Portugal’s decision to extend its fast track residency programme to include property investments in Lisbon and Porto by six months is expected to boost inquiries for homes from Hongkongers seeking permanent residency in the European country, say agents.
On Friday, Portugal pushed forward the deadline to exclude investments in Lisbon and Porto from its Golden Visa scheme from July 2021 to January 2022. The extension comes after the government in December had sought to disqualify home purchases in the two main cities and the resort region of Algarve under the scheme to cool down property prices and encourage investment in less popular districts.
Home prices across Portugal rose 5.9 per cent last year, making housing unaffordable for many locals amid the coronavirus pandemic that saw the economy contract by 7.6 per cent. Portugal’s unemployment rate rose to 6.8 per cent last year from 6.5 per cent in 2019 because of the economic fallout from the pandemic, according to official data.
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
“When the Portuguese government introduced the deadline of July 2021, Hong Kong buyers were hesitant to commit as they felt they may not have enough time to do the transaction and then fly to Portugal to complete the necessary biometrics,” said Chitra Stern, founder and owner of Elegant Group, developer of Martinhal Hotels & Resorts and Martinhal Residences, a branded residence project in Lisbon. “The extension removes this barrier and we expect to have more enquiries now.”
The scheme grants a foreigner the right to live, work and study in the country and visa-free travel within Europe’s Schengen area comprising 26 European countries. The residency route via purchase of property worth at least €500,000 (US$606,000) has been favoured by Hongkongers seeking an option to emigrate overseas.
“Investors will now have more confidence [regarding] their application as ten and a half months is a very comfortable time frame,” said Luiz Felipe Maia, managing director at Lisbon-based Maia International Properties, which has an office in Hong Kong.
Last year, Portugal issued 1,182 golden visas, with mainland Chinese and Hongkongers among the two biggest beneficiaries, accounting for 296 permits last year, according to official data. Property investments reached €646.7 million (US$783.8 million) in 2020, a decline of 11 per cent from €742 million in 2019.
In January, Portugal granted 55 residency permits, with Chinese nationals accounting for about half at 27. Of the 55, 52 bought property for a total investment of €32.1 million.
Portugal’s residency programme is popular among foreigners for its relative ease and affordability. To keep their residency, visa holders have to only spend a week in the country for the first year, and 14 days for the next two years. On the other hand, Hongkongers seeking a path to UK citizenship via a British National (Overseas) passport must remain five years in Britain and then wait for another year to apply for citizenship.
Portuguese developers and agents had criticised the original timing of the change, saying that the pandemic could create further instability in the market.
They said that decision to exclude property investments in major cities from qualified investment was likely to deter some potential investors if they had to invest the same amount in rural areas, as it might be deemed as an unattractive investment.
Besides getting a residency, investors were also looking for good properties whose values were likely to rise to recover their investment, they said.
“The Portuguese government fully understands the benefits that Golden Visa applications bring to the Portuguese economy,” said Elegant’s Stern.
“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.”
More from South China Morning Post: