Portugal is one of the oldest countries in the world, with nearly 900 years of history demonstrating its strong identity and internal cohesion. The country is politically and economically stable and welcomes all nationalities. It is part of the Schengen Area and is one of the safest countries in the world. Its history, culture and beauty, alongside its hospitality, gastronomy and affordable cost of living, are just a few of the country’s main selling points.
The Golden Visa programme has had a huge impact on the Portuguese economy, generating a significant increase in property transactions
Investors are also increasingly keen to explore the benefits that Portugal has to offer. The tourism and start-up scenes are thriving and, as a result, foreign investment is pouring in. The country’s Golden Visa programme has proven particularly attractive to high-end investors, providing the real estate market with a much-needed boost. PTGoldenVisa, winner of the 2017 Mrassociates award for Best Wealth Management Provider, Portugal, offers a full range of professional services to help its clients during every step of the investment process. Mrassociates spoke to Tiago Camara, Co-Founder and Partner at PTGoldenVisa about how international investors can take advantage of the many opportunities that Portugal has to offer.
What is the current state of the real estate market in Portugal?
The real estate market in Portugal is providing investors with capital appreciation on their properties of around 10 percent per year. The reasons for this are twofold. First, Portuguese citizens are taking their money out of banks and investing it in real estate, where they are able to generate much more income through rents. Second, foreign investors, driven by programmes like the Golden Visa initiative and the non-habitual residency regime, are also increasing their real estate investments. Portuguese real estate is a safe haven for domestic and foreign investment and there is no evidence to suggest the existence of a property bubble. At the moment, the only issue is that supply can’t keep up with demand.
What impact is the tourism industry having on real estate investments?
Tourism is the main industry in Portugal. In 2016, the Portuguese tourism trade balance was €8.8bn ($10.8bn), having increased by 12.7 percent on the previous year. As a result of this growth, the real estate market is undergoing significant changes, with foreign investment funds buying properties to transform into hotels or apartments. The boom in short-term rentals is bringing new life to historic neighbourhoods, where small investors are buying new properties or renovating old ones. In the major cities, investors are receiving a rental yield above five percent annually.
What effect has the Golden Visa programme had on real estate investments?
The Golden Visa programme has had a huge impact on the Portuguese economy, generating a significant increase in property transactions. So far, €3.5bn ($4.32bn) has been injected through the Golden Visa programme, with 95 percent of this investment in real estate. Last year, around 30 percent of all real estate transactions made by foreign investors were done so with the objective of getting a residence permit card.
Could you explain the typical profile of a Golden Visa investor?
Our clients are high-net-worth individuals, non-European and, more often than not, expat business owners who are currently living in the Middle East or Asia and are not willing to relocate. As investors, they are interested in acquiring secondary citizenship in order to be able to choose where they live and access different business markets without having to apply for visas. Being able to provide a better quality of life for their families and, if necessary, reach a safe haven in times of political instability is also important.
Why is there such a big demand for Portuguese investment funds from overseas investors?
The recent changes to the Portuguese Golden Visa programme allow clients to qualify for a residence permit card by making a minimum investment of €350,000 ($432,124) in a Portuguese investment fund, which is fully regulated by the Portuguese stock exchange market and audited by third-party companies. This option comes free of taxes and is focused on bottom line investment and high returns.
PTGoldenVisa is currently working on the implementation of the first investment fund in Portugal to qualify for the Golden Visa: the Safe Investment Fund (SIF). The SIF Portugal is centred on two strategic focal points: investment in real estate to sell on, and investment for the purpose of renting out. The investment period is seven years, it is custom designed to meet the Golden Visa requirements, and it should generate over six percent return per year. Considering that the overall market has an annual growth rate of more than 10 percent, this fund takes a conservative but reliable approach to investment.