The cancellation of Portugal's Golden Visa Program has dealt a blow to the country's residential tourism sector, resulting in the termination of a major project worth €800 million and causing ripple effects throughout the economy.
The Golden Visa scheme, formally known as the Residency by Investment program, had been instrumental in attracting wealthy foreign investors who sought residency in Portugal by making substantial investments in the country.
The decision to abolish the program on February 16, 2023, came as part of the Mais Habitacao initiative, which aimed to address housing shortages and concerns regarding illicit activities associated with similar programs in the European Union. While the move was intended to address these issues, it has sparked criticism and raised concerns about the potential negative impact on the country's economy.
Pedro Fontainhas, the Executive Director of the Portuguese Association of Resorts, expressed strong disapproval of the government's decision, accusing them of making a "blind decision" and calling for a more measured approach to avoid a potential catastrophe in the industry. Fontainhas warned that wealthy investors were now shifting their focus to Greece, indicating the potential loss of investment opportunities for Portugal.
The repercussions of the Golden Visa Program's cancellation have been significant. According to reports, the termination of residential tourism projects since February 16 has resulted in the loss of approximately €500 million in tax revenue that would have been collected by the Portuguese government. Moreover, over 2,090 jobs that were expected to be created through these projects have been left in limbo.
Numerous regions across the country have been affected by the project cancellations, including Alcácer do Sal, Beja, Amarante, Castro Marim, Faro, Évora, Grândola, Lagos, Portimão, Óbidos, Reguengos de Monsaraz, Sagres, Salir, Sines, Troia Santiago do Cacém, Tavira, Vila Real de Santo António, and Vila Viçosa. These areas had hoped to benefit from the economic boost provided by the Golden Visa Program, but now face the challenge of finding alternative sources of investment and development.
Despite concerns surrounding the program's involvement in unlawful activities, the Golden Visa scheme had been successful in attracting foreign investors. According to a report by El Pais, Portuguese authorities issued a total of 11,758 golden visas between October 2012 and February 2023, indicating the program's popularity and its significant contribution to the country's economic landscape.
While the decision to abolish the Golden Visa Program aims to address housing and regulatory concerns, its impact on the economy and the residential tourism sector is becoming increasingly apparent. As Portugal navigates this new landscape, it will need to find ways to attract investment and promote economic growth in alternative sectors while ensuring compliance with international standards and regulations.
By fLEXI tEAM