Despite ongoing housing crises in many countries worldwide (including Portugal) caused by the influx of wealthy foreigners, there is a growing trend among the upper- and upper-middle-class population to take advantage of golden visa programs worldwide.
According to a Fortune Magazine report, the golden visa program has been popular among the ‘ultra-high net worth’ segment of the global population since it offered a ‘safety net’ from potential political or economic instabilities in their home countries.
Note: The report cites data from a wealth analysis report by the investment management company Knight Frank which classifies ‘ultra-high net worth (UHNW)’ as individuals with a net worth of at least $30 million.
The report also quoted statistics from a US-based passport agency which found that the demand for second passports (through investment opportunities) among their US clients had increased by 500% between 2019 and 2021.
Additionally, the COVID-19 pandemic led to a sudden significant mobilization of the global workforce and allowed high-salaried employees worldwide to consider the golden visa option for dual citizenship or to become digital nomads.
Although many organizations have reverted to traditional work models, with most offering hybrid (semi-remote) options, many have gone fully remote.
The dark side of the golden visa
The golden visa program has been a target for criticism over the years due to its effect on lower segments of the population who are experiencing being side-lined from easy access to domestic housing and real estate, the cost of which has increased exponentially over recent years.
Portugal, for example, officially scrapped its golden visa program (following Malta and Cyprus) earlier this year owing to soaring housing costs. Per data from the National Institute of Statistics (INE) in Portugal, the average price per square meter for housing in Lisbon increased by 145% between 2012 and 2021.
Greece, too, has increased the minimum requirements for those seeking to enroll for the golden visa, citing the lack of affordable housing for Greek citizens.
According to the Fortune magazine report, the increased global demand for the golden visa can be observed in the number of surveyed UHNW people planning on obtaining one soon.
The mass inflow of wealthy foreigners buying land (and, more recently, digital nomads who stay longer than traditional tourists) has led to significant residential areas in hotspot cities being converted to commercial vacation rentals and accommodations.
It is possible that the same effects may not be observed everywhere as economic, social, and political factors can vary significantly between different countries and regions.
The concept of the golden visa program was first introduced by the Caribbean nation Saint Kitts and Nevis in the 1980s to attract foreign investors to the country, which, in exchange, offered citizenship.
It was popularized over the last decade when many European countries launched similar programs for the world’s wealthy.
Recently, authorities are seeing the possible benefits digital nomads (a more prominent segment than the UHNW) could have on the economy without having to stake real estate as with the golden visa program, thus starting the wave of countries that launched digital nomad visas over the last couple of years.
Whether the Golden Visa will be replaced depends on individual countries’ economic and political climate.
Certain countries may likely prioritize the digital nomad visa over the golden visa. However, it is improbable that the Golden Visa will be completely phased out.