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Portugal 2022 - a report from Ground Zero

Updated: Aug 17, 2022

I've just returned after spending nearly 4 weeks in Portugal over February and March. I spent my time in Lisbon, Évora, the Algarve, Beja.......I met fund managers, real estate developers & promoters, immigration lawyers, even building contractors....a real nose-to-the-ground trip to get a sense of what is going on in the country in general, and the Golden Visa landscape in particular.

So here's a quick report :-).

The Country

To start with, Portugal has (thankfully!) not been amongst the worst affected countries during the pandemic, although Tourism, which is a major industry, did take a huge hit, affecting many businesses and individuals in the sector. The country is now recovering well from Covid-19 and many restrictions have been relaxed. Tourism is heading towards a full recovery to pre-Covid levels by the summer holidays.

  • Entry of visitors to Portugal has been relaxed for many source countries and one only needs proof of full vaccination OR a negative RT-PCR test 72 hours before boarding (for the latest and detailed rules, please check here). For other countries (including India, Singapore), entry is restricted to "essential travel" only. However, in practice, it is quite likely that as long as you have a valid visa, you will be able to travel. But, please DO NOT take this as a green light, do check the rules on the website above and with your travel agent before making in any plans.

  • In Portugal, most establishments are open - hotels, restaurants, tourist attractions, events, offices etc. People have started working from office. Masks are by and large needed when indoors, but not required outdoors. Certain venues like concerts or sports events require proof of full vaccination, including booster if applicable.

Portugal Tourism Recovery 2022
Portugal 2022 - Back To Business


As a result, I found that the tourists are back - there were lots of Americans and Europeans, some Australians, and a few South and East Asians (perhaps living in some country other than their home country). Lisbon was quite busy actually, with Rossio, Chiado, Praça do Comércio, and LX Factory pretty full of visitors. Shops were full of shoppers, and high-end restaurants required reservations. Sightseeing tours, tourist guides and tourist attractions were all functional.

The Algarve

The Algarve is among the most popular holiday destinations in the world, and this time I visited Albufeira, Lagos and Sagres, driving past Silves and Portimão. Although it was off season, there was a fair smattering of tourists - the beaches were deserted but the bars and restaurants were full even on a weekday. The fort in Sagres had quite a few tourists visiting even close to closing time.

Speaking of the Algarve, while the most popular destinations tend to be Faro, Tavira, Albufeira, Portimão, Lagos and surrounding areas, I found Sagres stunning. Sagres is located on the south-west tip of Portugal, quite far from the international airports, and hence does not see as much tourist action as the other parts of the Algarve. But with its sheer cliffs, spectacular views of the Atlantic Ocean, huge surfer-heaven waves, and quaint houses and cafes, it is well worth the trip even if for a day visit. By a stroke of luck, Sagres happens to be the only part of the coastal Algarve which is considered "low-density" and an "interior region", and hence purchase of Residential properties are still eligible for the Golden Visa, even in the €280,000 category.

Albufeira Lagos Sagres Algarve Portugal
The Algarve in March


Évora, Beja and south/central Alentejo were idyllic and picturesque as ever, more green at this time of the year. All tourist attractions were open, including wine tours of local vineyards. Cyclists and runners were out in large numbers especially on weekends, and football fever was high with the Primeira Liga.

Beja Évora Alentejo Portugal
Alentejo - Beja & Évora

As always, the warm and friendly people remains the highlight of every visit to Portugal. The weather was great too - it was the end of winter but mild (2-3 layers at most). Unfortunately, though, the country is facing a severe shortage of rain and hence there is a prospect of drought looming over the country. Hopefully that will resolve soon with some good rainfall in the coming weeks.

The Golden Visa Scene

Application Status

There are several reports of a slowdown in the process at SEF, mainly due to the backlog that has built up over the last couple of years. This is also reflected in the month-on-month drop of nearly 20% in Golden Visas issued in February this year (12.5% drop compared to January this year).

In fact, SEF has not yet (up to the date of this post) start accepting new Golden Visa applications since the beginning of the year, ostensibly due to the change in regulations and the wait for a "system update". To make matters worse, although the recently held general elections threw up a clear majority for the incumbents PS, they have yet to form the government 3 months on, which is likely further delaying normal service. This means some more waiting for newer investors.

Appointments for biometrics are being opened up in the order in which applications were received and by current trends, it looks like those who applied in 2021 will likely start getting their appointments from Q2 (2022) onwards only (this is a guesstimate, there is no official information available). Renewals of existing Resident Permit holders is also on a waiting list.

