Portugal’s Golden Visa – not ‘in extremis’ but ‘in Extremos’

From the start of 2022, qualifying residential real estate investments under Portugal’s Golden Visa are to be restricted to the interior of mainland Portugal, as well to the autonomous regions of Madeira and the Azores. This means that residential real estate investments in the prime metropolitan and coastal areas – including Lisbon, Porto, the ‘Silver Coast’, and most of the Algarve – will no longer qualify.

So far, so bad you might think. But that is before you consider how many outstanding parts of Portugal do still qualify and, of course, how much further your investment is likely to go in these areas. I should know (and declare a personal interest from the outset) because one of these outstanding areas is where I currently live – Estremoz.

Estremoz is in the Alentejo region, which is the breadbasket of Portugal, makes half its wine and is the largest producer of cork in the world. Now the region is being touted as the new Tuscany, or the affordable Tuscany.

A historic town with beautiful architecture, Estremoz is the centre of wine production in the Alentejo and has also become the gourmet capital of the region with many fine restaurants. I built a winery in the city centre in 2018 and added a warehouse-style restaurant and bar in 2020. We opened for business on 1 March – just in time to be closed by the Covid lockdown in Portugal two weeks later. Perfect timing, not!

For me, and I stress I am not an investment expert, property prices in Estremoz can only go one way. In fact, they are already heading that way – up. I have bought a few small houses here, so I have a further conflict of interest in recommending the place (other towns and cities in the interior are available). But I have also put my money where my mouth is and I certainly think that anybody looking to invest for Golden Visa purposes, or who just wants a rural bolthole in Portugal, should take a close look at Estremoz and its surrounding parts.

What follows is probably rather unscientific but, I think, may be the best information available. Funnily enough the big professional real estate agencies do not publish research on Estremoz!

Until recently property prices in Estremoz varied between €500 and €1,000 per M2, with no discernible pattern. They have now moved north a little from there. For smaller properties in pretty decent order, €1,000 per M2 is the benchmark. The price per M2 falls from there as the size of a property goes up.

I have recently purchased two properties of about c. 250 square metres for €155,000 and €125,000 respectively. The first was in basic condition but sound enough to move in. The second, needs a new roof and the upstairs will need to be renovated completely. Refurbishment costs are, coincidentally, in the same range as the purchase price – €500 per M2 for basic work up to €1,000 per M2 for a high-quality finish.

So, you would expect to pay a price that reflects the combined purchase and refurbishment costs of up to €1,500/2,000 per M2 for a ‘fully renovated property’. The problem is that there is simply nothing on the market that fits that description because not a single property that is available has been ‘done up’ to a high standard.

Several small investors, including myself, are convinced that this has got to change. In a town of some 13,000 people, with a limited supply of housing and a number of investment projects already underway, there must soon be upwards pressure on prices soon. Here are some unscientific examples.

Prince Carlo Alessandro della Torre e Tasso, for instance, lives just outside Estremoz and has bought four houses up by the castle. Prince Wenceslas of Luxembourg has bought a farmstead on the outskirts of Estremoz and is converting seven cottages into holiday accommodation. Portuguese engineering supremo José Romão de Sousa is building a classic car museum and the Berardo organisation (who have already founded the Berardo Collection (contemporary art museum) and the Museum of Art and Design in Lisbon, and a wonderful tile museum in Estremoz are converting an old flour mill to house a collection of African and Asian art.

On the municipal front, there is a project underway to turn the road running along the front of the town hall in the main square into a water feature and to pedestrianise the whole area. The Saturday market, which sells antiques, bric-a-brac and food, is renowned throughout Portugal.

There is a new hotel is being built up by the castle which has been designed by Portugal’s most famous architect Álvaro Siza Vieira. Apparently, his minimum fee is €500,000 – so we are expecting something spectacular. The Gadanha restaurant group has also just completed a new boutique hotel in the centre of town. It only has 12 rooms but will offer the first quality accommodation available right in the centre of town.

The town lacks a really great destination hotel. Pateo dos Solares is a Charm hotel which is fine but lacks … well, charm. It has an ideal location, and the accommodation is adequate but uninspiring. There is also a Pousada at the top by the castle with magnificent public spaces but poor rooms. This is currently closed and there is no date for reopening. Pousadas de Portugal is a chain of historic hotels, formerly run by the Portuguese state but now in private hands, so something will hopefully happen there soon.

So, all is not lost for Golden Visa applicants just because Lisbon, Porto and the coastal areas are no longer eligible. In fact, they can take advantage of the rules that offer 20% reductions on the minimum investment if the real estate is in a designated area of low GDP or low population density. This means they need only invest €400,000 (rather than €500,000) in residential, commercial or agricultural real estate, and only €280,000 (rather than €350,000) if the property is more than 30 years old or is in urban regeneration areas and needs renovation.

And your investment will go much further in Extremoz. In core Lisbon, which is still only 90 minutes away, residential property prices start at €5,000 per M2 at the (very) bottom end, while prime stuff is €7,000 to €10,000 per M2. Typical prices in Evora, the capital of the Alentejo region, which is just 20 minutes away, are at least €2,000 to 3,000 per M2.

The opportunity seems clear. The Golden Visa provides qualifying individuals and their family with full rights to live, work and study in Portugal. It also provides visa-free access throughout the Schengen Area of 26 European countries and, after five years, the right to apply for permanent residency and then citizenship in Portugal. You will also get to enjoy a wonderful property in a beautiful and interesting location. So, it’s less a case of ‘in extremis’ and more a case of ‘in Extremos’.

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