Rich Chinese snap up Portugal property for 'golden visa'
Door of a real estate office with Chinese characters welcomes visitors in Lisbon, on November 26, 2013
Portugal is rolling out the red carpet to discriminating Chinese buyers, where they are stabilising property prices that have dropped by nearly a third during a deep recession that has accompanied the eurozone country's international bailout.
One year ago the Portugese government launched a programme to attract wealthy investors, and the results are now beginning to bear fruit.
For the purchase of a home or apartment of at least 500,000 euros ($700,000) which is to be kept for at least five years, investors will receive a Portuguese residence permit.
Only obliged to spend seven days per year in Portugal, the holders of these residence permits may travel and work throughout Europe without a visa within the Schengen area of countries.
Chinese account for the overwhelming majority of investors in the scheme, followed by Brazilians, Russians and Angolans.
The scheme is similar to those in place in a number of other European nations, and data released last week by the foreign ministry showed that 356 of these residence permits issued so far have brought 222 million euros in investment.
Now that the programme is up and running, the increase in investment is expected to be swifter, said Luis Lima, head of the Portugese real estate agent association.
More than 300 new requests for permits are under review, which would take the total investment to 600 million euros, he estimated, and "the requests are almost always accepted," he said.
In a single week last month, 15 million euros was invested, according to government figures, a rate which if sustained would take annual investment to nearly 800 million euros.
And companies are adapting to the rich newcomers. Lisbon real estate agency Casa em Portugal hired Yansi Xu solely to better serve Chinese clients.
"They are almost all businessmen. I have sold them seven houses in two months," said the 34-year-old, taking a break from tapping frenetically at his computer.
One client is a 35-year-old businessman who with his wife plans to move into a modern apartment near the Luz stadium in Lisbon's Benfica neighbourhood, so their young son can go to an English-language school in Lisbon.
The Chinese education system is "too demanding" for the child, Lima said, so the parents would prefer him to be educated in Europe.
Another advantage, said the realtor, is space.
"For 500,000 euros clients can buy an apartment with four rooms at 130 square metres (1,400 square feet) in Benfica, while in Beijing or Shanghai that is the price of a two-room space of 60 square metres," he said.
Gateway to Europe
Most Chinese investors do not aim to make Portugal their home, but want to use the visa to conduct business in other European countries, which they can visit freely within the Schengen area of 26 countries, which excludes Britain and Ireland.
"As a general rule, Chinese buyers are looking for new or renovated homes that they can rent out at a higher rate," said lawyer Raquel Cuba Martins, whose firm helps Chinese clients navigate Portuguese bureaucracy.
There are two other ways of obtaining a 'golden visa': investing a million euros ($1.36 million) in Portugal or creating 10 new jobs for its economy. But the property route, says Martins, is by far the most popular, with around 80 percent opting for it among her clients.
Outside the capital, Chinese investors are also attracted by Cascais, a seaside resort town near Lisbon, and houses on the southern Algarve coast.
Offices on the Avenida de Liberdade, equivalent to the Champs-Elysees in Paris, are also highly sought-after, with prolonged haggling over the price an expected part of the exchange.
"Golden visas now represent 20 percent of our sales," said Valdemir Lopes, commercial director at the estate agency ERA Expo, which offers apartments in the ultramodern Parque das Nacoes complex in Lisbon.
The country has enacted a series of austerity measures including painful job, pension and salary cuts to receive funds under the 78-billion-euro rescue agreed with the EU and IMF in May 2011.
The country's economy has contracted by more than 4 percent since the crisis began, with property prices declining by some 30 percent.