for Madeira and the Azores
As predicted here in early November the Portuguese parliament on Wednesday (5 February) approved a measure limiting the issuance of the so-called ‘golden visas’ for real estate investments made across the coastline, including in Lisbon and Porto. This means real estate investments will only qualify under the scheme for inland municipalities, as well as autonomous regions of the Azores and Madeira.
The measure aims to promote investment in low-density regions and to relieve the real estate market’s pressure of areas such as Lisbon and Porto (the two largest Portuguese cities). The ‘golden’ residence visa scheme for foreigners raised €742 million in Portugal in 2019 alone. The programme’s biggest beneficiaries come from China (4,467), followed by Brazil (863), Turkey (380), South Africa (320) and Russia (296).
Golden Visa changes reduce pressure on Lison and Porto
The measure aims at favouring “the promotion of investment in low-density regions”, as well as” investment in urban regeneration, cultural heritage, activities of high environmental or social value, productive investment and job creation”, and is now restricted to areas of the Interior and the Autonomous Regions of the Azores and Madeira where investments in real estate will continue to qualify for a residency permit.
The principal aim of the reduced coverage of the Golden Visa scheme is to relieve the pressure on the real estate market in areas such as Lisbon and Porto, ending the possibility of obtaining Portuguese residency by investing in real estate in these areas and along the coastline (including the Algarve – below).
Residency permits will be renewed
However, the proposal does not prejudice the possibility of renewing residence permits granted under the current regime, nor the possibility of granting or renewing residence permits for family reunification provided for by law, when the residence permit for investment has been granted under the current regime.
“With this measure, we seek to remove the pressure [on the real estate market] existing in the metropolitan areas [of Lisbon and Porto]. This measure of ours will contribute to greater territorial cohesion,” argued Ana Catarina Mendes, leader of the Socialists’ group, when the initiative was presented in more detail.
The end of ‘Golden visas’ for foreigners from outside the European Union who invest €500,000 in Portugal, namely in the real estate market, has been insistently demanded by associations linked to the fight against money laundering and by parties, especially the BE. ‘Golden visas’ have raised criticisms in the European Parliament, the European Commission and from the European Economic and Social Committee, over the risks of corruption, money laundering and even security they pose.
Job creation still qualifies for Golden Visa
The measure now approved allows ‘Golden visas’ to continue to be granted to investors who create jobs, for example by launching companies, in the metropolitan areas of Lisbon and Porto, or coastal cities of the country.
The investment in Portugal raised by the ‘golden’ residence visa scheme for foreigners fell by 11.4% in 2019, compared to the previous year, to €742 million, according to data from the Foreigners and Border Service (SEF). The Portuguese Minister of the Interior had already said last month that the government intended to change the ‘golden visa’ regime regarding property investment. Eduardo Cabrita stated that the ‘golden visas’ had “the relevant effect of attracting investment and urban requalification”, besides “some dimension of job creation”.
Algarve loses status as well
A sting in the tail of changes to Portugal’s extraordinarily successful golden visa regime means the Algarve may too be removed from the equation.
The PS Socialist decision to limit the scope of the programme to “areas of the Interior, Madeira and the Azores” was initially taken to mean that parts of the Algarve would still qualify for golden visa investment.
But on Tuesday in parliament, it appeared that no area of the Algarve, being a “coastal region”, would qualify for Golden Visa via property investment because every municipality is part of what is termed a CIM Litoral (coastal inter-municipal community) – and these too have been taken out of the regime.
Real estate agents and construction bosses have already lamented the changes, saying they threaten the very survival of the programme.
Property deals reported cancelled
The Portugal Resident reported three days ago that foreign investors have reportedly already started ‘pulling out of Portugal’ in wake of controversial changes to the golden visa residency regime.
TSF radio reports today that Chinese and Brazilian nationals have cancelled property deals they were pursuing since parliament has approved ruling PS proposals to limit the emission of golden visas to areas of the Interior and the autonomous regions of Azores and Madeira.
The cancelled deals were all in territories now removed from the regime: those of Greater Lisbon and Porto.
Hugo Santos Ferreira, vice-president of the Portuguese association of property promoters and investors (APPII) has described a “torrent” of calls from overseas in the last week – particularly on Wednesday when the changes were voted through.