Portugal, like several other European countries, has been going for gold in the last few years. Golden visas, that is.
The so-called golden visa residency program, launched in Portugal in 2012 to counteract the economic crisis of 2008 and 2009, has helped revitalize the housing market. That program allows foreign citizens to obtain visas in exchange for a real estate investment of €500,000 (US$546,000), and attracted more than 5,550 new buyers to the Portuguese market by the end of 2017, according to the country’s Foreigners and Borders Service.
“The golden visa program is going quite well from a government point of view,” said Julian Walker, director of InternationalPropertyForSale.com in London, which promotes property in Western European countries and other so-called investment hotspots.
The program yielded more than €3 billion (US$3.8 billion) in Portuguese investments as of the end of last year, according to the Foreigners and Borders Service.
Brazil, China and South Africa are the top three nationalities attracted through Portugal’s golden visa program, according to government statistics.
There are also tax benefits for “non-habitual residents,” a separate program established by the government in 2009 to encourage high-net worth industries and individuals to relocate, according to the London-based financial planning firm Blevins Franks. It offers people working in “high-added value” professions in the country a flat income tax rate of just 20% for 10 years.
In addition, retirement savings are also eligible for tax breaks. Retirees who receive funds from their home country will not be subject to Portuguese taxes on those earnings for the first decade of residence, the firm said.
Because of the increased interest in Portugal, particularly the capital, Lisbon, the Algarve beach region and the northern city of Porto, home prices have risen. The average home now costs €1,144 (US$1,373), according to Portugal’s Office for National Statistics.
The median house price in Lisbon is €2,315 per square meter (US$2,769) as of November, according to the agency. That is a more than a 15% rise since the same time in 2016.
In the Algarve, the average house price was €1,447 per square meter (US$1,737) in November 2017. That’s up almost 8% from 2016. Prices in Porto are significantly less, at an average of €1,254 (US$1,555), about a 5.28% bump up, according to the agency.
Prices have been predicted to rise by 4.5% over the next year throughout the country. according to a report by the firm Confidencial Imobiliário. Over the next five years, growth could be as much as 5.5%, the report said.
An S&P market report predicts prices in the country will rise at an even higher rate, according to a Property Wire article. Prices are expected to rise 8.5% in 2018, which is the highest growth for any European country other than Ireland, where prices are expected to rise at the same rate. Portugal is predicted to continue to lead in price growth at 7% in 2019, dropping to an annual 6% growth in 2020, according to the report.