Portugal's revamped golden visa scheme to boost investment funds

LISBON, Jan 9 (Reuters) - Buying property in Portugal is no longer a route to a "golden visa" giving residency rights but foreigners who want to secure one can still put their money into investment funds, which now anticipate a boom in inflows.

The Portuguese government has tightened the rules after initially saying in February 2023 that it would scrap the golden visa scheme, which has been blamed for exacerbating a housing crisis. It had already sought to redirect property investments from big cities to depopulated areas.

The scheme, which offers wealthy non-EU nationals who invest in Portugal the right to live in the country, has attracted 7.3 billion euros ($8 billion) of funds since its 2012 launch. Most participants are from China, Brazil and the United States.

Around 90% of that money went into real estate, sparking complaints it was driving up house prices in one of western Europe's poorest nations.

The European Commission has meanwhile called for an end to such programmes, citing security risks.

Putting money into investment funds has been an option under the Portuguese scheme since 2015, but is now expected to be its principal channel. Other routes include donating to cultural or research projects.

"Real estate has always taken the focus away from the other options," said lawyer Vanessa Lima, from Prime Legal, which among other services helps foreigners apply for the visa.

"The main type of investment will (from now on) be in funds - there is no doubt."

To be eligible, applicants must transfer 500,000 euros to one or more qualifying funds.

Portuguese stock market regulator CMVM, which certifies funds, said it could not provide a list of those eligible for golden visa investments. Lima estimated there were around 40, although some may not still be open for investment.

Among those hoping to benefit is sustainable agriculture investment fund Pela Terra, opens new tab, which is already helping to regenerate nearly 1,000 hectares of farmland in the Alentejo regio

"The new regulations are wind in our sails," said Pela Terra's Alex Lawry-White.

He described the changes as a "correction" of rules that had created problems such as higher house prices, adding: "The golden visa programme should have the community ... at the centre of its focus."

Jim Davidson, a Pela Terra investor from the United States, said real estate was still an option when he started the golden visa process but that he had been aware of growing negative sentiment toward the scheme. He said Pela Terra was more aligned with his values and ethics.

Another fund, Sharing Education, invests in international schools in Portugal.

"We have noticed an increase in interest from investors ... because they are looking for something different," its head of investor relations Goncalo Santos said.

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