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Venture Funds v/s Real Estate: Portugal Golden Visa

Updated: Aug 17, 2022



Portugal's Golden Visa programme is among the most popular Residency by Investment programmes in the world and has so far attracted almost 10,000 applicants (over 16,000 including family members), raising nearly €6 billion in investment into the country. An important reason for its popularity is that the entire capital is a genuine investment (not a donation or a sunk cost) with the potential to earn returns as per the market.


The programme offers many investment options, but Real Estate has been the overwhelming choice of about 94% of the investors so far. And for good reason. Property prices in Portugal have been rising at well over 5% year-on-year since 2014, and even during the pandemic, the real estate market in Portugal has seen growth.


The next most popular investment route, accounting for 5% of investments so far is the Capital Transfer of €1mn into a Portuguese Bank account. Quick and hassle-free, this along with real estate has accounted for almost all of the investments for the Golden Visa.


However, the option of investing €350,000 in a Venture Capital fund, which was introduced in 2017, has started gaining traction since 2019, and so far in 2021, has accounted for over 7% of all Golden Visa investments in Portugal. This growth in popularity of Venture Funds has been fuelled to a large extent by the restrictions in travel, which have prevented investors from visiting Portugal to view properties. It is important to remember that the eligibility threshold for Venture Capital investments rises to €500,000 from 1st Jan 2022.


Let us compare these two popular routes of investment for the Portuguese Golden Visa.




To summarise, each route has its own pros and cons, and the choice would depend upon the personal preferences, circumstances and risk-appetite of each investor. It is important to note that while venture funds may be risky by definition, registered VC funds in Portugal are regulated by various entities such as the Portuguese Securities Market Commission (CMVM), the Bank of Portugal, and an external Fund Management company. Therefore investors do have legal and regulatory protection.


However, whether you choose Real Estate or a Venture Capital fund, careful due diligence would be needed in both cases. Factors like location, price, clear title, reputation of developer (in case of construction/rehabilitation options), property management ecosystem etc become critical when selecting real estate. Whereas for VC Funds, ensuring that the fund is registered, the fund strategy, fund managers, their track record, management fees, exit terms etc become important factors to consider.


I look forward to your comments, especially on any angle I may have missed.




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