Portugal’s housing market is beginning to thrive, particularly in capital Lisbon, thanks to funds raised form its popular ‘Golden Visa’ program.
Mainly-Chinese investors have pumped €1.4 billion into the market since the program was implemented in 2012.
After a recent revamp, the investment has continued to flow in, boosting an economy struck down by the global financial crisis.
Of the 3,888 candidates given permanent residency under the program, 1,100 of them were granted in 2016. Some 766 were granted in 2015, 1,526 in 2014 and 494 in 2013. When the program was gaining traction in 2012, just two visa were awarded.
Investment Requirements: Portugal Golden Residence Investor Program
Transfer of capital of minimum value of €1 million into Portugal including through purchase of shares in companies
Creation of at least 10 new positions in Portugal
Purchase of unencumbered real estate in Portugal of a minimum value of €350,000. Co-ownership or purchase of property through finance is permissible provided each individual makes a mandatory minimum investment of €350,000.
Investment of at least €350,000 in constructed 30 years ago or investment for rehabilitation of properties located in Urban Rehabilitation Areas
Scientific Research and Development
Investment of at least €350,000 in R&D activities of institutions that are part of the national technological system.
Promotion of Culture
Investment of at least €250,000 towards financing of bodies pursuing cultural or artistic activities or towards renovation or maintenance of cultural heritage.
Small-Cap and Mid-Cap Finance
Investment of at least €500,000 towards purchase of units of small-cap or mid-cap venture capital funds.
Investment in Low Population Areas
20 per cent reduction in minimum investments in the above-mentioned categories when investment is made in a low population-density area.
Candidates overwhelmingly prefer the real estate investment stream of the program, which accounts for 3,669 out of the 3,888 visas awarded. There have been 213 visa offered in return for capital transfers and six for creating at least 10 jobs.
They included new investment options for buying older property, or buying a building in a designated regeneration area. Aa scientific research investment option was also introduced.
Existing investment classes include general real estate, capital transfer and job creation.
These latest figures go against fears candidates for investment immigration programs could start turning their attention away from European countries like Portugal and towards the Caribbean, because of the UK’s impending exit from the European Union.
‘Brexit’ could mean the investment immigration programs run by the likes of Cyprus, Malta and Portugal may no longer be able to offer visa-free travel to the UK, one of their key benefits.
Portugal’s golden visa has been highlighted as one of the chief drivers behind Lisbon’s emergence from economic difficulties.
Global real estate agency Savills says the property market in the capital is thriving thanks to the success of the investor program.
The Savills report uses data up until 2015, pointing out that €1.56 billion of investment could be traced back to the 2,697 golden visas awarded under the program. Chinese investors account for 83 per cent of real estate acquisitions.
New proposals for the U.S. EB-5 residency program could see the investment threshold rise significantly.
An announcement by the outgoing Obama administration suggested the investment requirement for both classes of the program rise by $800,000.
This would mean an investment of $1.3 million, up from $500,000, would be required for a project within a Target Employment Area (TEA), and a rise from $1 million to $1.8 million for a project outside such an area.
The thresholds would then be adjusted as per inflation every five years, under the proposals.
Current US EB-5 Investment Requirements
- An EB-5 investor must invest in a new commercial enterprise.
- The investor must invest at least $1 million when investing in a general area of business or at least $500,000 when investing in a targeted employment area (“Regional Centres”).
- Within two years of admission as a Conditional Permanent Resident, the investor must create or preserve at least 10 full-time, direct or indirect jobs belonging to qualified US workers.
- See Tax Implications of Gaining Permanent Residence Through US EB-5 Visa
Further proposed changes include allowing a candidate to keep their place in the line if they are forced to refile an application.
Huge backlogs have been established under the program, particularly for Chinese investors after caps were introduced because of the number of applications from that part of the world.
Places in the line are reserve using a ‘priority date’ system – essentially the date an application was filed. However, should a project be discontinued and a candidate forced to refile their application, currently they move to the back of the line.
Under the new proposals, the original date would be retained.
Changes to the system of defining a TEA are also part of the Obama administration proposals. Currently, the system is flawed in that states and developers can set their own geographical parameters for what constitutes a TEA. The basic requirement is that average unemployment is at or more than 150 per cent of the national average and that the enterprise will be doing business in the designated area.
The system is open to abuse, with critics arguing too much of the investment cash goes to projects in big cities, instead of helping struggling towns, as is the intention.
