WHY PORTUGAL’S STILL THE FAVOURITE
Country offers an easy route to a second passport, but don’t delay purchase decisions
Soon-to-be-implemented changes to Portugal’s golden visa programme mean that SA investors shouldn’t delay property purchase decisions. Buying real estate in Portugal is still by far the easiest and most cost-effective route for South Africans to get a second passport, says Pam Golding International MD Chris Immelman.
However, SA investors need to take note of changes to Portugal’s golden visa programme, which will come into effect early next year.
The programme gives foreign investors residency and citizenship opportunities in exchange for an investment in dedicated real estate developments.
From January 1, the Portuguese government will no longer approve new golden visa-linked residential projects in the country’s two largest cities, Lisbon and Porto, as well as on the Algarve, the much-visited southern coastal belt.
The minimum investment in these areas is €500,000. Golden visa investment opportunities in smaller cities and rural areas, with an entry level of €280,000, will remain open to offshore investors.
Immelman says the decision to halt new golden visas in selected areas is in response to pressure from Portugal’s opposition parties, which argue that increased foreign demand has led to rapidly rising house prices, making homeownership unaffordable to local buyers.
He urges SA investors not to delay purchase decisions or they may risk missing the Lisbon and Porto boat. Immelman says those who want to take advantage of the limited window of opportunity to buy into golden visa schemes in Portugal’s key cities should do so no later than October.
“Once you’ve bought a property, it still takes a few weeks to submit your residency application. So you don’t want to miss the January 1 cut-off,” says Immelman.
Meanwhile, Lisbon and Porto still offer a range of interesting residency-linked investment opportunities, some of which are priced from €350,000.
Immelman refers, among others, to Pam Golding’s latest offering in Porto, the Lapa Porto Hotel, which will operate under Marriott’s Renaissance brand. Investors are effectively acquiring ownership of a hotel room for
€350,000, which includes full EU residency and a free stay of seven days a year in the hotel.
Set for completion in early 2023, the Lapa Porto Hotel will comprise 163 rooms, a rooftop swimming pool, a restaurant and a convention centre.
The developers are offering a net income return of 3% a year to all investors, says Immelman. There is a compulsory buy-back after five years when the developers will repurchase each investor’s share at the original purchase price of €350,000.
He says a number of developers have also established private equity funds in Porto and Lisbon, which offer foreign investors a share in the company that owns one or more approved developments. Shareholders qualify for the same residency privileges as those offered by a direct investment in an individual project.
Immelman says that though Pam Golding International also offers residency and citizenship-by-investment opportunities in Grenada in the Caribbean, Malta, Mauritius and the US, most SA investors gravitate to Portugal.
“Over the past three-and-a-half years, we’ve assisted about 380 SA families enter the golden visa programme, and a number of the early investors have already been granted citizenship.”
He cites a desire among wealthy South Africans to secure European study and work opportunities for their children as one of the main reasons Portugal’s golden visa programme
has become so sought-after.
“This is not an immigration play as such, but rather an opportunity for SA investors to leave a legacy to their children,” he says.
“Many are concerned about SA’s future, and acquiring an EU passport for your children allows them to live, study and work freely in any of the Schengen zone’s 26 countries.”
Immelman says Portugal is also a popular choice for those looking to relocate or retire. It’s not difficult to see why.
Portugal counts among the top three in the 2020 Global Peace index and English is widely spoken. The country has great weather, an affordable cost of living and health care, excellent education facilities and no wealth or inheritance tax or tax on overseas pensions.
In addition, Portugal has in recent years achieved higher GDP growth than the EU average on the back of burgeoning technology, media and finance industries.
To qualify for residency, SA investors and their families need to spend seven days in Portugal during the first year, 14 days during the next two years, and another 14 days in years four and five — so an average of seven days a year for the first five years.
Thereafter, legal residents become eligible for citizenship. Main applicants may include their spouse, minor children and adult children who are financially dependent, as well as dependent parents of any age.