The Impact Of Golden Visas on Portugal’s Luxury Property Scene

Residency by Investment(RBI) or Golden Visa is a widely adopted program in many countries to attract foreign capital. The main aim of this program centres on growing the country’s economy and creating opportunities for foreign investors and native people. 

 

Among the other 9 European countries, Portugal also implemented this program in 2012 with the same purpose and turned out to be the most successful one. But is there a pitfall that came with this success? 

 

In this article, we will unveil not just Portugal’s Golden visa but also its impact on the country’s luxury property scene.

What is Portugal’s Golden Visa?

The Golden Visa Portugal is a program that offers non-EU residents an opportunity to obtain residency and later potential citizenship in Portugal by means of investment. It is commonly called the ‘Residency by Investment Program (RBI).”

Officially known as the Residence Permit for Investment Activity (ARI), this program was launched in 2012 to recover and boost Portugal’s economy after the 2008 economic crisis by attracting potential foreign investments into Portuguese property. Since then, it has yielded more than $7.2 B.

Highlights of the Scheme-

  • Investors can qualify for a golden visa (residency permit)  by making a significant investment in 4 types-

    ✔ Capital transfer of a minimum of €1 M.

   ✔Generation of at least 10  good jobs in the country 

   ✔Purchase of real estate worth €500k or more (no longer exists).

  ✔Donation or investment of a minimum €250k in Portuguese arts and heritage.

  • The minimum amount of qualifying investment is €250,000 in arts and culture. 
  • One must maintain the golden visa and residency requirements for a minimum of five years to apply for citizenship. 
  • To keep the Golden Visa functional, you do not need to move or live in Portugal permanently. The minimum requirement is 7 days per year in the country. 

Among the four investment options, real estate caught the robust attention. 

Portugal Golden Visa Benefits

  1. Visa-free travel within Europe, i.e., 29 European countries. 
  2. The golden visa holder can live, work, or study in Portugal, including family members(spouse, children, parents)
  3. Freedom to live in your home country while maintaining the golden visa.
  4. Can have access to healthcare, education, and public services.
  5. Can apply for a Portuguese passport after 5 years (minimum timeline to obtain citizenship. The passport allows visa-free travel in 191  countries.)
  6. Tax exemption on the income generated outside Portugal. 

Apart from these, low-cost living, safety and security, top-notch health care, education, and stunning landscapes can’t be overlooked while listing Portugal’s golden visa benefits. 

Golden Visa Regulations- Recent Changes

In October 2023, the Portuguese government brought the “Mais Habitação Law” to address the growing housing crisis. This law completely withdrew/removed real estate investment as a qualifying option for golden visa seekers. ie. It closed the route of residency for investors through real estate. It also-

  • Withdrew any investment in funds related to real estate( as a qualifying option) 
  • Suspended the registration of new rental accommodations.
  • Posed restriction on short-term rentals(Airbnb)
  • Forced lease of houses,  vacant for more than 2 years.

Does the Golden Visa program exist in 2025?

Yes, the golden visa program still exists, but with specific changes we discussed in the above section. In 2025, investors have other good options than buying a luxury property. Here’s what else you should invest in –

Funds– €500k in Private Equity and Venture capital (excluding the ones in direct or indirect association with real estate). Fund investment is the most preferred option after real estate withdrawal. 

Donations– €500k in research activities and €250k in arts and culture

Business venture– €500K in an existing or new business in Portugal to create at least 10 Jobs. 

Impact of Golden Visa on Portugal’s Luxury Real Estate

Well, every rose has its thorn. While the golden visa program offered easy residency to foreign nationals and many benefits, it posed pressing concerns to the country’s financial security and the low-income working class, particularly through investments in Portugal’s Luxury Real Estate—a primary reason why the Portuguese government terminated this option for investments. 

  • Surge in  Luxury Property Prices and Demand(Golden Visa Premium)

Since 2012, Investment in luxury real estate has dominated all the other options for the Golden Visa Portugal. Over 90% of applicants during 2012-23 chose real estate investment, resulting in a drastic price surge and demand for luxury properties. The percentage only came down after the real estate option was withdrawn in October 2023. Why prices and demand surged-

  •  Affluent applicants from Brazil, China, and the US bought luxury properties at or slightly over the threshold value of €500k. This approach, termed the golden visa premium, marked an increase of 60% in people buying properties just at the threshold value. It is called bunching when the majority of people aim at a particular similar value in order only to qualify.

Outcome—Noticing the growing luxury property demand in Portugal, (investors willing to pay more to qualify), the local sellers and realtor companies took advantage by pricing their properties exactly at 500k or above to attract investors. 

Though the golden visa wouldn’t benefit the Portuguese sellers, it attracted eager investors to buy the properties priced over the fiscal value, ultimately surging the luxury property prices at the threshold by 15%. 

  • Boost in Tourism in the Luxury Cities

Portugal has always been a very sought-after tourist destination. However, not initially intended, the lust for a golden visa positively uplifted tourism even more in urban cities like Lisbon, Porto, and the Algarve. 

In 2023, Portugal received around 30 million tourists, and in August 2024, the country achieved a record-breaking 10.6 million overnight stays. The shift of real estate from the residential sector to the tourism sector boosted tourism in the country, though it inflated the long-term rental house prices.

  • Urban Transformation/ Development

Many urban developments in Lisbon and Porto have been seen in pursuit of the golden visa. Real estate Investors developed luxury accommodations and high-end catering services for the elite class of tourists. They renovated old historic buildings into appealing tourist attractions and abandoned, vacant houses into luxurious apartments. 

The development of luxury properties stemmed from the Portugal real estate trends that favoured rental income from Airbnb. Most investors purchased properties not for residency purposes but for Airbnb rentals, which yielded them good passive income.

  • Side-lined locals’ Access to Luxury Living

Investing in luxury properties had multiple drawbacks, one major being that it sidelined the local people’s access to luxurious living. The real estate prices in Portugal skyrocketed,  that what felt cheaper for affluent investors became way too expensive for the locals. 

It became hard for local tourists and people to afford the overpriced Airbnb, as investors and real estate agents geared towards foreign elite tourists rather than the Portuguese. 

In short, wealthy investors outpaced the local community by overpaying cash above the market value. This resulted in the shattered dreams of many Portuguese families to buy a decent house and even to rent an Airbnb on their holidays to major cities. 

The golden visa has both positive and negative impacts, but the program’s reforms are on a mission to mitigate the latter.

The Role of Real Estate Agencies and Buyer Agents

Real estate agencies, especially luxury real estate advisors, played a very significant role before October 2023 in guiding investors through this pathway to residency in Portugal. It is also during this time that these agencies and individual buyer agents thrived in their business. 

Their main roles were to source suitable properties, align with the golden visa criteria, handle and verify legal requirements, and ensure compliance with the law. 

Golden Visa Effects on Housing in Portugal

The domain worst hit by the golden visa program is housing in Portugal. Here’s how it affected housing and led to a housing crisis for the common people-

  1. Housing prices went up by 42%.
  2. Sheer Shortage of Affordable Houses
  3. Resident displacement to remote areas
  4. Gentrification
  5. Decline in long-term rental houses

Conclusion

Since 2012, Portugal has given out more than 12,000 golden visas to various foreign nationals. The popularity of residency by investment is still alive, with investors inclining more towards private equity funds.