There has been a lot of publicity about the Portugal’s Golden Visa, but there are many more reasons that make Portugal an excellent off-shore property investment.
“While it is true that the Golden Visa programme has boosted the property market in Portugal, there are plenty of contributing factors that are boosting that country’s economy and driving up property prices, says international property specialist, and founder of Hurst & Wills, Lisa Bathurst. “Making investing there an excellent idea.”
Non-habitual tax regime
Portugal offers excellent tax advantages for investing, says Bathurst. In 2009 Portugal introduced the non-habitual resident (NHR) tax regime. This means that qualifying people can become tax residents and legally eliminate their taxes on most foreign-sourced income. “The biggest draw of the programme is the opportunity to reduce your income tax to zero,” says Bathurst. “If you qualify you can be a non-habitual tax resident for 10 years.” There are requirements to qualify, one being that the applicant must be a Portuguese tax resident and not have been a tax resident in the preceding 5 years.
“As well as the non-habitual tax regime, there is no inheritance or gift tax and no wealth tax,” she says.
Tax efficient property investments
The Portuguese government also offers tax benefits to property investors in tourism areas. For example, properties that are part of a tourism complex, such as lifestyle and golf resorts are exempt from many of the expensive acquisition taxes and duties associated with purchasing property, says Bathurst.
Hands-off investments in hard, solid currency offering great yields
Investing in euros is a solid investment, especially for South Africans looking to hedge against the volatile rand and political uncertainty. “Investing in the right properties will not only produce capital growth, but also good rental income and yields of up to 9%,” says Bathurst. “In some cases, investors can benefit from guaranteed yields where properties are placed into a rental pool, fully furnished and managed on your behalf.”
Property is still affordable compared to Europe
“Some people assume that properties in Portugal are now over-priced, and have been artificially enhanced by the Golden Visa programme but this is not the case,” she says. “For years, Portugal has been undervalued compared to its European counterparts. Property there is still relatively undervalued and costs a third of investing in neighbouring Paris or London. It is affordable compared to the rest of Europe,” she says.
Government incentives for business
The Portuguese government incentives for business are attracting large businesses to the country, putting the market on an upwards trajectory. There are also regular international tech conferences attracting brands such as Google. “The country’s political stability, low corporation tax and tax breaks also help to make the Portugal property market an attractive and safe investment,” she says.
Centrally located with good infrastructure
Another positive is that Portugal is centrally located in Europe, only a couple of hours flight to most European cities. “This allows for easy tourism and it’s a good destination from which to conduct international business,” she says. “Portugal has excellent infrastructure with a good road network, international airports and high-speed trains.” Being part of the European Union has also significantly boosted the country’s economy.
Safety & lifestyle
Portugal ranked as the 4th safest country in the world, according to the Global Peace Index 2018A. According to Bathurst, the living costs are similar to South Africa. As Portugal has some of the best beaches and golf estates, the lifestyle is similar to SA too.
“This adds to the appeal of this great country,” says Bathurst. “A growing number of people are looking to buy property there to move their families for tax benefits, safety, or even for retirement or holiday homes.”
Opportunities for farmers
Portugal also offers opportunities for farmers with the Alqueva Project, an agricultural project located in Alentejo, southern Portugal. Here there are 120,000 hectares of irrigated land, increasing to 170,000 by 2020. Alqueva’s water resource gives this land the autonomy to sustain itself in times of extreme drought.
The Alqueva region has some of the greatest agricultural production potential in Portugal. The combination of constant water availability, dynamic farming techniques, land availability and the EDIA organisation that actively supports new projects and investments, creates a unique opportunity for farmers.
“This land is primed for capital growth as it is sought after by local farmers and internationals wanting to buy or rent this fertile land for almond and olive production,” says Bathurst. “Investing €350,000 into this land also qualifies you for a Golden Visa application, making this very attractive for skilled farmers looking for a fresh start and European passports for their families,” says Bathurst.
“With all these advantages, it’s easy to see why investing in Portugal is one of the most popular off-shore property markets for South Africans,” she says.
