By Cristovao Matos, Real Estate Agent, www.nomeracapital.pt – Nomera Capital @ RE/MAX Collection SiimGroup
& André Rei, Lawyer, Pares Advogados
We know that most of the real estate investors seeking residency programmes value capital preservation. They don’t want to risk their money. They want to place it in an established market with good prospects over the long term. Well, we don’t know what will happen tomorrow, but we know what is happening now, and that might interest you…
Los Angeles Magazine recently published an article featuring Portugal as the new California dream. The author argues that the country has become a vital destination for Californians in search of reinvention and rejuvenation and that “Lisbon is the new chic spot to grow a startup, forge an international team, buy an apartment or truly live”. We believe that Lisbon is being poised to become the Silicon Valley of Europe.
To cite a few achievements, Lisbon ranks 6th among the most popular cities in Europe for startups; the city is home to the most prominent startup conference – Web Summit; Portugal is the 4th country in Europe with more unicorns (startups with over $1bn valuation) – 6 in total, so far.
According to Real Capital Analytics, Portugal attracts more than Є4bn investment in real estate, one of the largest slices in Europe considering the country dimension. CBRE considers Lisbon as the 10th most attractive city for commercial real estate investment in Europe, placing it right after the major cities in central Europe.
Portugal is the 4th most peaceful country in the world, the 7th country in the world with better English proficiency and our health care system ranks among the 20th best in the world, and we have 4 business schools in the Financial Times European Business School rankings.
Many stars bought houses in Lisbon, such as Alicia Vikander & Michael Fassbender, John Malkovich, Eric Cantona, Monica Belucci, Scarlett Johansson, and many more.
Financially speaking, the average price/sqm in Lisbon is €3,796, the average yields are 4% in Residential and 5% in the Commercial markets. The average mortgage rate is 0.807%. In 2021, inflation was 1.3%, and the GDP grew 4.8%.
Golden Visa in 2022
In 2022, the restrictions to the legal regime of the Residence Permit for Investment Purposes (commonly known as Golden Visa) entered into force. In short, investment in residential properties in coastal areas (namely Lisbon, Porto and Algarve) is no longer eligible for within the residency programme.
What changes?
- The minimum investment amount for capital transfer investments increased from €1 million to €1.5 million (for example, opening an account and keeping the funds deposited, investing in treasury bonds or other public debt instruments, or setting up a sole proprietorship using that capital);
- The minimum amount for investment in private equity funds increased from €350,000 to €500,000;
- Investment in residential real estate remains possible, but only if carried out in the Madeira and Azores regions or inland.
What doesn’t change?
- Foreign investors will continue to have access to the Golden Visa through investment in properties not intended for residential purposes (eg: commercial) located in coastal areas (namely Lisbon, Porto and Algarve);
- The minimum real estate investment amount remains unchanged, that is, in the amount of €500,000 or €350,000 (if, besides the acquisition, renovation works are carried out).
Which options you have?
What options are there for those who want to continue investing in the most attractive areas like Lisbon and Porto?
- Investment in non-residential properties, such as offices, stores, tourism (ex: hotel units). It is even possible to get the Golden Visa reduced to €350,000 through rehabilitation projects;
- Investment in touristic properties for housing, upon the signature of a Touristic Operation Contract (a legal requirement);
- Investment through the creation of a sole proprietorship with a capital of €1.5 million, and using the company’s capital to invest in residential real estate, in the proportion you wish.
Want to know more?
Join us for a webinar on the 16th of February at 4 pm GMT (7 pm Moscow/Istanbul time | 11 am EST | 8 am PST) to hear about the Portuguese Golden Visa programme, when we will showcase some investment options.
