20 March 2019
On September 23rd, 2018, Reuters wrote an article about a demonstration against soaring rent prices in Lisbon. The protest was organized by anti-gentrification groups that came from different countries in the EU. The demonstration was the first for housing rights in Portugal since 2007 when Portugal, like many other countries, was on the edge of a severe economic and debt crisis (you can read the full article here). The increase in rent prices has changed Lisbon as many “locals” has been forced out of the city centre.
Many locals just do not have the means to get by when renting in the city. One of the reasons for the increase in the cost of living is the tremendous number of foreigners with deep pockets investing in the city, primarily through the Golden Visa program schemes.
Opening up Portugal through the “Golden Visa Portugal” has certainly helped to save the country’s housing market as it was crumbling in 2011. Many foreigners saw an opportunity to get easier access to the EU by “buying” residency to obtain citizenship by simply moving their money into the housing market. The idea was that it would benefit wealthy people that wanted more freedom while saving the economy of Portugal. And it worked. But as with many quick fixes, there is a downside.
The side effect of saving the economy by inviting foreign investment is that the average local city-dwellers did not see the same increase in their bank statement. It’s simple math really. Typically, an economy would balance growth by analysing inflation, consumer price index and the overall individual’s salary increase (this is arguably an over-simplification). The outcome of balancing these “factors” is overall prosperity through controlled growth. But the growth in the real estate market has thrown everything out of whack.
The growth in the real estate sector is impressive. From hitting bottom in 2013, Lisbon has seen an increase of 25 percent. And in some sought-after neighbourhoods in Lisbon’s historic centre, people have reported price hikes of upwards of 60 percent, and even reaching prices per square meter that matches Paris – long one of Europa’s most expensive cities (reference here).
Since 2012, Portugal has granted more than 5,500 Portuguese Golden Visas, with a majority being Chinese investors. Overall, the Golden Visa scheme has been credited with pumping in 3.4 billion euros into the Portuguese economy. And it all started around five years ago when the government of Portugal implemented a string of measures to boost the economy through foreign investments. One program called NHR gives foreigners living in Portugal tax breaks. While the Golden Visa program offers Portuguese residency for non-EU citizens, who invest more than 350,000 euros in property in historic neighbourhoods. Such foreign investments certainly makes the point for many that are negative to the Golden Visa program, that thinks it rakes havoc to the cost of living in Lisbon. However, there is now a different visa scheme in play that turns all of this around.
The brand-new Portuguese Gold Visa by investment fund that focuses on innovation is a result of solving all of the issues mentioned above. You can read more about the Golden Visa here: golden-visa-portugal.info/golden-visa. And this website is the only place where you can apply for the visa and get more information about it. Here is a list of what this visa scheme is all about:
A Golden Visa of this calibre changes the conversation away from the gentrification issues towards overall prosperity. The aim is still the same; to help people with wealth in obtaining greater freedom while at the same time growing the economy of Portugal.
Since 2007, Lisbon and Portugal are finally on top of mind globally again. Young people are flocking to Lisbon, and new opportunities are being created every day. Good examples of this growth are seen through the increase in co-working communities such as Second Home and Alphabet Inc’s Google new support centre for Europe, Middle East and Africa located in Oeiras on the outskirts of Lisbon.
Whether the various Golden Visa schemes in Portugal are a curse or a blessing is subject to who you ask. What’s certain, is that lessons have been learned the hard way since its infancy. And a result of all efforts made so far to save the economy is a Golden Visa that attracts investors that will help in creating new jobs through innovation.
It’s a good sign for any country when it attracts talent, and Portugal is certainly doing that. To find out more about the Portuguese Gold Visa by investment fund that focuses on innovation here on our website. And contact us should you have any questions.
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