Hit by economic recession, Europe has never had it so bad. Though there are flickering signs of revival but it will still be a long time
before the Euro Zone can breathe easy. While Europe as a whole bleeds, the
financial health of the so called PIIGS (Portugal, Ireland, Iceland, Greece and
Spain), despite bailouts, is in dire straits. On the verge of bankruptcy, with
dwindling economic activity and high levels of unemployment, the real estate market
crashed and the banks were left holding mortgaged properties which were
difficult to offload even at heavily discounted prices.
To revive their flagging property market and consequently to rev
up their beleaguered economies, countries like Portugal and Spain announced, a
hitherto unheard of program, Residency by Investment Program for non EU residents.
The intent is clear … attracting foreign capital, and more so the super rich in
the hope that it might spur the stagnant real estate market saddled with heaps
of unsold inventory. Foreign investors just need to invest a hefty sum to secure
residency of these countries as a segue to permanent residency and culminating
in a opportunity to be citizens! The schemes have generated a lot of interest in
the emerging economies of Russia, China and India. The rich there, looking at
Spain and Portugal for a second passport.
Earlier people migrated to developed countries mainly, for better
financial and job prospects. Now what draws people, apart from economic and
political stability is the superior quality of life that the western countries offer.
Europe with its charming locales and a culturally rich lifestyle is definitely
a cut above the rest. For a growing breed of super rich who are now in the
increasingly globalized world no longer alien to western lifestyles, it makes
immense sense to have a vacation home abroad.
What makes Portugal and Spain attractive is that not only do they make
it to the list of destinations coveted by expats as excellent for relocating –
great climes, developed infrastructure, safety and security, mature political
and legal systems; they both also offer excellent healthcare system. The
economic slump has resulted in a sizeable drop in housing prices in both the
countries and even makes them a good investment opportunity from a long term
perspective. Spain boasts of a rich history, lots of sunshine (a big reason why
it’s a favorite with Britishers), art and culture in abundance. Barcelona is
its most modern city and oft visited too for its Gothic (read Gaudi’s)
architecture, wonderful Mediterranean climate and its cosmopolitan feel. The
Spanish people are very laidback and take their siesta time very seriously …
all in all makes for an ideal country for a laid back life. Of course not to
forget their cuisine- the Spanish Paella and the Tapas bars - the new buzz in
town.
Portugal is sought after for its stunning coastline and great
climate. Lisbon its capital city has a high quality of life and offers some
beautiful architectural marvels. It’s one of the most affordable countries in
Europe and has a low cost of living. Locals are friendly and would exchange a
‘Bom Dia’ when you run into them. Algrave
is another coastal town in the southern part of Portugal whose beaches are
among the best and it also boasts of some of most known golf courses in Europe..
So what’s the deal … you need to invest 500 thousand Euros in one or more properties (commercial /residential).This entitles you and your
family (children up to 18 years of age) a residency permit for one year to
begin with and post that two subsequent renewals of 2 years. On completion of 5 years you can apply for permanent
residency and that does away with any further requirement of renewing the visas. For
the entire duration of 5 years you are free to travel anywhere in the 26
Schengen countries. Also you are legally entitled to set up a business. The only additional obligations are to maintain this investment
for a minimum period of 5 years. The Golden Residence Permit Program FAQ's (for Portugal) are available at
Till sometime back, as per RBI regulations Indian nationals were
permitted to buy immovable property overseas and could invest up to US$ 200000
each year. This meant that an affluent family could afford the required investment
of about Rs 4 crore. However, as per recent RBI regulations an individual is
not permitted to invest in immovable property overseas – hopefully this is a
temporary restriction … introduced recently in wake of the rather steep
depreciation of the Indian Rupee. In fact an investment in overseas property
also works as a hedge against depreciation of the rupee for HNI (high net
worth individuals) apart from affording
numerous non-monetary benefits.
Though the scheme might look very attractive to those having spare
moolah and a zing for having a second home in Europe… but care must be taken to
go into the fine print … and hiring a legal expert might be a prudent
decision. Lucas Fox is a well established
real estate company which handles both Spain and Portugal for buying properties
in one of these countries. However, you need to do a lot of homework before
taking the plunge. Happy hunting for a second home … in charming Europe.
