After Ireland, Portugal, and Greece, it is now Spain’s turn to contemplate the future of its golden visa program.
Ireland simply shut down its program and Portugal is in the process of doing the same, barring the support of artistic production and the recovery or maintenance of cultural heritage.
Greece has not closed its program but has doubled minimum investments from €250,000 to €500,000 for some municipalities.
Now, Spain is considering two alternatives – completely abolishing its golden visa program or increasing the minimum investment from €500,000 to €1 million.
Spain introduced its golden visa program in 2013 to undo the damage of the 2008 economic crisis and boost foreign investment.
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The program was long overshadowed by the cheaper Greek golden visa program and the more popular program offered by Portugal.
With Greece hiking investment requirements and Portugal no longer an option for real estate investors, there were expectations of a surge in demand for Spain’s golden visa program.
However, factors like criticism by the European Parliament, concerns about too much Chinese dominance, and high housing prices are pushing the Spanish government to contemplate major changes to the program.
As of now, Spain’s golden visa program offers residency permits for up to ten years to those buying real estate worth at least €500,000 in the country.
Real Estate Prices
Golden visa programs in the EU are structured to offer fast-track permanent residence to foreigners buying real estate. And golden visa programs have been too successful for their own good.
The average income of around half of Portugal’s work force is less than €1,000. And property rentals have risen by close to 40 percent in Lisbon in 2022 alone. Ordinary people are finding it impossible to buy or even rent homes and businesses are struggling to find workers in big cities.
Homes are being converted into vacation homes and Airbnb rentals and this is aggravating the problem of lack of affordable housing in the big cities of Europe. In Spain, property prices have risen by 7 percent in 2022 and this is the key factor forcing the government to consider shutting down the program.
China Dominance
Another issue that is working to the disadvantage of golden visa programs is excessive demand from Chinese investors.
Nine out of every 10 applicants qualifying for permanent residence through the Irish program was Chinese. In Portugal and Greece, China is also top ranked in the list of countries with most successful applicants.
In Spain, majority of demand for its golden visa has come from have been made by Latin American, American and Chinese investors.
This introduces a geo-political risk for the EU and is another factor why the future of the golden visa program in Spain is under a cloud.
This uncertainty has fuelled demand with investors rushing to submit their applications before minimum investments are hiked or the Spanish government decides to shut down its investment immigration program.