JOHANNESBURG — For years, Portugal’s Golden Visa programme has become a strong plan B for many South Africans looking to hedge their bets against the uncertainty that exists in the country. There have been some recent changes to the programme that have actually improved the efficiencies of the Golden Visa Programme. In this interview, Sable International’s Andrew Rissik runs through some of these key changes. – Gareth van Zyl
It’s a pleasure to welcome Andrew Rissik, who is a Director of Forex and International Projects at Sable International. Andrew, before we jump into the recent changes in Portugal’s Golden Visa programme, can you give us an overview of what this programme is again and why it’s potentially attractive for many South Africans?
Yes, good to be speaking to you again. It’s fundamentally a residency-by-investment programme that gives you the right to residency in Portugal for a period of five years, minimum. That obviously entitles you to go and live and work in Portugal if you want to. But through an investment (which until recently has had a minimum threshold of €500 000 in real estate) one could (as the main applicant) take your spouse and your dependant children along.
One of the real positives about the programme is that one doesn’t need to actually up sticks and leave SA. You only need to spend, on average, seven days a year in Portugal to meet the residence requirement and I think that’s really what’s made it extremely popular in SA. Many people want a plan B without having to physically leave the shores of SA and go through the hassle of relocating to a completely new country.
Now, there’s been a recent development that’s made it easier to obtain a Golden Visa as well amid a new law having been passed in Portugal. Can you unpack these changes for our listeners out there?
Yes, I think ‘easier’ is always quite a subjective word when it comes to dealing with immigrating and immigration matters in foreign countries. More affordable is certainly the way we could also describe it. So, initially when the Golden Visa was launched there were three criteria you could invest in: €1m in capital, €500 000 in real estate or you could set up a company employing 10 Portuguese taxpayers, which was a very unpopular option. If you look at statistically, out of the approximately six-thousand families that have been moved to Portugal to date, since the programme was started in October 2012, 98% of them have been through the €500 000 real estate investment. That’s been by far the most popular.
But more recently they launched a €350 000 property category – which I think I’ve spoken about before – that was slightly more complex. The property had to be in a regeneration area, it had to be over 30 years old and there were some complexities that went along with it. There’s been a lot of demand for the €350 000 property option, but the real issue is finding supply, and supply that is a good investment and that’s not too risky. So, we’ve found that quite difficult in meeting the demand out there.
More recently, a new criterion has been introduced, which is also for €350 000, under the capital investment bracket. We’ve got a really interesting product at the moment, which has got an underlying real estate investment, as you’re buying €350 000 in a private equity fund and the underlying asset is a beautiful hotel, which is established and up and running, in a really attractive part of Lisbon. So, that is something that we’re very happy to offer our clients. I think that’s opened up a new opportunity for investors.
What is the hotel called?
It’s called The Vintage. We’ve actually got our partners coming out from Portugal – they will be out here towards the end of July. We’ll be showcasing that hotel on a one-on-one basis with potential investors.
How committed is Portugal to this programme?
Yes, there are always a lot of questions around the so-called Golden Visa residency, and citizenship-by-investment programmes. Politically, they are closely watched in Europe. We’ve had issues where some undesirables have invested and become EU citizens through the Cyrus Program for instance. But the Portugal one is a residency-by-investment programme. It started in 2012 under the then-government. In 2014 or 2015, there was a change of government and the opposition took over and they fully backed the programme. It’s been endorsed by most parties in Portugal.
It’s been really good for the Portuguese economy. If you remember that Portugal was part of the so-called PIIGS (Portugal, Italy, Ireland, Greece, Spain) countries that were bailed out by the IMF in 2012. Part of the condition of that bailout was that they had to modernise their economies. So, they put in a raft of incentives to try and stimulate the economy, one of them being the Golden Visa, which was really designed to attract foreign capital investment from non-European investors and to date, there’s been over €3 billion worth of investment directly into residential real estate. There’s been all the other knock-on positives, for instance, every investor goes over and tells their friends about Portugal.
