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Real Estate Investment for Golden Visa in the Portuguese Countryside

About a year ago, Decree-Law No. 14/2021, of 12 February, was published, making the eighth amendment to Law No. 23/2007, of 4 July, which approves the legal regime for entry, permanence, and departure of foreigners from the Portuguese territory, coming into force on January 1st of this year.
This change made by the Government aimed to displace the Golden Visa investment made in large urban centres to low-density territories in the interior of the country and islands of Madeira and Azores, since these territories suffer from less development and lack dynamics in the modernization of infrastructures, construction, and young working age population.

With the spectacular foreign investment made in Portugal, old and abandoned buildings were renovated, new housing units were built, historic centres and tourist points of interest were dynamized. Now, it is time to take the great investment instrument that is our Golden Visa program to develop, build and boost the interior of our country.

But let us first identify what these territories are – for purposes of investing in Golden Visa -, the amounts and requirements for the investment and then the attractive advantages for foreign investors in these regions of the country.

According to article 3, paragraph d) of Law 23-2007, of 4 July, in conjunction with article 90-A of the same law, a residence permit is granted, for the purposes of carrying out an investment activity, to third-country nationals who make an investment in Portuguese territory, meaning any activity carried out personally or through a company, and for a minimum period of five years, listing below the admitted investment modalities and which are relevant in this article, namely: acquisition of real estate worth €500,000 or more; acquisition of real estate as long as the construction of this property has been completed for at least 30 years or located in an urban rehabilitation area and carrying out rehabilitation works of the acquired property, in the global amount equal to or greater than € 350 000, after which the number 4 of the aforementioned article 3 refers that the properties acquired and intended for housing, only allow access to the Golden Visa regime if they are located in the Autonomous Regions of the Azores and Madeira or in the interior rural territories, being the definition of those territories in the Ordinance no. 208-2017, of 13 July, with the possibility that the amounts of the investment to be carried out or the minimum quantitative requirement of the investment activities may be 20% lower, when activities are carried out in low-density areas, thus opening the door to the possibility of investing the amount of €280,000 (€350,000 – 20%), when it is carried out in a low-density territory, the construction has been finished more than 30 years ago or located in an urban rehabilitation area and rehabilitation works are carried out on the acquired property, or an amount of €400,000 (€500,000 – 20 %) when cumulatively carried out in a low-density territory and the construction has not been finished for more than 30 years nor located in an urban rehabilitation area.

This way, the investor who previously, roughly 90% of the time, chose the coastal area as an investment zone, where high demand drives prices through the roof, paying €350,000 or €500,000 or more for a one or two bedrooms apartment, now has the possibility of acquiring a larger property, with a typology of more rooms and even a villa on an estate and/or with a swimming pool to occasionally reside there when looking for a comfortable and calm vacation, for the same price and even lower, lease the property to students, couples and even use it as accommodation for rural tourism, in a quiet place, close to nature, perfectly optimized to be monetized in rural tourism, something that has been in great demand recently by tourists not only Portuguese but also foreigners.

In fact, considering the current pandemic situation, which will not disappear in the short term, the demand for tourism destinations with less transmission risk, less dense and safer to avoid infection by COVID-19 will increase, something that the large cities of coastline and beach destinations on the Algarve cannot provide.

Also, regarding the demand for rural tourism and the offer of accommodation, according to data published by the National Statistics Institute in 2011 Portugal had 1188 rural establishments with an accommodation capacity of 13,293 people, and in 2019 there were 1,687 tourism establishments in operation in rural areas.
According to the report “Statistics of Tourism – 2019” published by the National Statistics Institute, “country houses were the most represented modality with 976 establishments (57.9% of the total establishments in this accommodation segment), followed by agritourism (277 units, with a relative weight of 16.4%), other types of accommodation (94 establishments, 5.6% of the total) and rural hotels (93 establishments, 5.5% of the total). Tourism establishments in rural areas and housing provided 26.6 thousand beds, with country houses concentrating 48.8% of the capacity of this accommodation segment, agritourism units followed (17.0%), rural hotels (14.8%) and home tourism (14.0%).”

Furthermore, in many interior cities of Portugal there are universities and institutes, such as Évora, Portalegre, Beja, Castelo Branco, Guarda, Covilhã, Bragança and Tomar, where there is always demand of rentals for young students who move to those cities to study, being the investor always guaranteed the demand for renting rooms. As an example, the acquisition of a four-bedroom apartment, in the city of Covilhã, centre of the largest university in the interior (Universidade da Beira Interior), can be monetized by renting each room, for example, for €300.00/month each bedroom, which makes a total of €1200.00/month and a total of €14,400.00/year.

There is also the question of property valuation and return on investment, as the Portuguese property market is one of the most stable and valued real estate markets in Europe. After five years, the investor will not only benefit from renting the property, but also the return on the investment made in the case of resale of the property.

If these reasons are not convincing enough, the interior has a low crime rate, a low cost of living when compared to the coast, peace away from the noisy and congested urban centres, the possibility of discovering flavours of the land, untouched by the great supermarket chains, monuments and castles that are part of the country’s history, the feeling of being welcomed by locals, ties of solidarity and friendly neighbourhood relations, natural resources for agricultural exploitation, production and sale, and Government support, especially through the “Interior Employment Program”, also applicable to citizens of Third States, self-employed or who start a business activity that works effectively.

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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