Real Estate Investments

On the other hand, the demand for investment opportunities seems to be robust. While touristic rentals did suffer during the pandemic, real estate prices have remained more or less stable. After a change in rules, they actually seem to be picking up especially in the interiors.

Évora is hot favourite among the "low-density population" regions where residential real estate still qualifies for the Golden Visa, and investment can be as low as €280,000 for a rehabilitated property. However, demand has shot up here resulting in lack of available inventory and in some cases, inflated prices. To add to the troubles, construction costs have gone up at least 10-15% due to rise in material costs and shortage of labour. There is a LOT of construction going on in and around Évora.

Portugal Real Estate for Golden Visa - Lisbon, Évora, Porto, Algarve
Busy Real Estate Sector - hotels and homes

Besides Évora, there are indeed other viable options to own residential property, mostly in the Alentejo region, like Beja, Monsaraz, Alcácer Do Sal etc, but the "flow" of transactions in these places is currently limited. So these locations are best suited for those who are comfortable with the idea of a potentially longer liquidity event, because the values in these regions are definitely closer to the real market scenario.

The change in regulation since January 2022 has also resulted in some interesting options in the real estate category. In places where residential property investments are no longer eligible for the GV (Lisbon, Porto, most of the coast), one can still buy an apartment/house, but it will not be licensed for use as a residence. It will have a Tourism Services license, and the owner must necessarily enter into an agreement with a Property Manager who is licensed to exploit the property for tourism rental (usually short-term rentals). The owner can stay in the property but for a limited period every year. Considering that most investments in residential properties by Golden Visa investors were in any case used for touristic rentals, this presents a potentially "equivalent" opportunity, although it still needs to be put to the test with SEF as well as in terms of income since the tourism industry is only now reviving.

I expect the popularity of the "share of Hotel project" investments will probably rise. This is where one invests not in the ownership of a specific unit, but in the co-ownership of a hotel (land and building) which is then managed by a professional hospitality group. Many of these also offer guaranteed buybacks of the original investment. The returns may not be attractive or may even be non-existent, but so are initial transaction and ongoing costs. Plus there is the guaranteed liquidity event, which some people find comforting.

In general, optimism about the real estate sector is intact, and even now, a good property does not stay in the market for too long making it imperative for investors to move quickly with their decision making.

Venture Funds

Driven by the impending change in Venture Fund investment limits last year, and also by the inability of investors to travel and see properties before buying, the availability of options in the Venture Fund space has increased drastically. At any given point, there are over 25 funds available to choose from. While a majority of them invest in real estate related businesses and assets, there are many that also investment in start-ups, healthcare, sustainability, infrastructure and other sectors.

The minimum qualifying investment for the Golden Visa is €500,000 now, but one can always spread this over 2-3 funds to mitigate risk. Venture funds remain a great option due to:

a. Diversification of investment

b. Professional Management of the investment

c. Low transaction and maintenance costs

Current Events

The ongoing war in Ukraine features prominently on the local TV news channels and papers, and no doubt, like the rest of the world, there are questions in the minds of the Portuguese regarding the outcome and impact. However, Portugal's connection with both Russia and Ukraine are fairly distant, and a very small portion of Portugal's energy supply comes from Russia. Portugal's friendly residency and immigration policy may see an influx of refugees, but again, the exact impact of this is difficult to ascertain at this point.

Another significant factor this March is the EU's increasing pressure on countries with Golden Visa programmes to restrict or even shut down the programmes. While most of the pressure is targeted at Citizenship By Investment programmes (where a passport is issued upon making the requisite investment), the Residency by Investment programmes like those of Portugal, Spain, Greece (where only a Residency Permit is issued to the investors) may also see some changes. These are probably a year or so away, but it is something to keep an eye out for.

It is my long-held belief that in such matters, it is best to act decisively and, once commenced, to see the process through as quickly as possible. Of course, at no point should one sacrifice due diligence, both, of personal circumstances and finances, as well as of the investment and legal framework of the Golden Visa programme. However, once you believe you have your ducks in a row, no point procrastinating, is what I would advice.

DISCLAIMER: The content in this post and in the entire website is NOT a substitute for legal, financial or tax advice from professionals. Please do consult authorized and qualified professionals in your home country as well as in Portugal before making any decision or taking any action.

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