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From India to China, what opportunities exist for the Portuguese market?

Portugal has a long history of exploring abroad, seeking to take with it its culture sharing it with other cultures and bringing back home what has been learned in other parts of the world. Today, an Asian version of pastel de nata is sold in all patisseries in China, spread mainly by Macanese restaurants in mainland China, called “Portuguese egg tart”, the “peixinhos da horta” make up the “tempura” of Japanese cuisine, the “garlic wine sauce”, gave way to the “vindaloo” in India, and the Castella cake became the Japanese “kasutera”, sold all over Asia.

Portugal brought back from Asia the tradition of cultivation and daily consumption of rice being the European country that consumes the biggest percentage of rice per capita, brought saffron, curry and samosas from India.

All over Asia, there are traces of Portugal and it is not uncommon to find Indian citizens with Portuguese surnames, especially those born in Goa, Daman and Diu. In Macau, there is Portuguese pavement (calçada Portuguesa) and buildings that remind you of being in a Portuguese city like Lisbon or Porto.

This same Portuguese curiosity, with what comes from outside, combined with the Portuguese tradition of emigration to the Americas and other countries shaped the way Portugal accepts and welcomes those who go there as well.

Portugal, nicknamed the country of welcoming customs, kindly accepts those who come from abroad, whether tourists, students, business people, investors or immigrants.

A small country with approximately 10 million inhabitants, located in southwest Europe, next to the Atlantic, has been the destination of thousands of foreigners who seek to invest there or even settle down permanently.

A peaceful country, with a temperate Mediterranean climate, politically, socially and culturally stable, having defined its borders for almost a thousand years, the general mastery of English by the local population and the easy integration of foreigners into Portuguese society and social circles are just a few reasons why many who visit Portugal “decide to stay”.

As Asia is a giant continent where half of the world’s population resides, with large financial hubs such as Singapore, Hong Kong, Bangkok, Tokyo and Shanghai, there is sometimes little space left to understand the potential of a small European country like Portugal. Everyone in India or China knows France, England, Germany and Italy – great European powers and famous tourist destinations for family, romance and luxury brands – but they know little about Portugal, its fado culture, codfish cuisine, the heart of the production of cork exported worldwide, wine and olive oil, the investments made there in real estate, companies and investment funds, or even the construction of a Silicon Valley in Vila Nova de Gaia, by a Brazilian group, in the near future.

The tradition of the Portuguese welfare state, having one of the best national health services in the world, accessible to all Portuguese citizens and holders of residence permits, guarantees a sense of additional protection and security for those residing in Portugal and for their relatives, as they know that in the event of a serious illness, they do not need to have health insurance, which is often expensive, to have access to a good health service or excellent professionals and medical care.

The constitutional protection of the property right combined with universal access to justice, the “rule of law” and a “due process of law”, convey security to those who invest in Portugal, knowing that they will not be expropriated or deprived of their property and their assets by the authorities of the State.

Portuguese education, especially that of Portuguese universities, is proud and privileged to be among the best in the world rankings, in addition to having international schools all over the country where there is the possibility of teaching in English and other languages such as French or German.

The great cultural, social and religious tolerance that prevails in Portugal allows the establishment of communities of foreigners such as Indians and Chinese throughout the country, where they can build their businesses, acquire housing and benefit from social welfare in areas such as health, education and justice, obtain a return on investment and passive investment through the leasing and sale of their real estate assets, and there are already local associations in Portugal to support citizens of the aforementioned countries.

So what opportunities are there for Indian and Chinese citizens in Portugal?

In addition to the already popular and widely disseminated programs of residence permit for investment (aka Golden Visa), it is also possible to obtain a temporary residence permit for retired people or holders of passive investment, respectively called the D7 visa and D2 visa.

The Golden Visa program allows an investor to acquire real estate in Portugal (in amounts of €280,000.00, €350,000.00 or €500,000.00), invest in investment funds (minimum amount of €500,000.00), bank deposit in the amount of €1.5 million of Euros for a period of five years or the incorporation of a commercial company based in Portugal, combined with the creation of five permanent jobs, or to reinforce the share capital of a commercial company based in Portugal, already incorporated, with the creation or maintenance of five jobs, for a minimum period of 3 years.

This is the typical program and most sought by foreign investors, especially in the acquisition of real estate for lease and resale after the five years of the program, or of low-return and low-risk investment funds, with the advantage of liquidity when compared to the acquisition of real estate.

In the case of Chinese citizens, the acquisition of real estate is the typical investment model that is often made in China – mainly due to the lack of an alternative given the high volatility of the stock market – for resale or as a condition required by the bride’s parents for marriage and has high demand abroad due to the housing market bubble and soaring prices in cities like Beijing, Shanghai, Shenzhen, Guangzhou, Chengdu, etc., where it becomes very difficult to get initial capital to invest, loans and new (or relatively new) and cheaper construction outside the heart of big cities and main districts like Chaoyang, Haidian and Dongcheng in Beijing or Changning, Jing’an or Huangpu in Shanghai.

As per the Indian citizens, a slowdown in the Indian real estate market and the intention of settling abroad are the primary factors driving Indian demand for properties abroad. Also, investing abroad can provide a hedge against the domestic economy and market risk. In the case of Portugal, Indians tend to see the real estate market as more transparent and regulated when compared with the Indian real estate market.

As per the choice in funds of investment, it is seen by both as a liquid asset with low risk kept during five years to obtain a door into Europe and can easily be returned to the investor without having to pay additional fees, deal with taxes or real estate agencies to resale the property.

The D2 and D7 are quite interesting choices and will start to see an increase in demand as in practice it grants the same rights as the ones granted to the Golden Visa investor and with a cheaper cost.

In fact, the covid and digital area saw a rise in the so-called “digital nomads” that can work anywhere in the world with just a laptop, tablet or even a smartphone, being a freelancer or with the HQ of a company located anywhere in the world.

The first one D7 is more appealing to retirees, digital nomads, stock market investors or owners of other passive income such as the ones from rentals in their country of origin. It ranges from the interest of someone over 55, 60 or 65 years old that seeks a peaceful country as Portugal to retire or the young digital nomad, social influencer or successful cryptocurrency or stock market investor that wishes to relax in Portugal for a while, travelling to other countries in Europe and coming back to Portugal to rest and enjoy Portuguese lifestyle. The successful investor and businessman can be in Lisbon, fly to New York in six hours for a presentation then take a flight back to another European city for tourism or luxury brand hunting.

The D2 is more optimized for entrepreneurs, independent professionals, company or branch owners or minds with new ideas that decide to open a start-up in Portugal. With the future investment made by the Brazilian group GCMP in the south part of Porto, the Views Valley in the north Porto and other projects supported by the Government such as transforming the country into a tech hub, Portugal is becoming the new European Start-up centre and will boom with tech companies and brilliant minds.

With the great ability that Indians and Chinese have with businesses and taking risks to invest and to dedicate themselves to technology, e-commerce, import and export, the opportunity to make it in the future Silicon Valley is there for the taking, and for now at a relatively fast pace and cheap price.

 

Article by lawyer Rosendo Guimarães da Costa
– Based in Beijing, China

The content of this information does not constitute any specific legal advice; the latter can only be given when faced with a specific case. Please contact us for any further clarification or information deemed necessary in what concerns the application of the law.

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