Which European country offers the best Golden Visa?
After the 2008 economic downturn, a number of European countries introduced Golden Visas. The name is a bit misleading because they’re not temporary tourist visas, but long-term residence permits and opportunities for citizenship.
In the past we’ve written about Spain’s Golden Visa program. However, we’ve recently received a number of calls from UK citizens, particularly those working in the financial industry, asking about Spain’s Golden Visa and how it compares with those of other countries. We’re not alone- according to the Financial Times, citizenship planning agencies have seen their traffic grow ninefold, post referendum. As Brexit looms ever closer and talks with the EU appear rockier, we’re addressing the issue head on.
This article compares and contrasts the different Golden Visa programs available. We focus on the countries where you can obtain a Golden Visa via real estate investment. We finish with an overview of the real estate markets in these countries and an analysis of which program is the best.
Which countries offer Golden Visas?
A number of countries offer Golden Visas. Prior to the 2008 downturn, they were mainly in the Caribbean. After the economic slide, European countries with good weather (and weak national balance sheets) began offering Golden Visas. They are attractive because most of them include the right to work and travel within the Schengen area.
The majority of calls we have received have come from people in the City of London worried about losing their EU work permits. Brexit hasn’t kicked in, yet banks have already moved hundreds of thousands of jobs out of London. Most jobs have moved to Frankfurt and Dublin, although Madrid has also benefited.
The closer we get to Brexit, the more banking jobs will leave the UK. Bankers who lose their jobs will have difficulty transitioning to the EU with their UK passports. However, they can apply for a Golden Visa and obtain long-term residency/citizenship in Bulgaria, Cyprus, Greece, Malta, Spain and Portugal.
What types of Golden Visas are available?
There are a number of options available. For example, Portugal issues Golden Visas for people that invest over 250,000€ in its cultural heritage. Bulgaria issues Golden Visas for people that invest over 1 million Bulgarian levs (around 500,000€) in Bulgarian Government bonds. France offers a visa for anyone that invests over 10,000,000€ in the country.
Although interesting, most of the above are impractical for anyone but the super rich. This article will focus on Golden Visas achieved through real estate investment. These are the most practical for those with labor related post Brexit fears. They are also attractive for financial professionals, many of whom have limited investment options due to compliance related issues.
What makes a Golden Visa “good?”
There are many variations in Golden Visas. We view the following to be most important:
- Low required investment.
- Small amount of time required to actually reside in the country.
- Short time required to gain full citizenship.
- Ability and ease of family members to also gain residency and/or citizenship.
- Potential to earn a high return on associated real estate investment.
Summary of Golden Visa characteristics, by country
Cyprus is an interesting country because it is running two schemes. Like the other countries, you can make an initial property investment. This grants long-term residency. After a number of years, this can be converted to citizenship.
Alternatively, for a much larger investment, you can gain citizenship within six months.
Property Market Overview
There is a large disparity in real estate prices in Europe’s Golden Visa countries. Malta is by far the most expensive, and prices have run up considerably. Greece (outside of Athens) is quite cheap but property prices there, as in Cyprus, continue to slide. Portugal and Spain have the strongest fundamentals- well priced but with room for appreciation.
To learn more about the opportunities for price appreciation in the Spanish real estate market, read Spanish property prices 2017: Where are we in the cycle? If you’d like to learn more about how to invest in Madrid real estate, arrange a FREE CONSULTATION with us today!
There are a number of factors that drive property prices. The primary two are a country’s GDP and interest rates. All of the European countries that offer Golden Visas have loans tied to Euribor, since they are in the European Currency Union. Therefore, we will focus on GDP growth.
Malta has the strongest GDP growth of all these countries, followed by Spain. Greece is doing surprisingly well, given how close they were to bankruptcy last year. Portugal’s prospects look bleak, and are bound to negatively impact the housing market.
All of these countries introduced Golden Visas to raise money after the 2008 financial downturn, so we can’t expect them to be Aaa rated. However, unless you have a large appetite for risk, it’s logical to expect that the country is at least investment grade. As you can see in the following chart, only Malta and Spain have investment grade ratings. The rest are considered junk bonds.
Conclusion: Which Golden Visa is the best?
All of the Golden Visa programs are different. The one that is best for you depends upon your needs. If you have a couple million euros to burn and are looking for quick citizenship, Cyprus is the answer.
If you’re not super rich, it’s important to factor the potential for your investment to appreciate into your Golden Visa consideration.
Greece & Cyprus
Greece and Cyprus have relatively low investment thresholds to gain visas, and ultimately citizenship. However both property markets continue to depreciate. Both country’s sovereign bonds are rated junk. There is still a very strong possibility that Greece will abandon the euro altogether and return to the drachma. This would crater the price of any property you purchased and could bring your EU work permit into question. Moreover, even though the country offers citizenship relatively quickly, you have to reside in Greece. This is useless if you want to work in another part of the EU.
Malta is the country with the best credit rating, it grants citizenship quickly (after one year) and there is no need to reside in the country. However, real estate prices are extremely expensive, as is the visa. You must purchase of at least 320,000€. Additionally you must purchase, and hold for five years, 250,000€ of government bonds and make a 35,500€ contribution to the Maltese Government. It also has very expensive processing fees: roughly 40,000€. It’s a good option if you want to work in the EU, don’t have the millions required for Cypriot citizenship but still have over six hundred thousand euros to burn. There is also the issue that it has capped the number of Golden Visas it issues at 1,800 people, many of which have been claimed.
Spain & Portugal
Portugal and Spain have similar Golden Visa programs. Portugal’s main advantage is that it grants citizenship after six years, whereas it takes the Spanish Government ten years. They both offer permanent residence after five years, although Spain requires the main applicant to spend 183 days a year in the country in years 6-10. By this time, if you were affected by Brexit, you should have your work situation sorted.
The two countries have very different investment profiles. Portugal’s bonds are rated as junk, GDP growth is one of the lowest in the Eurozone and property prices are, on average, more expensive than those in Spain. Finally, its Golden Visa program has been wracked by scandal.
Spain, on the other hand, has been ranked as one of the best places to purchase property. The Madrid property market, specifically, is performing extremely well and prices are forecast to further appreciate. There are no residence requirements in the first five years, and after that they are limited, so it is your best choice if you are worried about short and medium term post-Brexit work opportunities. If you are close to retirement age and want your children to be able to work in the EU, it is by far the best choice. The icing on the cake: you stand to make a lot of money on your property investment.