment about the growing threat of a recession in the US. But looking beyond those headlines is important to understanding the actual level of risk.
The reality is that most banks and economists are putting the chance of a recession in the US at somewhere between 20% and 40%, as of mid-March 2025. Moody’s has quoted a 35% chance of recession, Goldman Sachs has quoted a 20% chance, and Morgan Stanley’s Chief US economist has also quoted a 20% chance in recent days.
But remember, the way the media presents these numbers is important. Because the leading experts are also saying that there is a 60-80% chance that there won’t be a recession in 2025. Comments such as St. Louis Fed President Alberto Musalem’s, that “the prospects for continued growth still look good” often get lost in this kind of media frenzy.
It’s also insightful to compare these reports with previous years (given the benefit of hindsight, knowing that the S&P 500 continued to grow after these forecasts were given). In August 2024, JP Morgan said there was a 35% probability of a recession. In October 2022, Bloomberg reported that the probability of recession within 12 months “had now hit 100%”.
But could an investment abroad still make financial sense, regardless of the outcome for the US economy?
Benefits of global diversification
As we (seemingly) move into a more isolationist phase of global politics, diversification across different markets naturally becomes more important to managing risk.
The benefits of global diversification in your portfolio have long been established, but with the rise of tariffs, trade wars and domestic industry, performance gaps between different economies are predicted to increase.
This means that having all your eggs in one basket becomes increasingly risky. Someone who has previously held 100% of their wealth in their domestic economy, for example, might be well advised to effectively de-risk their position by moving a portion of that wealth into foreign markets.
This is exactly what citizenship via investment programs allows you to do – with huge added benefits.
Recession-proofed investments & inflation hedges
Of course, global economies are still heavily linked – even in a more isolationist world. If the US does slide into a recession in 2025, that undeniably increases the risk of a recession in Europe.
It’s also important to remember that even if we avoid a recession, inflation could still effectively degrade your overall wealth without causing a financial crisis. Bonds for example, which are often the first investment choice in a recession, are much less attractive with high inflation.
So, what are the criteria investors normally look for during these times of economic turmoil?
- Asset-backed investments: Linking your capital to tangible assets is often seen as a safe haven for your wealth during recessions.
- Low volatility: Investors are naturally drawn to sectors with historically low volatility because sectors that are subject to large upswings during economic prosperity are more prone to large drops during recessions.
- Stock-market dissociation: Dissociation from the stock market (which always tends to fall during recessions) is crucial to maintaining value.
- Inflation hedge: Assets that are closely linked to inflation, unsurprisingly, tend to rise in value alongside inflation. This helps protect your wealth from being eroded over time.
- Income potential: Warren Buffet famously rejects gold as a safe haven because “it does nothing other than look back at you.” The ideal investment will not only provide a recession & inflation hedge but also earn you positive returns & income during that period.
And, of course, the investment has to meet the eligibility criteria for the Portuguese Golden Visa!
Is farmland the perfect investment for 2025?
If you’re looking for an asset class that ticks each of these five criteria, then investing in Portuguese farmland and the agri-business sector could be the perfect fit.
Clearly, making an investment into farmland fits the description of asset-backed investments, with your capital being secured against the physical asset of land.
Financial Samuri also calls farmland investing “an excellent source of recession-resistant returns” and for good reason. This graph from CAIA demonstrates how farmland was the only traditional “safe haven” to deliver positive returns during the “Covid Quarters”:
Farmland investments are also dissociated from the stock market, and they provide income potential through annual harvests – which is why Warren Buffet prefers it as an asset class to gold.
Perhaps most importantly – farmland provides an excellent hedge against inflation. This is because food is the third biggest category, which makes up the inflation calculation, and farmland is heavily involved in the production of food.
This means that when inflation goes up, food is most likely to have gone up in price, too – making farmland more valuable. This provides you with protection against inflation because your investment is likely to have risen in value as inflation rises.
And even when you’re investing in safe-haven asset classes, it is good to know you have momentum on your side. With institutional investment into Portuguese farmland rising by 120% over the last few years, according to CBRE, your investment will also be well positioned to benefit from a “rising tide” effect.
Are European almonds a tariff hedge?
To be as insulated as possible from the economic turbulence in 2025, it’s important to look within the farming sector and find categories that might stand to actually gain from Trump’s tariff war. Almond farming is a perfect example of this.
California currently produces 70% of the world’s almonds, and both Portugal & Europe are net importers. What does this mean in Trump’s new world of tariffs? For European farmland producing these crops, they are at a significant advantage.
A Portuguese farm growing almonds could already supply the whole of Europe tariff-free. But its competitor, those 70% of the world’s almonds coming from the US, now have hugely significant costs attached to them. This leaves the Portuguese farm well-positioned to capture more of the market and at a higher price. Put simply, if it’s a farm you are invested in – you stand to benefit.
How to invest in farmland for Portugal’s Golden Visa
If you’re considering an investment in the agricultural sector, then you may want to consider Pela Terra – who manages Portugal’s largest agricultural fund.
The fund operates agricultural businesses for a holding period of 6-8 years. They focus on acquiring & operating olive and almond farms, predominantly within the Alentejo region of Portugal.
During this time, the fund targets a 5-6% annual dividend based on the income from the harvests of those almonds, which are exported to Spain and then distributed across the European Union.
At the end of the holding period, the fund aims to sell the farms for a profit – which is shared with investors as well. Overall, the target is to deliver a 7-9% average annual return.
Positive environmental & social impacts are also at the core of the fund, which has pioneered a “Golden Visas For Good” model in Portugal. After raising 33.5m euros in the first Pela Terra fund between 2021-2023, the team is currently raising a larger second fund until November 2025.
And if you invest before that deadline, you’ll even benefit from an in-house Concierge Service to make the visa application process as smooth as possible, removing the need for you to engage with costly agencies.
If you’d like to learn more and speak to one of the experts at Pela Terra, you can book a call via their website.
Alternatively, you can email them here (nick@pelaterra.com) or drop them a message on WhatsApp using +44 7768 929321.
