Millionaire foreign investors to buy property in exchange for visas
13 August 2013
Thousands of non-European Union “high net worth” individuals are expected soon to invest in luxury Spanish properties, in return for being granted permanent residency in Spain, according to international real estate experts.
In a bid to revitalise the property sector, and therefore the wider economy, the Spanish government announced last October that those who invest more than 500,000 euros in real estate will be allowed to stay indefinitely in Spain, and therefore the entire Schengen Area, which consists of a group of 26 European countries.
“We hope the new law will have a similar effect in Spain as it has done in Portugal, where the so-called ‘Golden Visa’ scheme similarly targeted high net worth buyers,” explains Alex Vaughan, a partner at Lucas Fox, an estate agency specialising in high-end properties.
“The law is due to be passed any day, but it is now more likely to come into force in September, after the summer break. We will not know the exact process until the law is enacted but it is expected to be an administrative one involving checking the applicant has all of the necessary documentation.”
Interest in this initiative has already been strong, with Alex telling this newspaper that his firm alone has more than 200 direct clients who have said they intend to buy once the law is passed.
“To date we have registered most direct interest from Indian, Chinese and American clients. It seems that the law change is still fairly unknown in Russia.”
So, why is Spanish residency such an attractive prospect for so many foreign investors?
“The law is interesting because it provides a hassle-free, relatively cheap solution to non-EU clients who want to get European residency and travel rights for themselves and their families – it will allow investors to move freely across the Schengen zone,” affirms Alex.
“In some cases it will be for lifestyle and education reasons, and in others it will be a combination of investment and diversification of risk. Chinese investors, for example, may use it as insurance against future instability in China.
“In all cases it will make it easier for investors to travel to Europe without the need to go through a complicated, lengthy visa application process.
“Out of the other areas that are currently offering similar schemes, Cyprus has lost a lot of credibility recently due to its banking crisis and Portugal is still regarded as Spain’s poorer cousin.
“The investment limits in the UK and France are much higher and Spain offers a much better year-round lifestyle.”
He adds: “I consider this to be a positive measure for the Spanish property market and economy. I believe it will make the prospect of investing in Spanish property far more attractive to the wider global community and, as a result, will improve national confidence, which is much needed.
“If the procedural side of the law runs smoothly then I cannot see any potential downsides.”
Naturally, it is expected that the areas of the country, such as Madrid, Barcelona, Ibiza and Mallorca, which have traditionally attracted high-end buyers will be those most likely to do well from this government initiative.
With this theory in mind, in southern Spain, it is probable that Marbella, which has been synonymous with a jet-set lifestyle since the 1960s, will receive a boost to its real estate sector.
“Marbella and Puerto Banús as well as other affluent areas offering desirable properties with a good potential rental income will benefit from the new residency law,” says Stephen Lahiri, the Lucas Fox director responsible for the company’s Marbella operations.
“I also expect that properties within luxury residential complexes, ski chalets in the Sierra Nevada, country houses in national parks, and historic buildings within cities popular with tourists, such as Seville and Granada, will be most in demand.”
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