Insights in to the Golden visa program and what you should be aware of.
A stable political and social environment, a modern education system, low crime rates, high living standards and an Economy that has been developing steadily with expected expansion to another 1.7% in 2019. All this surrounded by stunning safe landscapes, modern developed cities, 300 days of sun, leading gastronomy and welcoming people. These are just some of the reasons that we have seen Portugal steadily rising in becoming an increasingly popular destination for investors around the globe and considering recent global safety concerns, a country that has a major pull factor for many wealthy families in Asia.
The rise of Lisbon: Undervalued asset Lisbon is considered a leading European destination for real estate investments for 2019 and in recent years has undergone a resurgence in international tourism, with many capitalising on its start-up culture. The capital, equipped with its reliable climate with warmth running from March to October also shines as an event destination and has been recognized by the International Congress and Convention Association (ICCA) for its excellent infrastructure, accessibility and the advantageous price-quality ratio of hotels and services offered to the event participants. In 2017, revenue of the tourist market in Lisbon increased by 16.6%, reaching a new record. The positive dynamics continues and in 2018 RevPAR (revenue per available room) grew by about 7% in Lisbon. This figure is expected to grow by 6.5% in 2019. At the same time, the real estate market is booming. Residential property prices in Portugal grew by 15.4% in 2018, thus accelerating from the 12.8% recorded one year before (data by Confidencial Imobiliário). And in Lisbon, the increase stands (as of Q3 18) at close to 20%. Another important figure coming from the Portuguese National Statistics Bureau (INE) is the 17%-growth in the number of dwellings sold in total Portugal in 2018, peaking at 180,000. This happens in a context of increased demand and limited supply, which means that property rental rates are growing very fast. *Residential property prices in Portugal Price point comparable: In Lisbon, price points still remain competitively lower than in other European capitals, with the advantage of average yield rate for long-term apart- 3-5% average yield rate based on long term APR 5-10% 57% management company services international buyers ment rentals ranging from 3 to 5% and even more with short-term rentals. At the same time, management company services are significantly cheaper in comparison to other countries (5–10 % of the rent against 20–25 %). And, besides showing a rising trend, demand is also increasingly diversified. During 2018, international buyers accounted for 57% of the total JLL´s mediated transactions, composed of 45 different nationalities, mainly Brazilian, English and French, followed by the Turkish and South Africans. Since 2012, there is a programme in place that provides foreign investors with an opportunity to receive a residence permit via investment, including that in property. The condition on which the Golden Visa is given is of a property being worth more than €500,000 (investment amount may be reduced by 20% (€100,000) in case such an investment is made in low-density population areas). Portugal also offers an attractive tax regime, with the rates often being lower than in many other European countries. In addition, for tax residents (individuals spending over 183 days a year in the country) a so-called “exclusive tax regime” is in place that allows for a significant reduction of expenses that are incurred during business or other activities. For the foreign tax residents coming to reside permanently in Portugal that have not lived in the country before (have not had a residence permit for the past 5 years), an exclusive tax regime (Non-Habitual Residents, NHR) exists. This programme is designed to attract creative people, scientists, medical practitioners, IT professionals, high-net-worth individuals to Portugal. This regime is also applicable to the acquirers of Golden Visas.
Advice for International Indians When considering aspects such as global mobility, post Brexit, ROI and lifestyle, Portugal offers both strategic access and safety. But you must be aware that not all properties priced at the market rates for Golden visa applications are truly reflective of its long term value. We would always advise clients to contact our team first to get an unbiased overview of what you need to know to keep a step ahead.
