End of Portugal’s Golden Visa: A Pyrrhic Victory for Housing Reform

End of Portugal’s Golden Visa: A Pyrrhic Victory for Housing Reform

Updated: 24 February 2023
Charles Taylor Harris Executive Director

Portugal’s Golden Visa program is currently facing a major challenge. The Portuguese Prime Minister António Costa has announced his intention to close the program, sending shockwaves throughout the country and beyond. While the closure is aimed at combating rising home prices, many have criticized the decision, arguing that it will harm the country’s economy in many sectors all at once.

The Golden Visa program has been instrumental in attracting foreign investment to Portugal, raising nearly seven billion euros in direct investments and creating countless jobs since opening some ten years ago. While the program has been blamed for rising home prices, the facts suggest otherwise. Take the year 2022, Golden Visa investors only accounted for about 1,000 of the 168,000 homes sold in Portugal. Foreigners are not to blame for the housing crisis. They represent a negligible fraction of the real estate market, and that fraction has no ability to affect prices or demand. 

The closure of the Golden Visa program sends the message that Portugal has closed itself to international investment and foreigners are no longer welcome. This is particularly worrying for companies and industry associations that have contributed the most to Portugal’s economic development through the program. Directly or indirectly, the residency-by-investment program has allowed many companies to create businesses that employ thousands of local workers, generating crucial economic activity in fundamental sectors.

Miguel Albuquerque, President of the Regional Government of Madeira, wants to keep the Golden Visa program for his autonomous region. The closure of the program, he says, is “ridiculous” and “bad for the country and it is bad for the national economy.” He accuses the government of thinking it proper to interfere in private property rights, trying to steer the free market, and telling business people what to do.

It’s worth noting that significant changes to the program were made at the beginning of 2022 to address the concerns that the program was contributing to rising home prices and displacing local residents. The changes already prohibit investors from purchasing residential properties in high-demand urban areas like Lisbon and Porto. Therefore, the argument that the closure of the Golden Visa program is necessary to protect local interests may no longer hold as these changes have already been implemented. 

It may be more rational to consider restructuring, rather than discarding, the program to ensure the continued flow of foreign direct investment while protecting the interests of the local population. Rather than dismantling the program, the government should focus on increasing the number of buildings, eliminating bureaucracy in getting construction permits, reducing taxes, and injecting capital into the modular construction sector to create affordable housing.

In conclusion, the closure of the Golden Visa program is a worrying development that could harm Portugal’s economy and reputation as a welcoming destination for foreign investment. While there are concerns about rising home prices, blaming the program for the housing crisis is misguided. The lack of construction is the primary reason for the crisis. The government should focus on injecting capital into the modular construction sector, which can play an important role in providing affordable housing. The Golden Visa program should evolve, not end, and the government should make Golden Visa investors part of the solution rather than the problem by relying on them to, for example, inject capital into sectors that can provide affordable housing.


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