Though Walloped by Pandemic, Spain’s Golden Visa Raised EUR 0.5 Billion in H1 2020

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A great deal of anticipation attached to the first batch of statistics on the Spanish golden visa program to come out following the onset of the pandemic in one of the world’s worst-hit countries. The trepidation was all the more poignant in light of reports released in the spring indicating golden visa investment specifically in real estate had dropped to half its 2019-level by the end of May 2020. The results, thankfully, aren’t as bad as preliminary figures had indicated.

In June, Idealista reported that figures from Spain’s Foreign Ministry showed only 113 property buyers had been granted golden visas in the first five months of 2020, down from 285 during the same period the year before.

Promisingly, however, recently published statistics from the country’s Ministry of Labor show Spain approved an additional 683 golden visas for main applicants during the first half of 2020. That represents a 19% rise in approvals on the preceding six months, but also a 19% drop compared to the first half of 2019, when Spain approved 848 applications.

There are at least two possible explanations for this disparity in numbers: There was either a major surge in approvals of backlogged applications when Spain “reopened” in June, or the share of golden visa investors who pick the real estate route is not as dominant as in previous years. A combination of both explanations is also likely. Furthermore, it’s possible that the Ministry of Labor and the Foreign Ministry use different calculation methods.

A surge in approvals is the more plausible explanation for the surprising last-minute upswing in H1 due to an idiosyncratically Spanish rule favoring residence visa applicants, as explained by Spanish golden visa expert Juan Antequera in his article from February this year, How Spain Became a Golden Visa Powerhouse Without Even Trying:

For residence permits, the government’s maximum permissible adjudication period is legally set at 20 working days from the filing of the electronic application with the competent body. “Big deal,” you may say. “Plenty of programs have rules that say they will process within a certain number of days, but they exceed their own limits without consequences”. Well, in Spain, that’s different because the law definitely favors the applicant. If no decision is reached within the mandatory 20-day period, the rules stipulate that the residence permit may be deemed granted due to tacit administrative assent. The onus, therefore, is on the government, while the applicant gets the benefit of the doubt. If the government is inefficient, it is the one that’s disadvantaged, not the applicant. In other words, unless you get a rejection within three weeks, you are – by default – approved.

What may have occurred, then, is that Spain saw normal levels of applications during the pandemic months (about 60-80 monthly) but were unable to process these due to nationwide office closures. Subsequently, after languishing idly on the desks of the competent authorities for more than 20 days, several hundred applications may have been approved by default over a lack of government response.

In any case, the Ministry of Labor, whose figures IMI rely on for reporting statistics on the program, show that of the 683, Chinese and Russian investors represented the largest applicant groups, accounting for 202 (217 in H2 2019) and 131 (99) main applicant visas, respectively. The total number of golden visas “en vigor” in Spain by the end of June 2020 stood at 6,198.

The program offers three distinct routes of qualification for residency by investment in the country; real estate investment (historically the most popular), capital transfer, and business investment. The average investment amount (minimums range from EUR 500,000 for real estate to EUR 1 million for capital transfers) across all three categories have historically hovered around EUR 700,000.

Presuming those averages have remained relatively constant throughout the period, Spain would have raised nearly half a billion euros during the first half of 2020, and about EUR 4.5 billion overall since the program’s opening in 2014.