The discussion surrounding the effectiveness of the Golden Visa in Spain has gained prominence in recent hours, with the government announcing its intention to abolish this program, which grants residency in exchange for investments in the country.
While some proponents argue that it has contributed to the growth of the real estate market, especially in major cities, its detractors maintain that it has not had a significant impact on the economy, and has even exacerbated gentrification and housing price increases.
To extract lessons from Portugal’s case, it is crucial to examine the situation following the abolition of the Golden Visa in Lisbon and Porto in January 2022. Despite the measure, data reveals a 21.55% increase in housing prices in Lisbon and a 13% increase in Porto, surpassing Madrid’s four-percentage-point increase during the same period. This phenomenon suggests that the abolition of the Golden Visa has not managed to contain the price escalation in these cities.
Several complex factors influence this dynamic. The persistent demand for housing in Lisbon and Porto confronts limited supply, increasing price sensitivity to demand. Furthermore, foreign investors are not the sole actors in the real estate market; local buyers also compete for the same properties, exacerbating pressure on prices.
In the Spanish context, the trend towards a robust luxury real estate market is consolidating, driven by investors from various countries such as China, Russia, the United Kingdom, the United States, among others, attracted by the security, climate, and quality of life offered by the country. While obtaining the Golden Visa has been an attractive factor, the investment of these high-net-worth individuals is not exclusively linked to this program but seeks safe haven assets that can withstand economic fluctuations.
It is imperative to recognize that the complexity of the Spanish real estate market and lessons learned from previous experiences, such as Portugal’s, indicate that the abolition of the Golden Visa alone will not be a magical solution to control the upward trend in prices in select locations. The reality indicates that the Spanish real estate market diverges from the situation in the Eurozone, where prices have shown a decline, consolidating Spain’s perception as an attractive destination for international investors seeking stability, security, and quality of life.
Consequently, it is projected that the upward trend in housing prices will continue this year, driven by latent demand and the perception of stability in the Spanish market. It is necessary to understand that multiple variables interact in the real estate market, and comprehensive solutions, considering not only visa policies but also economic, social, and urbanistic aspects, will be fundamental to address the challenges facing the sector.
