If you have been considering applying for the Portuguese Golden Visa you must be aware that some of the rules with respect to eligible investments are changing with effect from 1st January 2022. What are these changes?
1. Residential Property investments in areas of high population density, i.e. major cities like Lisbon and Porto, and the popular tourist areas of Coastal Portugal (the Algarve, the Silver Coast etc) will no longer be eligible for the Golden Visa. This includes both, homes above €500,000, as well as older homes rehabilitated for an aggregate value above €350,000.
2. Investments in Venture Funds will have to be a minimum of €500,000, up from the current minimum of €350,000.
3. Capital Transfer threshold (maintaining a bank balance) of €1mn is going up to €1.5mn.
Of the many investment options available to apply for the Golden Visa, the above three have been the most popular accounting for almost 99% of all applications. In Real Estate in particular, Lisbon has been by far the most popular destination for the money, followed by the Algarve in a distant second place.
Given this background, should you be making a dash for it before everything changes after 31st December 2021? In my humble opinion, NO, there is no need to panic.
To start with, I feel it is already too late. Sure, it is not impossible and many believe that as long as you can complete the investment and get the application in before 31st December, you're ok. But then, the probability of making a sub-optimal investment decision in haste is high. There is already a surge in demand (and prices) in Lisbon and who's to say prices will not correct after the city is no longer eligible?
Secondly, given the nature of the process and the documentation required, there can easily be unexpected delays (especially in a country like India) threatening the whole application. Is it worth taking on that stress? And to what end exactly?
Finally, it is my belief (and the opinion of some immigration law firms I work with) that the safest is to ensure you have not only submitted your application, but it has also been officially admitted by SEF, i.e. you have a pre-approval. Now, SEF (the department in charge of processing Immigration & Residency visas) can take anywhere from 1-3 months from the date of submitting the application, to give a pre-approval. If yours doesn't come through by the 31st of December, you may be left biting your nails.
Which brings us to the main point - is it worth taking this trouble (and risk) to get your investment and application in before 31st December 2021? Only if :
You are determined to invest ONLY in Venture Funds (see my post on a comparison of Real Estate V/s Venture Funds). You would save a cool €150,000, which is not insignificant.
For some reason, you would only like to buy a residential property in Lisbon, Porto, or the coast. Perhaps you have business there, perhaps you intend to use it as a regular holiday home.
However, if neither of the above situations apply to you, do you need to worry about missing out? Is it safe to invest in the unknown hinterland of an unknown country?
Firstly, do remember that only residential property investments in high-density regions will become ineligible. Commercial properties (shops, offices etc) and even homes meant exclusively for touristic purposes (like serviced apartments or time shares) will continue to remain eligible. So you can still own a property, earn rental income, and redeem the investment - it just cannot be a place you can live in yourself. And that segment will likely wake up to the Golden Visa opportunity and we will start seeing many more options to choose from.
Secondly, the real estate action in Portugal is not restricted to these high-density centres alone. There are some thriving centres of activity and commerce in the interiors too like Évora, Beja, Guimarães and so on. According to Idealista, over the past year, property prices have risen in all regions. Of the districts analysed by idealista, the highest increases were seen in Vila Real (19.9 percent), Ilha da Madeira (17.4 percent), Évora (14.7 percent), Setúbal (12.5 percent), Aveiro (12.4 percent), Lisbon (10.2 percent), Leiria (9.5%), Porto (8.4 percent), Faro (7.9 percent) and Santarém (6.6 percent).
Sure, the high-density regions would likely be more attractive in terms of the volume of transactions (both sale & rental), and perhaps even price appreciation. It may be easier/quicker to sell and rent homes in the big cities compared to the interiors. But it is not that there is no movement there as the above data shows. Further, just as prices in Lisbon, Porto and the Algarve may correct downwards after the clock ticks over to 2022, that may well be the trigger for further acceleration in the interiors (this is mere speculation, of course). And as an added bonus, the eligible limit in these low population density regions drops to only €280,000 from €350,000 in bigger centres, meaning you risk even less money.
I would like to emphasise, I am NOT suggesting that the interiors would make a better investment destination than the big cities. Each option has its pros and cons, and most importantly no one can predict the future. I am merely suggesting that it is imperative to weigh the merits of rushing to meet the 31st December deadline against the risk of a sub-optimal investment and more importantly, of a delayed application/pre-approval.
In my most humble opinion, unless there are pressing reasons to invest in Venture Funds or only in the high-density regions, or if you are presented with a ready and well-researched investment that can be quickly and safely concluded, it is probably not worth speeding to meet the Golden Visa rule change deadline.
Disclaimer: This is an opinion piece based on my limited experience and observations of the Portugal Golden Visa real estate market, and of advising clients over the last couple of years. Neither am I a real estate professional, nor is this an attempt to predict trends in the market. Please consult a qualified immigration lawyer and/or an investment professional before making any decision about real estate investment, fund investment or immigration application.