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Portugal update - buyer demand holding up and extension to Golden Visa scheme

The demand for knowledge about the investment landscape in Portugal during the pandemic, and post-Brexit, shows no signs of slowing down, with people eager for clarity, answers and guidance.

The Algarve, in particular, has long been a favourite destination of Brits, thanks to its long, sandy beaches, world-class golf courses and offering of both charming inland villages and more expansive coastal locations.

But how is demand holding up despite lockdowns, travel restrictions, Brexit and uncertainty over the Golden Visa scheme? And what could the main property market trends be this year in the Algarve?


Here, PIT speaks to Mario Sardo, sales executive at QP Savills, for his take on the above questions and more.

How has interest/demand held up despite fresh lockdowns (in both the UK and Portugal), Brexit and other variables?

I strongly believe that under previous and current lockdowns many British citizens will have had time to pause and reflect on what’s most important in life, and that’s being with family and time with their loved ones in a quality destination like the Algarve.

Furthermore, with a lot of uncertainty surrounding the Brexit transition and long-term relationship between the UK and EU, demand for properties remains high and in January QP Savills’ enquiries were up 18% year-on-year.

We are continuing to see a trend in lifestyle and investment purchases, and a further developing trend from British citizens interested in relocating to the Algarve due to the high quality of living, superb all-year-round weather, selection of international schools, and safety and security.

Is a Golden Visa or a D7 visa the best way for Brits to invest for residency?

It depends if purchasers have (or don't have) problems on being fiscal residents in Portugal, declaring and paying their worldwide income here. With a Golden Visa, you can choose not to be fiscally resident. With D7 you are fiscally resident, despite being able to apply for the Non-Habitual Residency (NHR) scheme.

What do you think will be the main trends for the year ahead?

In these times of uncertainty, it’s difficult to say what the main trends will be for the year ahead. However, looking at the data and using 2020 as a benchmark, I believe the Golden Triangle will continue to be driven by high-net-worth lifestyle purchasers.

This will be further supported by the NHR scheme and D7 visa. Furthermore, due to a high demand and shortage of quality product available for purchase, investor confidence remains high and established or up-and-coming developers are securing land for development.

In the sought-after luxury resorts of Vale do Lobo and Quinta do Lago, there are a number of spectacular high-end villas currently under construction which are due for launch in 2021/2022.

Are people willing to purchase sight unseen, via video/virtual tours, or do they generally want to visit in person? Could this slow sales as it’s virtually impossible to travel to Portugal from the UK at present?

Due to flight restrictions and lockdowns over the past 10 months, we have seen a large increase in video/virtual tours. These platforms have certainly helped support the sale of some properties, but the large majority of purchasers will prefer to experience properties and their respective surroundings and neighbourhoods before spending millions of euros.

For foreign purchasers, the Algarve is a touristic residential market and not a primary residential market. Prospective purchasers, therefore, need to travel here and spend a considerable amount of time with a qualified agent in order to get a good understanding of the areas, what your money can buy and what lifestyle is on offer across a range of locations.

Sales will no doubt slow down until there is clarity on travel. However, I expect sales to spike immediately after air travel opens between the UK and Portugal.

Golden visa programme extended to January 2022

After much confusion and uncertainty, it has finally been revealed that restrictions to Portugal’s Golden Visa scheme will now not come into play on July 1 2021, as previously thought. Instead, the non-EU investors eligible for the scheme – which now, of course, includes British investors – will have an extra six months beyond July 1 to take advantage of the scheme before it’s closed off in certain very popular areas.

New rules, published on Friday in the government newspaper Diário da República, bumped the deadline forwards by six months to January 2022, meaning Golden Visas can continue to be sought within areas like Lisbon and Porto, and in popular coastal areas like the Algarve, for an extra six-month window.

What is being changed?

The exact changes to the Golden Visa scheme, which have finally been confirmed by the Portuguese government, gives non-EU investors until the end of 2021 to make their applications.

