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Portugal’s Golden Visa Moving Inland: How to Navigate the Transition and Get High Returns

Economic and political background of the new ARI/Golden Visa regime 
Portugal introduced the ARI/Golden Visa program during the Great Recession in 2012 to attract foreign investment and boost the economy. Since its launch, the program has become one of the most attractive residency visa programs in Europe due to its low minimum investment amount (investment in real estate renovation projects as low as EUR 280,000) and the short timeframe (five years) towards citizenship. By 2020, the program had raised more than five billion euros of overseas investment, with the majority of investments made in Lisbon, Porto, and the coastal regions.

The program brought new types of international buyers to Portugal that did not exist before 2012. The year 2019 marked Portugal’s 7th consecutive year of economic growth. With the pro-investment policies supported by both the national government and the European Union, and high yield, undervalued real estate assets, Portugal offers unparalleled investment opportunities for international capital. 

Many attribute the rise of housing prices in Portugal to the ARI/Golden Visa Regime. However, there’s no proven correlation between the program and the growth of housing prices in Portugal after the crisis. According to CBRE’s “Portugal residential report 2020”, sales through the Golden Visa program only represented less than 1% of housing sales, with 1,245 permits assigned in 2019. The weight of domestic and foreign sales in Portugal stayed stable, with an average of 13% of overall sales made by foreign investors in the past 7 years. 

The rising housing price is mainly due to the tourist boom since 2015, which translated into a growing demand for both holiday homes and short to long-term rental properties in the residential sector. In 2019, Portugal’s tourism reached a new high record with over 29.5 million tourists, corresponding to increases of 7.4% p.a. Fueled by the growing tourism, both demand and prices in rental properties have been on the rise. High demand and a lack of available products continue to drive up both rents and housing prices. 

Details of the new legislation 
In October 2020, the European Parliament asked the EU countries to immediately end their golden visa programs that provide fast-tracks towards residency for foreign investors. In response to Brussel’s pressure and in an attempt to stabilize its rising housing market, Portugal’s Council of Ministers approved a legislative amendment to the Golden Visa program on 22nd December 2020. The new legislation aims at redirecting investors from buying properties in high-density areas like Lisbon, Porto, and the Algarve to the central and inland low-density regions of Portugal. 

Under the new legislation, real estate investment along coastal regions including Lisbon and Porto will no longer qualify for the visa program. Alternatively, investors can opt to invest in real estate investments in inland regions, the Azores, or Madeira to obtain their visas. The new decisions will come into effect on the 1st of January 2022. Initially, the changes were to come into force in July 2021 with a transitional period of one year. However, the government has amended these guidelines and the new regulations will have effect from January 2022 with no transitional period as stated earlier. 

How to navigate the transition period: Advice for new and current Golden Visa investors

Since the announcement of the changes to the Golden Visa program, Portugal has seen a strong increase in demand for the 350k reduced Golden Visa property investments. According to Oliver Banks, senior negotiator for international residential development at Knight Frank, “there is a pent-up demand particularly from international purchasers and those wishing to relocate to Portugal who hasn’t been able to in the past 12 months given travel restrictions”,  with “inquiries for residency via property investment up by at least 20 percent”, as reported by South China Morning Post. 

  1. New Golden Visa investors: How to achieve high ROI? 

Remaining opportunities in Porto and Lisbon before the program closes
There are still great real estate investment opportunities to be found in both Porto and Lisbon. For investors looking for investment properties in these areas, prime location yielding assets should always be on their top search criteria. An example is Qualive’s Dom Pedro Quinto development project enviably located between the Douro river banks and Porto’s vibrant downtown, the development embodies a style of modern living that balances grandeur with community and privacy, crafted with Portugal’s best natural materials.

