By Uglobal Staff
After a period of upheaval that culminated in a brief suspension in 2015, Portugal’s golden visa program is now getting back on track, according to data from the Serviço de Estrangeiros e Fronteiras (SEF), the country’s immigration agency.
The number of visas issued annually fell by almost half in 2015, to just 766, as SEF struggled with a corruption scandal, an internal audit and a labor dispute. Visa issuances rebounded to 1,414 in 2016 and are continuing to climb, with 1,041 visas issued in the first seven months of 2017.
That’s a sign that SEF’s troubles didn’t scare off investors, and that interest in Portugal’s golden visa program remains strong, says Charles Roberts, a managing partner with real-estate agency Fine & Country. The dip in 2015 was due to delays in processing visas, not a decline in the number of new applications, he says.
“It wasn’t a downturn — it was bottleneck in the system,” he adds.
The Portuguese golden visa program, also known as ARI, offers a range of investment options, from a 1 million euro capital transfer to a business investment that creates at least 10 new jobs. The vast majority of investors who use the program, however, purchase real estate: 94 percent of the 5,243 people who have received golden visas since the program’s launch in 2012 did so through real estate investments, SEF data shows.
Just 290 investors qualified for the golden visa through capital transfers, and only eight people qualified through job creation.
Real estate “is the cheapest and easiest investment choice, and this is why investors chose it,” says Madalena Pedreira, an immigration and real estate lawyer with Belion Partners. Buying a property is “definitely less bureaucratic than incorporating a company” in order to qualify for the job-creation visa, she points out.
The real estate program offers a renewable, year-long visa to anyone who spends more than 500,000 euros on real estate, or 350,000 euros to buy or refurbish properties in distressed or outlying areas of the country.
There are few restrictions on the kinds of property that can be owned, Pedreira says, but investors should be aware that they have to pay cash in order to qualify.
“For the duration of the program, the investor has to keep the investment with no burdens. This means that the real estate has to be bought without bank credit,” she explains.
In total, golden visa investors have poured 3.2 billion euros (about 3.8 billion dollars) into the Portuguese economy since the program launched in 2012, with more than 90 percent of that total — around 2.9 billion euros — coming through property transactions. That has been a boon for the Portuguese real estate industry, Roberts says.
“In 2013, you didn’t see a single crane working in Lisbon, and now, it’s a boom town,” he says. “It’s been a big game changer, and it’s brought into the country a tremendous amount of capital.”
So far, most of the real estate activity generated by the visas has been in Lisbon.
“Clients want to buy in prime locations, where they’re going to get capital appreciation and a chance of income,” Roberts explains. Most of Roberts’ clients pay well over 500,000 euros for their properties, and so far only 53 visas — about 1 percent of the total — have been issued in the 350,000-euro real estate category.
“We have several clients who chose that route and all went well, but it is for sure a more bureaucratic and complicated one, with more documents required,” Pedreira says. “That is why investors still choose the 500,000-euro investment route.”
Investors need to be physically present in Portugal to apply for their visa, and must complete their property purchase before applying, but the process itself is straightforward, Pedreira says, requiring only basic documentation such as passports and birth certificates, along with a police background check that must be renewed annually.
The golden visa doesn’t require investors to live in the properties they buy, or even to spend significant time in Portugal: one week of residence a year is all that’s needed to keep the visa current. It’s also easy to obtain visas for family members, with 8,637 visas issued to investors’ family members since the program began.
That all makes Portugal’s golden visa an attractive option for clients who are planning for the future, rather than seeking to relocate immediately, Roberts says. “The golden visa is attractive to wealthy people from countries outside the EU who believe their home country is politically or economically unstable,” he explains. “What they’re buying is a plan B.”
Chinese investors were the first to embrace Portugal’s golden visa program, and since 2012 over two thirds of issued visas have gone to people from China. In recent months, however, there has been a significant shift that’s yet to be reflected in the official numbers, Roberts says: increased awareness of the program, along with political turmoil in places like Turkey and Ukraine, means that most applications now come from outside China.
“The main market now is Turkey,” which accounts for about half of new applicants, Roberts says. China still accounts for about one in 10 applicants, Roberts adds, while Brazil, South Africa, Russia and Lebanon are also increasingly important players.
According to statute, applications should take no longer than 3 months to process, but SEF isn’t currently meeting its targets, says Margarida Almeida Santos, a partner with Lisbon law firm Dinis Lucas e Almeida Santos.
Officials are still working their way through a backlog of about 3,000 outstanding applications, Almeida Santos says, so current applicants can expect a six to nine-month wait for their visa.
Still, she adds, the Portuguese government appears committed to reducing delays, and has increased staffing at SEF to help speed up processing. A new pilot program allowing applicants to use provincial offices to process their visas, rather than the overburdened Lisbon office, should also help matters.
“Everything is going well, and the process is getting faster,” Almeida Santos says. “That’s my conviction.”