Welcome to Portugal. Californians don’t go home!
Americans looking overseas to enjoy their retirement, set up a company, or enjoy a better quality of life, could possibly find no better place than Portugal. This sunny country, perched on the Iberian Peninsula, is perhaps the closest to California that you can get. Atlantic Coast, check. Sublime climate. Check. Laid-back lifestyle. Check. Plus, the welcoming locals and excellent school care, healthcare, and infrastructure are additional bonuses to those venturing abroad.
However, a recent article featured in the Los Angeles Times, Welcome to Portugal, the new expat haven. Californians, please go home, has framed Americans choosing to move to Portugal in a somewhat misleading way, hinting that real estate prices in Lisbon are being dragged up since their arrival and creating increased prices all around, creating a somewhat unwelcoming atmosphere that may be off-putting to some of our friends from the other side of the Atlantic.
Here at Global Citizen Solutions, a boutique investment migration consultancy, we work with a wide range of different programs across the world. As such, we’d like to put these claims into perspective with some relevant facts to put your minds at ease.
A recent love affair between America and Portugal
For many a year, Portugal has been considered a prized location for expats, with many British nationals heading to the Algarve to secure the perfect beach home, and many other Europeans anchoring down in the country to reap some of the many benefits that the country has to offer. Indeed, as the article mentions, Lisbon has become synonymous with the word expat, not only American expats.
While there has been a long history of foreigners moving to Portugal’s sunny shores, the increase of Americans choosing this part of the world has only increased significantly in the last couple of years. According to census data for 2021, published in the Wall Street Journal in April, 6,921 new residents from the USA were registered in the country, an increase of 45% from the previous year. It is true that there are many attractions luring Americans to the shores of Portugal, not least the low costs of living, attractive tax incentives, and the warm climate.
Louise Hudson, a travel journalist, and her husband Dr Simon Hudson, a tourism professor, researcher, and author, who hail from Canada, have recently unveiled a new book “A Worldwide Guide to Retirement Destinations” and were interviewed for this piece. Regarding reasons as to why Americans have recently taken an interest in the country, Simon commented that “Portugal has also benefited from other favorable publicity in recent years. Publications like Live and Invest Overseas have picked the Algarve as the best spot to retire abroad based on a combination of natural beauty, weather, and affordable housing. Portugal also claims the top position as the world’s most welcoming country for foreign residents according to the Expat Insider Survey, which is based on the insights of close to 13,000 expats from 188 countries”.
Another major factor at play is that Portugal was ranked as the fourth safest country in the world in 2021, according to the Global Peace Index, and the security aspect should not be underplayed as a contributing factor.
However, although many Americans are discovering Portugal, this influx in US nationals moving to the country has only increased significantly in the last year or so, not over a longer timescale. This is in contrast with real estate prices, which have been on an upward trend since 2016. It is therefore evidently unfair to blame increasing property prices on our American friends. For example, many different nationalities have been searching for the NHR Scheme, a tax incentive for expats that, if structured correctly, allows them to live with significant tax benefits for up to ten years, highlighting that Portugal is seen as a prime location to live for many different nationalities.
Indeed, as a further indication, the leading nationalities investing in Lisbon in 2019 were citizens from Brazil, France, China, the UK, and Angola, according to data published in Your Expert Guide to Buying Property in Portugal — a book written by Goldcrest Buyers Agent, our real estate division. If you are interested in buying a property in the country, then here we supply a nice rundown of the best locations to consider, along with an easy step-by-step guide to the buying process.
Why should our American friends shoulder all the blame?
Another very important factor to consider is short-term rentals, such as Airbnb, whereby the increased demand to cater to tourists has increased the number of rental units in the city, which has pushed Portuguese nationals away from the prime locations and been a deciding factor in increasing property prices. For example in Lisbon, swathes of homes have been renovated into short-term rentals for tourists on platforms such as Airbnb to accommodate the heady footfall of tourists discovering the city. To put this into perspective, Lisbon has more than 22,000 Airbnb listings, as of October 2021, highlighting that the bright spotlight of tourism is firmly fixed on the Portuguese capital.
Louise Hudson has also noticed that there are many factors at play when asked about the increasing property prices in the country and that “increasing property prices are a fact of life in all desirable areas”. She rightly pointed out that “since COVID many people have re-evaluated their lives, their lifestyle, their futures, and their priorities […]
“All of these people have been researching different opportunities to get more quality of life and Portugal has been trending in traditional media as well as social media. Cost of living is at the forefront, so obviously more affordable destinations are more appealing and traditionally Portugal has ticked this box with its free healthcare, cheaper property, affordable groceries, utilities and services, value-for-money restaurants”. Says Louise.
In conclusion, Portugal has become a highly desirable location, where demand is simply outstripping supply.
The Portugal Golden Visa: A vast array of nationalities
Portugal’s Golden Visa, the country’s residency by investment scheme, has fast become one of the most popular schemes of its kind in the world, with 10,636 investors benefiting from the program since its inception in 2012. The Golden Visa has recently made significant changes to its residential real estate pathway, as of 1 January 2022, where it is now impossible to invest in residential real estate in the hotspot areas of the country — such as Lisbon, Porto, and the Algarve, amongst others.
While this inevitably created an increase in applications in 2021, whereby applicants wanted to take advantage of the scheme before these changes came into place, to pin this on Americans is failing to look at the entire picture.
Out of a total of 802 Golden Visas issued last year, only 102 were American investors and, of these, the majority were families moving to the country or retirees simply looking to relax in one of the most beautiful European countries. Looking at the Portugal Golden Visa over a greater timespan, the leading nationalities are the Chinese, followed by Brazilians, Turkish, South Africans, and Russians, again indicating the wide range of nationalities looking to invest in Portugal, not only US nationals.
On the flip side, it is also important to mention that foreign investors bring an array of positives to the Portuguese economy. According to SEF, Portugal’s Foreign and Border Service, in terms of Golden Visa investments, six billion has been invested in Portugal from 2012 to the present. There is greater purchasing power and improved developments and infrastructure, which has a trickling down effect to benefit all parts of the Portuguese economy. These investments can create job opportunities for local Portuguese and help businesses that cater to the increased expat population in the country.
So, Californians don’t go home!
With all things said, it seems unfair to use Americans as a scapegoat, piling on their shoulders the blame for the rising prices in real estate in Portugal. Yes, they may have contributed to the rising prices to some extent, but their love affair with Portugal has not been as long as that of the British, the French, the Spanish, or other Europeans that have been heading to the country for many a year. There is a wide array of complex, contributing factors to the issues, such as short-time renting platforms, that the real estate market in Portugal is experiencing. So, we would like to warmly receive our American friends with open arms to the shores of Portugal. Enjoy the warm climate, the relaxed quality of life, and the pristine beaches. You are very welcome indeed!