Driven by both local and tourism rental demands, Portugal offers top rental yields among European countries, with average gross rental yields in Lisbon and Porto city center are at 4.17% and 5.17%, respectively. According to CBRE’s report, the demand volume outpaces the supply and has been pushing up rental prices in Portugal. Median lease values have grown 10%, both in 2018 and 2019, and were recording the same rate of growth in the first 3 months of 2020. Prime location assets can not only provide stable rental yield but also offer great potential for capital gains.

Investors should also consider buying properties off-plan, good quality prime off-plan assets can have a potential upside of property valuation between 10% and 25% on delivery. Given the current restrictions on international travel, buying first-hand properties from developers is hassle-free. One does not have to be concerned about the conditions of the property; discrepancies between the actual size of the property and the numbers on the legal papers; as well as potential legal complications and liabilities on the properties that often come with the acquisition of second-hand properties. 

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Investors can still obtain the Golden Visa through real estate investments in Lisbon, Porto, and coastal cities. The current legislation will be applicable to all investors who submit their applications to SEF (The Immigration and Borders Service) before the given deadline (January 1st, 2022). As such, it is advisable to start looking for options now to avoid a limited selection and to leave sufficient time to complete the legal paperwork and the application process before program termination. The Portuguese government also recently announced that the Visa applications will now be digitized. All documents are to be submitted digitally, including the issuance of the Portuguese Individual Tax Number. The change will hopefully help reduce bureaucracy and create a faster application process.

Three inland locations to achieve high yield investment in undervalued inland Portugal  
The new legislation aims to redirect real estate investments to inland municipalities and regions, especially in the central region of Portugal. Qualified real estate developments in inland areas allow investors to apply for the ARI/Golden Visa Program with investments as low as €280,000. Those interested in investing in inland areas should explore investment options and make decisions early when the asset valuations in these areas are still relatively low. 

  • Option 1 – Evora
Preço do passe do Alentejo para Lisboa, Algarve e Évora passa para 40€

Under the new legislation, the Alentejo region, located between the Algarve and Lisbon will become the most attractive destination for local and foreign investment in the country with high growth potential. 

Classified by UNESCO as World Heritage, Evora City, the capital of the Alentejo region, is one of the top tourist destinations in central Portugal. The city is surrounded by exclusive world-renowned Alentejo wineries which offer unique gourmet food and wine experiences. Within the old city walls there is a concentration of churches, places, and historical monuments. Due to its extensive historical and cultural importance, Evora has seen a huge increase in its tourism sector over the past years. As Evora’s tourism is on the rise, tourism-related services, and development present high-yield opportunities to investors. Misericordia Boutique Hotel curated by Qualive embodies Evora’s essence, bringing together history and well-being, investors can join this unique project both as a capital investor or for visa residency purposes.

  • Option 2 – Alcacer do Sal
Alcacer do Sal

Alcacer do Sal is a municipality of Lisbon’s South Bank, in the Setúbal district. The Romans developed an important commercial port here, which prospered mainly with the production of salt and has since been one of the main wealth sources of the county. Recently, there has been an increasing interest in the region due to its proximity to Lisbon and the unique cultural and historical experiences it can offer. Alcacer do Sal is becoming one of the most popular destinations for real estate and tourism investment in Portugal with many of the major developers are establishing themselves in this region. 

  • Option 3 – Tavira
Tavira - Itinerário Accesible |

Tavira is a small city on Portugal’s south-eastern coast. It is one of the few municipalities in Algarve that will still qualify under the new legislation. Tavira offers a unique and relaxed lifestyle, with small white-washed houses lining its cobbled streets in the city’s historical center, the medieval town of Tavira has a very different feel from the rest of the developed coastline. A scenic boat ride can take you to its white beach on the sandbank.  

2. For current Golden Visa investors: What is the impact on existing visa investors?
For those who have already submitted their visa application to SEF or are planning to submit their application before the January 2022 deadline the change of legislation will have no impact. All existing investors will follow the current rules and will not be subject to any new changes in the future. 

To learn more about how Qualive can help you invest in qualifying real estate in Portugal and get a residence permit in the country at the same time, contact us on email or telephone or visit our website.

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