Real Estate: A gateway to the Golden Visa Portugal

The Golden Visa Portugal is a very attractive path for investors who wish to access the European Area and obtain European citizenship. The Portugal Golden Visa programme was created in 2012 to attract foreign capital and boost the country’s economy. It is a residence permit for investment activities (ARI) in exchange for a qualified investment in the country.

Portugal currently offers the best Golden Visa programme in Europe, either because of the diversity of capital application options, or because of the lower minimum investment amounts than those required in other countries. Besides, in the Portuguese programme, the applicant is not obliged to reside in the country, being only required to stay 7-14 days per year in Portugal during the 5 years investment period. And after this 5-year period, it is already possible to apply for Portuguese citizenship.

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Acquisition of real estate: the most sought-after investment

Among the investment options eligible for the Golden Visa, the most popular is still the acquisition of real estate in Portugal. In 2021, Real Estate investments represented a total of 87% of Residence Permits for Investment Activity (ARI) in the country, according to the SEF (Foreigners and Borders Service).

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What are the current restrictions on the location/use of Golden Visa eligible properties?

From 2022 onwards, some restrictions were imposed on the location/use of properties for Golden Visa application purposes. Properties acquired for residential purposes are now ineligible when located in areas of high population density. Urban areas, such as Lisbon and Porto, became available only for the purchase of real estate for commercial and tourism purposes. Previously, there was no geographical impediment to this modality. For commercial or service purposes in relation to the use of the property there is no location impediment, i.e. it is possible to invest in property all over the country.

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What are the minimum Real Estate investment amounts to obtain the Golden Visa?

It is possible to qualify for a Golden Visa by acquiring one or more properties whose sum of the invested values is, at least, € 500.000. The residential properties, as previously mentioned, must be located in mainland Portugal and on the islands of Madeira and Azores.

However, this minimum amount rises to €350,000.00 when the property is to be rehabilitated. In such cases, the property must be more than 30 years old or located in an Urban Rehabilitation Area (ARU). This was a way found by the Portuguese government to promote the rehabilitation of cities and old properties. The geographic delimitations (for ARU) are established by each Municipality.

Additionally these values can be reduced by 20% if the property is located in an area of low population density which is also defined by the public authority (by law). Thus, the minimum values can reach €280,000 when located in certain areas and provided that the property is intended for rehabilitation.

Properties for commerce and services must also have a minimum value of €500,000.00. In this case there is no geographical limitation. The minimum value is reduced to €350,000.00 in the case of property for rehabilitation and also in this case the value can be reduced by 20% if the property is located in an area of low population density.

Main advantages of investing in the Portuguese real estate market

Even in a scenario where housing properties are no longer eligible for GV in large urban centres, we understand that investment in the real estate market can still be quite interesting for the following reasons:

1. Attractive Values: In general, property values in Portugal are very competitive compared to the value of similar properties in other countries located in the European Union, with the possibility of attractive returns for investors, in a strong currency and in a country with a stable context;
2. Competitive Tourism: Portugal has very competitive tourism, not only in the capital but throughout the continent and the islands. In a post-pandemic scenario, a rapid and expressive return of tourism in the country is expected, with numbers already exceeding 2019 values. Thus, properties intended for rentals for tourists can present good rates of return on investment.
3. Expatriates/Nomads: Portugal has become increasingly attractive for expatriates with high purchasing power, who are looking for real estate to establish their dwelling. In fact most of them aim to settle in the cities of Lisbon and Porto, however the demand for smaller cities or the islands is increasing, as well as the Government’s efforts to populate the interior of the country.
4. Domestic DemandThe internal demand has also been very strong in the last years and continues to be so, despite the international instability scenario. In this sense, it is noteworthy that there is still not enough supply in the country to meet domestic and external demand, especially in large cities.
5. Low interest rates: Despite the forecast of a global increase in interest rates, in Europe a slower and more gradual rise is expected compared to the United States or England. In particular, in Portugal the 12-month Euribor went from negative rates to 1% in 2022, with forecasts for 2% by the end of 2023, still quite attractive values on a global level.
6. Attractive products for commerce/services in large cities: With the change in the law that removed the eligibility of residential properties in the large urban centers of Lisbon and Porto, investments for GV in commercial or service properties have been growing in supply. Commercial rooms, shops and industrial warehouses are eligible for the GV and there are excellent offers on the market. It should be remembered that this type of operation is usually linked to a long-term commercial lease, guaranteeing a return for the investor, in addition to the increase in value of the property.
7. Real estate products aimed at the hotel market: The GV programme is responsible for an important drive to renovate Portugal’s hotel stock and the market offers an excellent investment opportunity in various regions of the country, in particular the Algarve, Porto and Lisbon. The GV investor can acquire hotel units, from 280k, which will be rehabilitated or built, operated by major brands such as Hilton and Sheraton, and still enjoy holidays during the period of application of the GV. An interesting investment with a return, sometimes guaranteed by a buy-back operation. Moreover, as these are properties with a commercial/service purpose, they can be located in large urban centers and be eligible for the GV under the current rules.

Do you wish to invest in property in Portugal? Atlantic Bridge assists you in your application process to the Golden Visa, providing legal advice, real estate and investment consulting, necessary for a calm and safe operation.

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