Chinese rushing to buy property for Portugese visa
LISBON, Portugal: Billboards in Chinese at Lisbon’s international airport peddling luxury properties leave little doubt about who is buying real estate in Portugal.
While the ads offer a chance at securing a so- called golden visa to live in Portugal in exchange for property investments of at least 500,000 euros ( RM2 million), they leave out the golden rule of such purchases: Never rush into a deal.
The haste with which some Chinese buyers have acquired their piece of Portugal has left them feeling cheated once they realise they might have struck better deals. Some may even have been victims of middlemen who charge commissions of as much as a quarter of the value of the transaction.
“Many Chinese land in Portugal for the first time, don’t speak the language and buy a home in a matter of days,” said Y Ping Chow, head of the Chinese League in Portugal, a Lisbonbased group that promotes the Chinese community. “Some of these investors got burned.”
Portugal can’t afford to leave a sour taste in the mouth of Chinese investors. The goldenvisa programme, which began in late 2012 while the country, like much of Europe, was in the throes of the financial crisis, has raked in more than one billion euros in much-needed investment, mainly from Chinese property buyers, according to the country’s foreign ministry.
The Chinese accounted for more than 80 per cent of the 1,526 resident permits issued under the programme last year, according to the ministry. Home prices in Portugal rose 1.2 per cent in 2014 after seven straight years of declines, Confidencial Imobiliario, a company that collects property-market data, said in an email.
To ensure foreign investors continue buying property in the country through the golden visa programme, the government announced plans on Feb 23 to tighten controls over the issuance of resident permits, including a closer monitoring of real estate prices. That came after a probe into allegations of corruption, influence peddling and money laundering linked to the golden visas led to 11 detentions.
“The aim is to improve this programme,” Vice Premier Paulo Portas said at a press conference in Lisbon. “There are 13 other EU countries with similar investor programmes and it doesn’t seem wise to give up this programme to the benefit of others.”
Keeping the programme going will mean convincing potential property buyers that they won’t meet the fate of Hua Guiping.
Hua, 47, flew from Shanghai to Lisbon in 2013. In less than a week after her arrival, she agreed to buy a home for 500,000 euros before moving to Portugal with her husband and daughter.
Bracketed by an interpreter on one side and a real estate agent on the other, Hua visited dozens of homes in two days before agreeing to buy a house at The Arrabida Resort and Golf Academy, about 40 kilometres (25 miles) south of Lisbon.
“While none of the houses that I visited pleased me, the seller insisted the price was very low and that in two years it would rise to one million euros,” Hua said in an emailed statement to Bloomberg News. “I agreed to buy the house and returned to China feeling happy because I thought I had made an excellent deal.”
A few months later, while browsing the Internet, Hua learned that some of the homes in the same resort were on sale online for less than half the price she had paid. “I saw that houses in the same area were valued at 210,000 euros to 250,000 euros while my home was sold for more than twice that value,” said Hua. “I’m truly upset by all this.”
Several online real estate listings show prices for similar three-bedroom properties in the same resort ranging from 220,000 euros to 515,000 euros.
P e l i c a no - I nve s t iment o Imobiliario, the company that owned the house Hua agreed to buy, denies that it sold the
Many Chinese land in Portugal for the first time, don’t speak the language and buy a home in a matter of days. Some of these investors got burned.
property at above market prices.
Some properties are being sold at lower prices because they have been repossessed by banks or belong to individuals looking to repay debts, Pelicano said in a statement on Feb 10.
“The Arrabida Resort and Golf Academy has more than 1,000 residential units, most of which have been bought by foreign clients with different nationalities who are totally satisfied with the acquisition,” the Lisbon-based company said. Pelicano has “total legitimacy and liberty to define its price policy and the potential buyers are free to decide whether or not to buy these properties.”
Sergio Martins, directorgeneral of the Portuguese- Chinese Business Chamber of Commerce, is aware of complaints by some Chinese of overpaying for properties in Portugal. “This happens because some unusual mediators tend to be involved in these transactions, emigration agencies and more than one real estate agency in Portugal and China, plus lawyers and other consultancy services,” Martins said in an interview on Feb 10. “Commissions can sometimes rise to as much as 25 per cent of the real estate transaction.”
Unlike Hua, Rex Shen spent months researching home prices in Portugal before using up most of the money he saved working as a casino manager in Macau to buy two apartments almost 7,000 miles away in the centre of Lisbon. He cut out middlemen and paid almost no commissions.
Shen now works as a real estate agent in the Portuguese capital selling properties to his fellow countrymen.
“A smart Chinese investor should do the necessary research before coming to Portugal,” Shen said in a telephone interview on Feb 25. “It’s a free market and some real estate agents in Portugal are indeed selling properties at very high prices.”
Demand from Chinese property buyers remains strong as China continues to allow a freer movement of funds in and out of the country. About 90 per cent of bidders at a real estate auction of government- owned apartments in Lisbon last year were Chinese. Housing in Portugal is among the cheapest in Europe, with property values in line with replacement construction costs, Fitch Ratings said in a report. — WP-Bloomberg
Y Ping Chow, head of the Chinese League in Portugal