As Portugal’s Golden Visa Investment Funds Take Center Stage, Expect Surge of Asset Class Options
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IMI Official Partner
The Portuguese Golden Visa lives on after a scare in 2023, but the program’s new framework means it will have an entirely new outlook going forward.
The government’s decision to completely remove any investment category directly or indirectly linked to real estate investment means that Golden Visa’s top investment options are no longer available. But that won’t translate to lower application volumes; on the contrary, experts expect this year to be one of the best in the Golden Visa’s history.
The investment fund category will undoubtedly dominate the application pool as it establishes itself as the most attractive option for most Golden Visa applicants, bringing a significant paradigm shift.
Get Golden Visa’s new comprehensive report – Get A Look Ahead: 2024 – explores the intricate details of the Portuguese Golden Visa’s journey through a turbulent yet high-volume 2023 and the possibilities that await it in 2024.
The report, full of industry veterans’ insights and experts’ high-level predictions, tells you all you need to know about the new-look Portuguese Golden Visa.
Drawing inspiration from the report, below are some of the most prominent issues that have affected and will affect the Golden Visa in the future.
Americans drove initial demand for funds
Before the government removed the real estate investment options, the investment fund category comprised a minuscule percentage of the Golden Visa applications.
That would change, however, with the influx of American investors, who are much more familiar with funds as an investment asset with a manageable risk profile.
In 2021, the number of US nationals applying to the Portuguese Golden Visa grew by more than 25%. The investment fund category’s percentage of all applications simultaneously grew from 4.06% to 9.35%.
The following year, American applicants nearly doubled, as did the percentage of fund applications, highlighting the correlation between the two.
Americans are familiar with fund investments, having had them around for centuries. Eastern countries only began adopting funds as investment assets in the past few decades. It is, therefore, no surprise that Americans drive fund investment demand.
Expect growing diversity in available funds
One significant matter we will see during 2024 is the shift in Golden Visa applicants' perspectives regarding funds.
Regarding the investment factor, there are two types of investors: Those inclined toward fund investments and those more real-estate oriented.
The first group will witness rapid growth in the number of funds and available options under the Golden Visa as the higher demand will require a larger and more varied selection. This is good news for investors who like to choose their next venture carefully and find the risk-reward ratio that aligns most closely with their preferences.
The second group will be looking to understand the nuances of the investment fund category and uncover the details of the fund management, supervision, and operational aspects within Portugal, especially within the confines of the Golden Visa.
These factors lead to a more open and dynamic investment fund landscape that can provide the same - if not higher - level of diversification possibilities for investors as the real estate option once did.
Fund investment assets take center stage
The gargantuan demand for real estate under the Golden Visa had a domino effect on its investment funds.
Fund management companies quickly realized that investors prefer real estate investments due to their low-risk profiles and passivity and aligned their fund investments to provide similar risk and profitability levels.
However, the change in regulations also affects funds as they cannot qualify if they invest in real estate. This change will have a massive effect on the optionality of funds as management companies now look to set up their fund's investment framework to attract a specific niche of investors.
Some funds may look toward high-potential assets such as distressed hospitality assets. Others may go down a more traditional route and target companies with heightened potential to expand into the EU market.
In contrast, some may even go for unorthodox investment assets (especially under the Golden Visa), such as classic cars or fine art. Get Golden Visa's report provides more details on how funds may reconfigure their investment framework to adapt to the new regulations.
In short, the changes to the Golden Visa give companies and investors a blank canvas that can result in outstanding investments under the world's most popular residence by investment program.
To know more about the Golden Visa and what it has in store, you can download Get Golden Visa's report here or contact us directly via our website.