The Impact of Foreign Investment in Portuguese Real-Estate Market

Hello NomadGater´s !

I am Rita Vieira, a portuguese student from the Master´s of International Management at ISCTE Business School.

At the moment I am writing my dissertation and the goal is to understand the Impact of Foreign Investment in Portuguese Real-Estate Market.

Consequently, if you have 3 minutes of your time to answer the survey below, this would help me tremendously as your answer will help me understand the dimension and consequences that this brings to the portuguese economy.

Furthermore, if any of you is interested in this topic and is available to an interview please contact me directly.

Thank you for your time.

Kind Regards,
Rita Vieira

First thoughts: ARI applicants are buying homes more expensive than the typical buyer, so any competition would be minimal. This is increased by the fact that ARI buyers represent a tiny portion of the overall real estate market.

More interesting would be the impact Digital Nomad visas have on the local rental market, as Digital Nomads are likely renting and more numerous.

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It is best that you find a french forum and pose your question there. French people are the ones who buy most properties in Portugal but no one dared to talk about it as the french are EU citizen and they can buy and live there as they want.

In this forum most people are from US and i believe that the total properties from ARI of the americans is not even 1% of the french’s

That’s not how that works. Sure it’s not direct competition, but by increasing the cost of more expensive housing, you push the people that would have bought that property down one level to something they can afford, which pushes that level up, repeat. It’s the opposite of the hermit crab effect

OP, the prevailing opinions here will be annoyance that the PT govt is blaming golden visa investors when they are demonstrably a very small portion of people purchasing housing (whether buying, or renting). Something like 1k-2k GV applicants a year for the past decade.

I have no idea what your understanding of housing prices are, but it’s all supply and demand. Portugal has limited supply and high demand, so prices climb. GV buyers add to the demand, but so do people moving from France (as mentioned), or elsewhere in the EU, or immigrants from Brazil, or Ukrainian refugees, etc.

“Too much demand” isn’t really a thing. If investors were able to easily build more housing, everyone would win. But Portugal makes it very hard to build, and hard to make money investing in constructing more housing, so you have stagnant supply with skyrocketing demand. Of course housing is expensive.

This isn’t a uniquely Portuguese problem, we have similar issues in the USA and I think it’s even worse in the UK. The mechanisms are just slightly different in different countries. In the UK and Portugal it seems to be permitting, and in the USA it’s restrictive zoning and lawsuits (from people that don’t want anyone building anything)

The reverse hermit crab effect is only true if there was tons of existing demand and little supply for the tier of properties being purchased by GV applicants, who are so few in number that the market would have to be quite low on supply for them to impact it.

So, not really the fault of GV applicants either way. Now, digital nomads who are outcompeting locals for rentals? I would argue that is a bigger problem, as presumably more people are looking to rent than buy.

Agreed this seems to be a problem in a lot of the world. I dont buy the complaints about NIMBYs, but I do think no current property owner is really incentivized to support broad scale solutions to housing problems because they want to keep their property values high. And who can blame them? Most of most peoples net worth is in their house, which they may plan to cash out of and downsize one day.

I would have thought that most ARI applicants are not buying homes … if you were going to buy a home, you would have gone the property-purchase route. That is why we invested in a fund, we have no intention of buying a home in Portugal even in the next 5-10 years. But I could be painting with too broad a brush!