Portugal’s Golden Visa Public Discussion Period and What’s at Stake

---

Contentions around Portugal’s residential property market, like in many European countries, have led to public pressure and demands that the government act to tackle the high costs of housing. In response, the government called a meeting of the Council of Ministers on February 16^th and, subsequently, gave a national press conference to announce its plans.

The government has presented the general terms of a preliminary proposal for housing reforms, which include proposals for the golden visa program. In his speech, Prime Minister António Costa announced that it was the government’s intention to review the Golden Visa Program, regarding real estate investment options. The Prime Minister’s precise words were:

“Two particularly important measures to combat real estate speculation – the first, the elimination of golden visas, or rather, the elimination of the granting of new golden visas. As for the golden visas already granted, their renewal, in the case of exclusively real estate investments, will only be renewed if they are the owner’s own or permanent home or of his descendant or if the property is placed, on a permanent basis, on the rental market.”

On March 3^rd, 2023, the government shared the preliminary proposal for the amendment to the Immigration Law. From the information we have been able to gather, it appears that, in general terms, once the new law takes effect, the government will accept no new real-estate-based applications for golden visas.

This week the Portuguese Government announced that the Council of Ministers meeting scheduled for March 16th, in which the final draft of the proposal Mais Habitação was to be discussed, was postponed to March 30th.

The extension announcement signaled that the executive wanted to wait for the opinion of the Portuguese municipalities regarding the proposal presented for public discussion, an opinion that will not be ready until March 21st.

As a result of the meeting’s postponement, the government has also decided to change the date for the public discussion to March 24th, 2023.

What can investors or future investors expect from this preliminary proposal?

Public debate: Currently, the public debate about the proposed general measures is ongoing, and all relevant stakeholders are invited to give their feedback to the government. 

Voting: Following this public discussion, the government will issue its final proposal. Subsequently, it will send its final proposal to Parliament, which will vote on it in the general session. Presuming it is approved, a separate committee will then discuss the proposal and prepare its final draft.

Ratification and approval: This last version will then come back to Parliament for general approval. In the final stage, the Parliament will send the proposal to the President of the Portuguese Republic, who may require an assessment from the Constitutional Court, an outcome that is likely considering the serious questions surrounding the proposal’s constitutionality.

In summary, what can happen?

One of three things can happen: 

• Direct ratification: In this case, the proposal will be published upon ratification. In this instance, a transition period is also likely.
• The President of the Republic does not accept the proposal as it is: He would then return it to the Parliament for alterations.
• The President of the Republic accepts the document but requests the evaluation of the Constitutional Court.

It’s important to mention that any changes will, most likely, benefit from a transition period.

We believe that this change is a good indication that the Government really wants to listen to the opinion of all stakeholders regarding this matter and to include all the feedback collected in the final draft. 

Nevertheless, there are opportunities available for investments and the applications can be submitted with all the guarantees, benefits, and advantages that the golden visa program offers to investors and their families.

What is at stake?

The passion for Portugal is notable and it has been a destination of choice for both European and international investors, as evidenced by the EUR 6.7 billion in investment raised from 2012 to date through the golden visa program.

We have developed – or are in the process of developing – 27 hotel projects in various parts of the country under the aegis of the program. Many of these are already operational, and several others will open in the coming months.

To date, these projects under development represent an investment of EUR 1.1 billion in the tourism sector in Portugal, which could reach EUR 1.4 billion by the end of 2023, thanks to the investments of more than 2,500 foreign investors.

The projects represent significant investments and have a positive impact on the growth of Tourism and the Economy, on national and local development, as well as on job creation. These projects come exclusively from the rehabilitation of commercial (non-residential) properties from buildings of more than 30 years of age or located in areas of urban rehabilitation.

These projects have enabled the creation of about 550 direct jobs, both in the hotels in operation and in corporate services in Portugal, as well as about 2,300 indirect jobs created during their construction.

Hotel construction and urban rehabilitation are activities that stimulate other types of economic activities. These induce secondary economic activity, such as consumption around these assets, and include related and different support services related to construction, such as the production and sale of materials, urban rehabilitation, architecture and engineering, labor, and support services that directly or indirectly create many thousands of jobs that often end up forgotten in the public disclosure of numbers.

We expect that these hotel projects, when completed, will create around 2,000 direct jobs and, in the construction phase, around 3,000 indirect ones. With the opening of all these hotel units in Portugal in the coming years, we will reach a total of more than 3,500 rooms spread throughout the country, including several cities in the interior of Portugal. This is a good example of how golden visas directly contribute to the economy also through job creation. All of this in a sector as fundamental to the Portuguese economy as tourism and hospitality.