Sometimes it’s possible that there is just too much of a good thing. Take, for instance, the fact that the Golden Visa in Portugal has brought in roughly 5 billion euros in investment since 2012. The country desperately needed that influx; yet, now that Portugal has posted a 1% of GDP budget surplus, debt-to-GDP ratio has become more manageable, various bond agencies have continued to upgrade Portugal and fiscal targets are generally looking pretty good, a new policy was passed showing that members of Parliament seem to be considering ways to keep the good times rolling while attempting to safeguard the financial safety of Portuguese citizens.
You see, with a minimum wage of 635€ per month (the lowest in Europe), the purchasing power of the average Portuguese is not exceptionally high. Further, bear in mind that those who already owned a property (or properties) in the major cities have already been able to capitalise on the increasing value of prices per metres squared. Some even sold the urban property and established a family farm in the countryside! Not everybody has benefited though. Several citizens have either been forced from their homes, or have simply become unable to maintain the quality of life they had before the Golden Visa programme ushered in a new group of investors with significant access to capital.
So it makes sense that Parliament would review the programme and how it is implemented. Mistakes in the roll out of investment in Lisbon are a black stain upon the programme, and several policymakers have worried whether Portugal has opened up their economy to money launderers from abroad. Even more, policymakers fear the increase of income and wealth inequality that the programme seems to be influencing. In fact, various political parties have been calling for public housing options, and strenuously put forward efforts to limit the amounts of investment allowable, especially since an increase in inequality has reared its ugly head, with no visible signs of abating.
The new policy of excluding Porto and Lisbon Golden Visa investment, the reporting of which was released on February 5, 2020, aims to ‘promote investment in low-density regions’. The argument is that investment in Portugal’s major cities has already been kickstarted, and further Golden Visa investments will only continue to spur real estate speculation, thereby increasing the gap between those with the opportunity to invest and those who may or may not be taken advantage of by this system. In my view, the policy is in line with the Socialist policies the country is run on, and is a check instituted to diminish class inequality, so that’s a good thing.
However, for potential investors, the exclusion of the two largest municipalities in the country presents two considerations: 1) rush for an investment in Lisbon or Porto now, before the policy is fully implemented, or 2) consider a non-urban area which may be cheaper and allow for a ‘quality of life’ investment rather than solely basing the decision on return-on-investment.
Let’s talk about municipalities like Setúbal, Braga and Guimarães. All of these communities are within reasonable distance to a major airport (or, in the case of Setúbal, within proximity to Lisbon’s future airport) and have elements of tourism that attract differing types of people. They have plenty of dilapidated buildings that could use refurbishment and are roughly thirty minutes away from the largest cities in Portugal. Therefore, there are options that are not solely limited to extreme rural locations.
Further, places like Matosinhos and Vila Nova de Gaia (located just outside the municipality of Porto and accessible by Porto Metro) are still available for investment. They offer proximity to the centre of Porto and typically host larger flats than the Porto City Centre. These areas are not excluded from the Golden Visa investment programme. So the headline that parliamentarians have completely excluded ‘urban development’ is a bit misleading. It seems that in some cases, they’ve simply shifted the goal posts. Of course, one would only know this if they were on the ground here in Portugal.
I want to address a February 5, 2020 article in the South China Morning Post stating that the Golden Visa programme is ‘anything but golden’ (link below). If you believe everything in that article, you’ve got a recipe for perceived instability that can make the option of investing in Portugal feel a bit wonky. There are impediments to proper investments that can arise in the market here; however, with enough research, time and the willingness to dismiss overly aggressive opportunists, it is possible to find honest people who stick to their word, put forward a quality product, and are willing to take the time to make sure all necessary documentation and standards are considered. It just takes time.
The article is not an outlier so much as it is a warning to those who think that doing business in a bureaucratic country like Portugal will be pain free. It’s not, but it’s manageable.
Here is my definitive opinion: In the face of wanton opportunism, the majority of people cannot be trusted. I knew that if we didn’t oversee this process ourselves that some unscrupulous character would try to cheat us. I knew they’d even try to cheat us while we are overseeing the process on the ground here in Portugal! Yet, we has consistently pushed people away that have the stench of opportunism (and sometimes desperation) and instead focused on a community that operates at a level of honesty and quality.
So be aware: there are PLENTY of remaining opportunities here still, but it is extremely difficult to know who to trust.
So I’ll make a statement: Even though a portion of our livelihood is tied to the property market and our interest in facilitating investment through Portugal’s Golden Visa programme, we refuse to wander the path of opportunism. We have established standards for the people with which we work, and are dogged in our pursuit of quality and return-on-investment. Even though the process is incredibly slow, we believe the benefits that investing in this part of the world provides are more than enough to answer affirmatively were we to re-consider the investment. We certainly hope to show that to those who would consider using our consultancy services, regardless of where their Portugal property investment may take place. An investment in Portugal is an opening of the mind as much as it is an increase in overall net worth. Consider that.