Portugal’s €4bn Golden Visa Backlog Would Take Until 2030 to Finish Processing, Insider Reveals

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Portuguese newspaper Público today reveals that, according to “an official source in the SEF”, 7,802 golden visa applications remain pending with the government. Presuming an average per-applicant investment of 500,000 (in the last year, per-applicant investment has averaged EUR 498,942), that backlog is worth nearly EUR 4 billion.

Right now, says the source, SEF has 21,364 applications related to the golden visa on hand. Of this total, claims the source, 7,802 pertain to main applicants and 13,562 to dependents.

The figures are remarkably high considering the SEF’s average processing rate in the last 10 years has been 1,153 approvals per year. Even if the program were to close to new applications today, it would take some 6.8 years to clear the existing backlog alone, which means Portugal would be approving golden visas well into 2030.

Little to indicate processing capacity will improve any time soon

According to Portuguese golden visa specialist lawyer Pedro Catão Pinheiro of Next Lawyers Gali Macedo & Associados, there is little to indicate processing capacity will increase any time soon:

"While it's true that the Portuguese Agency for Minorities, Migration, and Asylum (APMMA) will take over processing of golden visas from SEF from late October onwards as the SEF closes, I don't expect any surge in processing capacity. The processing officers, the routines, and even the people will be practically the same."

Pinheiro says the problem isn't the lack of organization or procedures but that Portugal's immigration authorities suffer from a persistent lack of personnel and resources to keep pace with application volumes.

"And, of course, the climate of indecision, mainly of political origin, has caused severe delays in processing."

Pinheiro laments that Portugal - a country with one of the EU's most liberal immigration regimes that attracts scores of foreign investors and residents that its demographic structure sorely needs and should welcome with open arms - is not able to capitalize on foreign demand for bureaucratic reasons.

"The problem is that, without investment in organizations, structures, and human resources, it simply isn't possible to process all these requests for residency in a useful or even reasonable timeframe."

One possible way of mitigating this state of affairs, he indicates, would be to outsource parts of the procedure to the more productive, more incentivized, and better-organized private sector.

"This already happens to some extent in the part of the application process that relates to organizing and delivering documentation to diplomatic missions, through companies like VFS Global," he says, pointing out that the government could let private sector firms handle more steps in the process.

Confusion regarding the final text of the bill: Will the fund option survive?

Last week, parliamentarians voted "na generalidade" (in the generality) to approve the final wording of the Mais Habitação bill, which, among many other policy initiatives, would end the golden visa's direct real estate investment and capital transfer options.

While some confusion arose as to whether the fund investment option would survive (it took days before the contents of this vote became clear to the public), the latest wording appears to leave the fund category intact, though the government has indicated funds will no longer be able to invest in real estate.

Tomorrow, according to Público, the Parliamentary Commission on Economy, Public Works, Planning, and Housing will ratify the final text of the legislative package before it goes to Parliament for a vote "na especialidade" (in the speciality). Finally, the bill is sent to the President for promulgation.

Record year in store for the program - even if it closes

The SEF approved 179 applications in June, bringing the total number of approvals in the first half of this year to 861, a number just shy of the 865 approvals issued in the entire year of 2021. Should the SEF's processing capacity so far this year extend to the end of the year, 2023 will see annual approvals reach an all-time high.

The 179 approvals pertain to investments worth EUR 80 million.

Since the program's opening in October 2012, approved applicants have invested EUR 7.16 billion. Add to that the nearly EUR 4 billion invested by applicants whose files remain pending, and the program has, in reality, raised FDI to the tune of EUR 11 billion.

The overwhelming majority of that investment, historically, has taken the form of real estate. In the last few years, however, alternatives like the fund investment option has taken an increasingly greater share of the market. So far in 2023, 48% of the euros invested relate to conventional real estate (subparagraph 3), 25% to renovation real estate, and 22% to funds.

In terms of the number of investors per asset class, however, renovation real estate is now leading, with 34.6% of the 2023 total, followed by conventional real estate (33.7%), and fund investment (28.6%).

In relative terms, the fastest-growing investment category for the last several years has been fund investment, which saw its number of approvals triple between 2021 and 2022 and which is on track to more than double once more this year: At the half-year mark in 2023, this option had already raised more money from more investors than in all of 2022.

The rise in interest in funds, as we have noted on several occasions in the past, has coincided with rising program participation from Americans, a group that appears more inclined to invest in securities than other nationalities. Approvals of US applicants are set to reach a fifth consecutive all-time high in 2023.

Last year, Americans became the first investor group to displace the Chinese as the program's top applicant nationality, a feat they are on track to repeat once more this year. In the first six months of 2023, Americans accounted for more than 20% of all approvals, followed by the Chinese at 13%.

On a cumulative basis, however, the Chinese retain a seemingly unassailable lead thanks to their historical domination of the Portugal golden visa. All told, 5,366 Chinese main applicants have received approvals, followed by 1,229 Brazilians, 713 Americans, 592 Turks, and 550 South Africans.

British applicants, however, are likely to soon break into the all-time top 5 nationalities too. UK investors have appeared on the monthly top-5 nationalities list for eight of the last ten months and have logged more than 100 approvals so far this year.

If you like data-driven articles like this one, you'll love the IMI Data Center, the world's largest collection of investment migration statistics, with more than 350 graphs and charts on dozens of IM programs and markets.

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