Portugal has become very popular in the last couple of years from a tourism perspective. So, whilst we were in the 2015/2016 arena, we had a really difficult period with backlogs and delays in the approval of applications because of the popularity of the programme. We’ve already seen the Portuguese government, in the last two years, working hard to overcome those problems, and in fact, as recently as last Friday there’s been a legislation change around some of the citizenship implications for when investors come to the end of the five-year period, which we believe are the moves that they’re trying to make to actually, simplify this programme even more.
Can you just explain those specific legislative changes?
Just to give you an idea, when they first launched the programme, the minimum stay requirement was going to be 30 days per year, on average, over the five years. So, that would have been 150 days. Very quickly they realised that that’s not practically possible for a non-resident investor. So, they changed that to seven days. Then a couple of years later your dependants could come along as a resident, with you as the main applicant.
So, for instance, if I had one of my kids studying at Stellenbosch University, he’s 22 years old, he’s still dependant on me. He would then be eligible for the Golden Visa. In the early days, the law said that they had to be studying at a tertiary institution in Portugal. But they actually changed the rules and said that they could be studying at a tertiary education institution anywhere in the world as long as they are financially dependant on you as the main investor. Again, that was a small change that they made to the legislation to actually clarify these so-called grey areas because people were ducking and diving. So, they’ve clarified that and we’re definitely seeing moves now for clarification on the transition from being a resident to ultimately applying and naturalising as a citizen once you’ve done your six-year residency period.
Now, apparently some people are trying to skip getting professional advice when getting a Golden Visa. What are the risks if you go it on your own in this process?
There are two aspects of risk. At the end of the day, you are making a very big investment, mostly into real estate. So, just think of it in your own country. If you’re looking at buying a property for anywhere between R7 million and R10 million, there’s a certain amount of risk involved in making a real estate investment. You are now doing this in a foreign country and a foreign currency, and if you’re 10,000 km away from your investment – there is risk. The predominant reason why people are looking at this programme is because, ultimately, they’re looking for a plan B, so there’s a whole residency/citizenship component to the decision. European immigration is a field where you should really be taking professional advice.
What we’re seeing now is that this programme has become more well-known and people are better researched compared to three or four years ago. But if you jump into an Uber in Lisbon these days, your taxi driver will be telling you about the Golden Visa and he’ll tell you that he’s got a cousin who can help you find a property, and he knows a friend who’s a lawyer. When that happens, you really have to be careful. It’s very easy when you’re in Portugal and it’s a fantastic, very accommodating, friendly city. The Portuguese are very hospitable people, but at the end of the day, you need to be careful that you’re dealing with people who’ve got your back, and we’ve heard of some horror stories.
There are investors in Johannesburg who’ve lost their €500 000 investment through an attorney. This lawyer is now sitting in jail, but the investors have lost the full capital amount of their investment. The other real risk is that people could buy properties at a €500 000 threshold, but the property may only be worth €420 000 – you could be overpaying, as the vendor might be just putting it up to €500 000 so that you meet that criteria.
We’ve gone to great pains over a period of many years to make sure that we’ve developed a really good network of professionals, both lawyers and real estate vendors, that work closely with Sable International, and we make sure that they understand what the criteria are for our clients. We ensure right from the outset that our clients are making the right investment decisions and getting involved with the right lawyers.
Finally, you’re also holding a roadshow in SA towards the end of July 2018. Where is it happening and what’s involved, if one wants to attend?
We’ve got one of our property partners who will be joining us and we’re going to be working through the country over a period of five days. So, it starts on 23 July, in Durban, for the whole day. Then we’re going to be up in Johannesburg for the Tuesday and Wednesday, 24 and 25 July. Then we head down to Cape Town on the 26 and 27 July. People are welcome to make contact with us and make an appointment.
We’ve got a lot of time to see people and probably just spend about an hour with each person who’s interested. We’ll talk about the legal aspects of the programme but, more importantly, we’ll have some really nice investments to show them as well. It will give them a really good idea of what they’ll be getting for their money, and they can actually meet the developers face-to-face.
Andrew, thank you so much for taking the time to chat to me. It’s been fascinating learning more about the Golden Visa programme.
Pleasure Gareth and thanks for the opportunity.