The Obama proposals would move the power to designate TEAs into the hands of the US Department of Homeland Security.
It is difficult to give much credence to the proposals of an administration that is now no longer in power, but these ideas are an indication of what could happen to the EB-5 program under President Donald Trump.
Despite Trump’s anti-immigration position, real estate industry sources firmly believe he will separate a crackdown on people in the U.S. illegally from a program that has generated billions in foreign investment.
The current program was temporarily extended to April 28, 2017 recently.
It has faced criticism from several sources, who want it abolished. There are several ongoing court cases linked to potential EB-5 fraud. There are calls for a body to be formed to oversee these transactions, to ensure transparency.
Fraud Cases Linked to EB-5
- The developer behind a biomedical research facility in Vermont, which benefitted from EB-5 funding, is currently being investigated for misusing the money. The project had attracted $83 million of investment from 166 foreigners, many of them Chinese, who now risk losing their money. Developer Ariel Quiros, and several of his associates, stand accused of using the funding to buy a ski resort, a luxury New York condo and to pay tax bills.
- Developer Lobsang Dargey was accused of defrauding Chinese investors out of money for a tower in Belltown. Dargey no longer has control of the project and denies any wrongdoing.
- American Life, a recipient of more than $1 billion in EB-5 investment money, was fined $1.2 million for facilitating payments to unlicensed intermediaries in the U.S.
New Zealand has announced plans to double the investment required to gain permanent residence under the ‘investor 2’ visa, its government has announced, as neighbour Australia faces pressure to scrap its program altogether.
Starting in May 2017, investors could be required to pay NZ$3 million instead of NZ$1.5 million to get permanent residence in New Zealand. At the same time, the government also plans to increase the number of visas issued, from the current 300 per year up to 400.
New Zealand is currently looking at ways to shift its immigration policy so that it provides more benefit to its economy.
The technology and construction industries in the country are desperate for highly-skilled immigrants to help them grow, but these foreign workers are in demand all over the world and competition is fierce.
The country’s central bank has criticised the government, calling for it to modify immigration policies to increase the quality of new permanent residents.
Government figures suggest nearly $3 billion has been attracted via the investment program since it was introduced in 2009, with most of it pumped into bonds.
Now, lawmakers want to see more of the money used to help the New Zealand economy grow.
By contrast, Australia is being urged to end its permanent residency-through-investment visa over fears it is overheating the property markets of major cities.
Interest in the program has dropped dramatically since riskier investment classes were introduced, and now experts say the time has come to end it entirely.
Australia’s Entrepreneur Visa: Eligibility
- Be under 55-years-old.
- Have a competent level of English.
- Have an agreement in place for at least $200,000 to grow an entrepreneurial venture in Australia.
- Hold at least 30 per cent interest in that entrepreneurial venture.
- Be nominated by a state or territory government.
- Commonwealth agencies.
- State and territorial governments.
- Publicly funded research organisations
- Investors registered as a venture capital limited partnerships or early stage venture capital limited partnerships or any combination of these.
- Australia’s existing investment immigration program has been largely unsuccessful.
Under the program, candidates are granted permanent residency for an investment of A$5 million over four years, or A$15 million in 12 months.
The program has initial success when it was introduced in 2012, and has raised a total of A$5.4 billion over the last four years.
The initial investment target was A$10 billion at a capacity of 2,000 visas per year.
But rapidly increasing house prices in sought-after cities like Sydney and Melbourne mean support is gathering for the visa to be abolished.
Statistics show 90 per cent of the 1,228 visas awarded through the program went to high-net worth individuals from China.
Critics say the program has been of little financial benefit to Australia, with the investment returned to the candidate at the end of the four-year period.
There are also fears it is being used to launder money.
An report commissioned by the Australian government recently recommended the closure of the program, saying the requirement for just 160 days of physical presence over four years was too low. It also criticised the lack of English language requirement and upper age limit.
The government is yet to say whether it will act on the report, released on September 12, 2016.
Since Australia changed the rules in July 2015, just 98 applications have been received and 10 visas issued against a target intake of 2,100. That contrasts with 1,544 applications and 590 visas during the final year of the previous program.
Meanwhile, Australia has already begun accepting applications for a new entrepreneur visa.
The new stream comes under the country’s Business Innovation and Investment Program.
To qualify, the immigrant must secure A$200,000 in funding from an agency specified by the Australian government (see below for a full list) in order to start their business in the country.
Securing the visa comes with a direct pathway to permanent residency.