“The existing ways of obtaining a Golden Visa will now remain until January 31 2022,” David Moura-George, Portugal director at Athena Advisers, commented. “The changes are around two aspects, increasing the minimum thresholds of certain investments and redefining the areas where residential property investments can be made.”

The minimum amounts required for property investment will remain the same. But, as expected, there are some areas in which property investments will no longer be able to qualify for a Golden Visa beyond the end of January 2022.

Outlying areas of the Algarve, the Azores and Madeira, and a long list of interior areas made the cut, but the likes of Lisbon and Porto won’t be eligible once the extension ends.

“The market has been working in the grey around these changes for over 12 months, so finally having clarity is almost as important as the six-month extension to the previous July deadline,” Moura-George added. “The Azores will see a rush of investment as it is both beautiful and coastal, and those outlying areas of the Algarve which qualified are likely to see renewed interest too, especially from Chinese investors.”

The Portuguese government has decided to alter the Golden Visa regime so that it can be directed ‘preferentially to the territories of the interior’, to increase investment in job creation and ‘urban and heritage requalification’. 

For now, anyone seeking to invest in property in exchange for a Golden Visa in Lisbon, Porto or coastal areas along the Algarve has a golden window until January 31 2022.

After that, according to property website Idealista, the law makes it very clear that a Golden Visa for the acquisition of property for a value equal or above €500,000 ‘is only permitted when these properties are in the regional autonomies of the Azores and Madeira, or in territories of the interior’ on the mainland.

The exact locations which will qualify and not qualify haven’t been made abundantly clear – for example, would an area right on the outskirts of Porto or Lisbon, away from the coast, be eligible? – but should become more apparent over time.

Investors in commercial property look set to be free of the new restrictions imposed on residential homes. Hugo Santos Ferreira, vice president of APPII, the Portuguese association of property promoters and investors, told Portugal Resident: “On first analysis, the new legislation safeguards investment made in the commercial segment. Offices, retail, commercial and touristic apartments continue to be covered by the programme, meaning investment can continue in Lisbon and Porto.”

Chitra Stern, co-founder of Elegant Group, the developer of Martinhal Residences, which includes new homes on the outskirts of Lisbon, is jubilant about the Golden Visa extension for residential real estate.

“The Portuguese government fully understands the benefits that Golden Visa applications bring to the Portuguese economy,” she said. “While the government rightly wants to channel future investment into inland areas, it is critical to keep open the opportunity to attain a Golden Visa through real estate in Lisbon for the remainder of this year.”  

She added: “The country’s growth prospects post-Covid-19 are positive and the government is fully committed to attracting foreign investment in other ways. We are sure that the extension to Golden Visa through real estate will contribute to bolstering the country’s economy this year."

How important is the Golden Visa to Portugal?

In January 2021, month-on-month investment from the Golden Visa scheme was up by nearly 20%. According to the latest figures from the SEF (Serviço de Estrangeiros e Fronteiras), Portugal’s borders department, investment in January reached €33.1 million, up by 19.5% compared to December's total of €27.7 million.

Property investment in the €500,000 category accounted for 87% (€28.9 million) of January's total, with property investment in the €350,000 category attracting almost 10% (€3.2 million). By comparison, fund investment made up only the remaining 3% (€1.1 million). 

The programme as a whole is now quickly closing in on €6 billion of total investment since it was launched by the government in 2012, making it one of Europe’s most successful Golden Visa schemes.

It took less than two years for the programme to generate € billion in investment, and has steadily been rising since. It has been most used by Chinese, Brazilian, South African and Russian investors – and now, of course, it’s open to Brits, who were already one of the biggest investors in Portugal.

At present, it has attracted €5.67 billion in investment, making it one of the most popular investment-for-residency programmes of its kind in the world.

"The reasons why people apply for this programme haven’t changed in the eight years it’s been running,” Moura-George claimed. “First you get a residency permit, which gives ease of travel across the Schengen zone and then the big carrot is the five-year path to citizenship - a ‘golden’ passport - and the creation of timeless European lineage within the family.”


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