After experiencing a prolonged slump following the 2008 global recession, Portugal’s national economy is finally beginning to show signs of recovery. Unemployment levels continue to improve; tourism is rising, with inflow of visitors rising by 11.9% as compared to 2013; and investment-boosting measures like Portugal Golden Visa and a liberal tax regime for non-habitual residents beginning to attract capital into the country.
Although still facing high debt levels, Portugal’s growing economy enabled it to step out of the IMF bailout plan in 2014. One significant factor was the Golden Visa program, which attracted around €1.46 billion worth investments into the country since its introduction in 2012. The program allows non-EU applicants to acquire permanent residency for a period of five years by investing €500,000 in the country’s real estate sector. A cheaper version requires a minimum investment of €350,000 for the renovation of an existing property in Portugal.
Additionally, the government introduced a new tax regime for non-habitual residents as well as non-Portugal individuals living outside the country for the past five years. The new tax law exempts global income, pension income included, from income taxes for a period of ten years.
The two-pronged approach has led to steady rise in demand for vacation properties in Portugal including the Algarve. With existing inventory levels declining, new projects are also being built to meet the higher-than expected demand for real estate in the country. After falling 20% after the 2008 crisis, real estate prices have recovered and are just 5% lower than peak prices seen in 2006.
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