The golden era of tax benefits for international citizens in Portugal has ended, leading to a significant decline in foreign interest in luxury properties, including South Africans.
The former government of António Costa ended the Golden Visa programme for real estate investment at the end of 2023 and terminated the non-habitual resident regime in early 2024.
These policy changes have been linked to the reduced demand for high-end homes from overseas buyers, with searches hitting a four-year low, according to Idealista.
The Portugal Golden Visa programme, officially known as the residence permit for investment activity (ARI), was launched in October 2012 to attract international capital post the 2008 economic crisis.
The programme was highly successful, generating over €7.5 billion in investments. Portugal's appealing lifestyle, favourable climate, friendly locals, and affordable living costs made it an attractive destination for investors seeking residency, and potentially citizenship, in just five years.
Under the Golden Visa programme, non-EU citizens could qualify for residency with a minimum investment of €250,000, one of the lowest thresholds in Europe. The scheme offered flexibility, requiring only a seven-day stay per year to maintain residency.
Investors also gained eligibility for Portuguese citizenship in five years, providing visa-free access to 191 countries.
In recent years, international interest in Portugal's luxury housing market was significant, with 30% of searches for properties over €1 million coming from abroad.
However, foreign demand for these properties dropped to 22.8% at the start of 2024, the lowest since late 2021, following the cessation of new Golden Visa admissions in October, 2023.
European residents have shown the most interest in Portuguese luxury homes. The UK leads with 11.9% of total international demand, followed by the US (11.2%), Germany (10.2%), Spain (9.2%), and France (8.6%).
Other significant sources of Golden Visa investors included China, Brazil, Turkey, and South Africa. Data from Sable International in 2021 showed that South Africa was the fourth most popular country that Golden Visa applicants hail from, with over 416 Golden Visas issued to South African investors by the end of 2021 – excluding accompanying families.
In 2022, the visa programme underwent significant changes:
The investment fund option increased from €350,000 to €500,000.
The capital transfer option rose from €1 million to €1.5 million.
Real estate investment for residential purposes was restricted to interior areas of the country, as well as the Madeira and Azores islands.
Brazilian interest in luxury homes accounted for 6.2% of total demand in early 2024, consistent with the previous year but lower than the previous quarter, however demand from China, Turkey, and South Africa remains minimal below 1% according to Idealista.
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