Why invest in Portugal?
Portugal is currently developing a very solid investment strategy by granting residency authorization visas (known as golden visas) with the aim of attracting foreign investment. (For details of the golden visa regime, see Luís Filipe Carvalho and Maria Barão Assis, “Obtaining a ‘Golden Visa’ through Real Estate Acquisition” Real Estate Gazette (Issue 12, 2013) page 28; for more on real estate investment trends in Portugal generally, see Luís Filipe Carvalho and Maria Barão Assis, “Real Estate Investment Trends in Portugal” Real Estate Gazette (Issue 16, 2014) page 32 (hard copy) and page 56 (soft copy).)
The latest statistical data published by the Portuguese government reveals that a total of 1,936 golden visas were granted over a period of two years, with over EUR 1 billion being invested by foreign investors holding a golden visa.
It is important to note that 91 per cent of the total foreign investment referred to above has been in the real estate sector, and represents over EUR 60 million in taxes and EUR 20 million from the issue of visas. In just one month (November 2014), 132 new investors were registered and EUR 90 million poured into the real estate sector.
Portugal benefits from an attractive environment, a pleasant climate and a transparent tax regime, particularly advantageous to those wishing to retire to the country. All these factors tend to suggest that Portugal offers highly attractive investment opportunities. Notwithstanding the economic crisis that continues to blight much of Europe, investor confidence remains high and it may be justifiably asserted that no other investment strategy has achieved the positive results seen in Portugal’s real estate sector. Further, success breeds success and Portugal’s past performance in this sector means that investors are now highly confident that Portugal’s real estate market can offer solid returns.
From a domestic perspective, this sector has assumed an important role in reaffirming Portugal’s position as an attractive market in which to invest, compared to its European neighbours. It is also worth noting that, given the cyclical nature of investment, Portugal’s eventual success in its current fight against unemployment should, in the long run, stimulate increased demand in real estate.
Commercial real estate
Commercial real estate has also been performing well, registering growth of 130 per cent in comparison to 2013. Investment in this area has doubled, and this is due in part to an increase in foreign investment greater than that registered in previous years.
Market commentators are forecasting that investment in commercial real estate in 2015 will continue to grow, possibly at a record rate, partly due to sales at levels not seen in 2014, such as the sale and purchase of real estate valued at over EUR 200 million.
In addition to these high value transactions, other commercial transactions for capital assets that have been in the offing for the past few years look set to be completed in 2015, boosting profits in this sector even further.
In the commercial rental market, as a general rule, rents have remained stable and vacancy rates have decreased substantially.
Portugal versus Europe
There are various factors that make Portugal attractive to foreign investors.
A country’s cost of living, its climate, the quality of its health care and the strength of its hospitality industry are key factors when it comes to investment, and in all these areas, Portugal has much to offer. The country has been named as one of the ten best countries in the world in which to spend your retirement. In addition, real estate in Portugal is generally of high quality and offers investors good value for money.
For all these reasons, it would be fair to say that Portugal holds an exceptional position in the European real estate investment market.
Luís Filipe Carvalho and Mariana D’almeida Ribeiro, ABBC Law Firm, Lisbon